Exam
Name___________________________________

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.
Solve the problem
1) Descriptive analytics	1) _______
A) helps companies classify their customers into segments to develop specific marketing campaigns.
B) can use mathematical techniques with optimization to make decisions that take into account the uncertainty in the data.
C) can predict risk and find relationships in data not readily apparent with traditional analyses.
D) helps detect hidden patterns in large quantities of data to group data into sets to predict behavior.

2) A manager at Gampco Inc. wishes to know the company's revenue and profit in its previous quarter. Which of the following business analytics will help the manager?	2) _______

A) prescriptive analytics	B) normative analytics
C) predictive analytics	D) descriptive analytics

3) Predictive analytics	3) _______
A) detects patterns in historical data and extrapolates them forward in time.
B) identifies the best alternatives to minimize or maximize an objective.
C) uses data to determine a course of action to be executed in a given situation.
D) summarizes data into meaningful charts and reports that can be standardized or customized.

4) A trader who wants to predict short-term movements in stock prices is likely to use ________ analytics.	4) _______

A) normative	B) prescriptive	C) predictive	D) descriptive

5) Which of the following questions will prescriptive analytics help a company address?	5) _______
A) What will happen if demand falls by 10% or if supplier prices go up 5%?
B) What do they expect to pay for fuel over the next several months?
C) How many and what types of complaints did they resolve?
D) What is the best way of shipping goods from their factories to minimize costs?

6) The demand for coffee beans over a period of three months has been represented in the form of an L-shaped curve. Which form of model was used here?	6) _______

A) mathematical model	B) kinesthetic (tactile) model
C) verbal model	D) visual model

7) Decision variables	7) _______
A) are always uncertain.
B) can be selected at the discretion of the decision maker.
C) cannot be directly controlled by the decision maker.
D) are assumed to be constant.

8) Identify the uncontrollable variable from the following inputs of a decision model.	8) _______
A) intercity distances	B) machine capacities
C) investment returns	D) staffing levels

9) Which of the following inputs of a decision model is an example of data?	9) _______
A) investment allocations	B) costs
C) inflation rates	D) estimated consumer demand

10) Descriptive decision models	10) ______
A) help analyze the risks associated with various decisions.
B) describe relationships but do not tell a manager what to do.
C) do not facilitate evaluation of different decisions.
D) aim to predict what will happen in the future.

11) Prescriptive decision models help	11) ______
A) decision makers identify the best solution to decision problems.
B) make predictions of how demand is influenced by price.
C) make trade-offs between greater rewards and risks of potential losses.
D) describe relationships and influence of various elements in the model.

12) The manager at Soul Walk Inc., a shoe manufacturing company, wants to set a new price (P) for a shoe model to maximize total profit. The demand (D) as a function of price is represented as
D = 1,500 - 2.5P

The total cost (C) as a function of demand is represented as
C = 3,200 + 3.5D

Which of the following is a model for total profit as a function of price?	12) ______

A) (1,250 � price) + (5 � price2) - 8,320	B) (1,508.75 � price) - (2.5 � price2) - 8,450
C) (3.5 � price2) + 3,200 - (1925.50 � price)	D) [4521 + (4.5 � price)] � price - 9684.25

13) Which decision model incorporates the process of optimization?	13) ______
A) predictive	B) prescriptive	C) normative	D) descriptive

14) Which of the following is the first phase in problem solving?	14) ______
A) analyzing the problem	B) defining the problem
C) recognizing the problem	D) structuring the problem

15) Middle managers in operations	15) ______
A) determine product mix.	B) make pricing decisions.
C) develop staffing plans.	D) develop advertising plans.

16) The product mix is determined by the	16) ______
A) top managers.	B) accounting staff.
C) finance managers.	D) middle managers.

17) During which phase in problem solving is a formal model often developed?	17) ______
A) defining the problem	B) structuring the problem
C) implementing the solution	D) analyzing the problem

18) Which of the following is true about problem solving?	18) ______
A) Recognizing problems involves stating goals and objectives.
B) Structuring the problem involves identifying constraints.
C) Decision making involves translating the results of the model in the organization.
D) Analyzing the problem involves characterizing the possible decisions.

ESSAY.  Write your answer in the space provided or on a separate sheet of paper.
19) Develop a linear model relating the demand for Goody Woods' units to the price.

20) Develop a prescriptive model that will help Goody Woods identify the price that maximizes the total revenue.

TRUE/FALSE.  Write 'T' if the statement is true and 'F' if the statement is false.
21) Decision support systems evolved from efforts to improve military operations prior to and during World War II.	21) ______

22) A deterministic model is one in which all model input information is either known or assumed to be known with certainty.	22) ______

23) The complexity of a problem increases when the problem belongs to an individual rather than a group.	23) ______

ESSAY.  Write your answer in the space provided or on a separate sheet of paper.
24) A goal of Korel & Marke, a dot-com company, is to gain strategic advantage over its rival firms. How can Korel & Marke use analytics and exploit social media to accomplish this goal?

25) What are the three components of decision support systems (DSS)?

26) Explain how data are used by accountants, economists, and operations managers.

27) Data used in business analytics need to be reliable and valid. Explain.

28) Why do predictive decision models incorporate uncertainty?

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.
29) Which of the following is not a challenge faced by organizations that want to develop analytics capabilities?	29) ______

A) understanding benefits versus perceived costs of analytics studies.
B) difficulty in getting good data and sharing information.
C) a lack of understanding of how to use analytics.
D) competing business priorities.

30) Prescriptive analytics	30) ______
A) uses data to determine a course of action to be executed in a given situation.
B) identifies patterns and relationships existing in large data sets.
C) summarizes data into meaningful charts and reports that can be standardized or customized.
D) detects patterns in historical data and extrapolates them forward in time.

Use the table below to answer the following question(s).

Fiberia Accessories, a clothing retailer, is planning to introduce a new line of sweaters as part of the winter collection for $65 with an inventory of 1500. The main selling season is 60 days between November and December. The store then sells the remaining units in a clearance sale at 65 percent discount. Out of the 60 main retail days, Fiberia sells the sweaters at full retail price for only 45 days, while giving a discount of 25 percent for the remaining 15 days. The demand functions a, and b are given as 79.5 and 1.1 respectively.

Marked Down Pricing Model for
Fiberia Accessories's new sweater		
		
Data		
		
Retail Price	$65	
Inventory	1500	
Selling Season (days)	60	
Days at Full Retail	45	
Intermediate Markdown	25 percent	
Clearance Markdown	65 percent	
Demand Function		
A	79.5	
B	1.1	

31) What is the average daily sale during the full retail sales period?	31) ______
A) 24.55	B) 33.33	C) 8	D) 15

32) Calculate the total number of units sold during the full retail sales period.	32) ______
A) 360	B) 520	C) 33.33	D) 187.5

33) Calculate the total revenue during the full retail sales period.	33) ______
A) $17,550	B) $23,400	C) $16,200	D) $2,880

34) Calculate the daily sales during the discount sales period.	34) ______
A) 133.3	B) 388.13	C) 25.88	D) 39.28

35) Calculate the total units sold during the discount sales period.	35) ______
A) 133.3	B) 388.13	C) 25.88	D) 39.28

36) Calculate the total revenue during the discount sales period.	36) ______
A) $18,921.09	B) $43,321.09	C) $4,478.91	D) $10,042.73

37) Calculate the revenue for the clearance sales period.	37) ______
A) $17,105.16	B) $48,871.88	C) $23,400	D) $18,921.09

38) Calculate the total revenue for the new line of sweaters.	38) ______
A) $23,400	B) $43,231.09	C) $59,426.25	D) $48,871.88

Use the table below to answer the following question(s).

In the spreadsheet below, there is data on the price, cost, demand, and quantity produced for an item. There are also different "what if" values that can help a manager to calculate costs and revenue with variability in demand.

	A	B	C	
1	Profit Model			
2				
3	Data		What-If Demand Values	
4			20,000	
5	Unit Price ($)	50	40,000	
6	Unit Cost ($)	25	55,000	
7	Fixed Cost ($)	550,000	60,000	
8	Demand	60,000	65,000	
9	Quantity Produced	55,000		
10				

39) Which of the following is the Excel formula to determine the number of units sold?	39) ______
A) =MIN(0,B8,B9)	B) =MIN(B8,B9)	C) =MAX(0,B8,B9)	D) =B8

Solve the problem
40) If D is demand, P is the unit price, and c and d are constants (where d > 0 is the price elasticity), which of the following is a nonlinear demand prediction model?	40) ______

A) D = cP-d	B) D = (d � P)c	C) D = cd � P	D) D = d + (c � P)

Use the chart below to answer the following question(s).

41) What is the slope of the sales function D = a - bP?	41) ______
A) 12	B) 9	C) 17	D) 4

42) How many gallons will be sold if the price is increased to $4.75?	42) ______
A) 843	B) 798.72	C) 818	D) 833.26

43) What does business analytics use to help managers make better decisions?	43) ______
A) data and information technology.
B) statistical analysis and quantitative methods.
C) all of the above.
D) mathematical or computer-based models.

1) A
2) D
3) A
4) C
5) D
6) D
7) B
8) C
9) B
10) B
11) A
12) B
13) B
14) C
15) C
16) A
17) B
18) B
19) Economic theory tells us that demand for a product is negatively related to its price.
The linear model to predict demand as a function of price is
D = a - bP
where D is the quantity demanded, P is the unit price, a is a constant that estimates the demand when the price is zero, and b is the slope of the demand function.

Substituting the values given in the data
1,540 = a - (b � 240)
1,220 = a - (b � 320)

By solving the two equations, values of a and b can be found.
a = 2,500, which indicates the demand for wood units when price is zero,
b = 4, which is the slope of the demand function.

Substituting values of a and b in the linear demand prediction model
D = 2,500 - 4P
20) Having found out the model for demand as a function of price, sales (S) can be expressed as
S = 2,500 - 4P

Revenue (R) = Sales � Price = (2,500 - 4P) � P = 2,500P - 4P2

Thus, Goody Woods Inc. can identify the price that maximizes the total revenue using
R = 2,500P - 4P2
21) FALSE
22) TRUE
23) FALSE
24) Analytics is helping businesses learn from social media and exploit social media data for strategic advantage. Using analytics, Korel & Marke can integrate social media data with traditional data sources such as customer surveys, focus groups, and sales data. It can also understand trends and customer perceptions of its products; and create informative reports to assist its marketing managers and product designers.
25) DSSs include three components
•	 Data management - The data management component includes databases for storing data and allows the user to input, retrieve, update, and manipulate data.
•	Model management - The model management component consists of various statistical tools and management science models and allows the user to easily build, manipulate, analyze, and solve models. 
•	Communication system - The communication system component provides the interface necessary for the user to interact with the data and model management components.
26) Following are the ways data are used
•	Accountants conduct audits to determine whether figures reported on a firm's balance sheet fairly represent the actual data by examining samples (that is, subsets) of accounting data, such as accounts receivable.
•	Economists use data to help companies understand and predict population trends, interest rates, industry performance, consumer spending, and international trade.
•	Operations managers use data on production performance, manufacturing quality, delivery times, order accuracy, supplier performance, productivity, costs, and environmental compliance to manage their operations.
27) Sample data do not always reflect reality. People do not always behave the same when observed, nor do they always act as they say they act. Poor data can result in poor decisions. Hence, care must be taken when working with data, and every effort should be made to ensure that data are sufficiently accurate.
28) The future is always uncertain. Uncertainty is imperfect knowledge of what will happen; risk is associated with the consequences of what actually happens. Even though uncertainty may exist, there may be no risk. However, risk is an outcome of uncertainty, though not always. Thus, many predictive models incorporate uncertainty and help decision makers analyze the risks associated with their decisions.
29) A
30) A
31) C
32) A
33) B
34) C
35) B
36) A
37) A
38) C
39) B
40) A
41) A
42) A
43) C