## [answered] 1. A firm is considering two location alternatives. The fix

1. A firm is considering two location alternatives. The fixed cost at location A would be

\$5 million per year, and the variable cost would be \$0.30 per unit. At location B, fixed

costs would be \$3 million per year, with a variable cost of \$0.35 per unit. If annual

demand is expected to be 20 million units, which location offers a lower total cost?

Location A

Location B

The total cost at location A equals the total cost

at location B.

Not enough information available

2. Plant A is located at the (X, Y) coordinates of (500, 200) and has a shipment volume

of 400 units per day. Plant B is located at the (X, Y) coordinates of (200, 400) and has

the same shipment volume of 400 units per day. Using the Center-of-Gravity method,

which of the following is the X coordinate of the new plant location? Find the closest

value.

300

350

387.

5

275

3. A retailer decides to use a continuous review model for inventory control. The

average daily demand for dishwasher water pumps is 8 per day. The standard

deviation of the daily demand is 2 per day, and the order lead time is 4 days.

Suppose the retailer wants to achieve a service level of 98%. What is the reorder

point for the dishwasher water pumps? Find the closest value.

8

3

2

4

0

4

8

4. Given the following two constraints in a Linear Programming model, (1) 14X + 6Y &gt;=

42, and (2) X - Y &gt;= 3, which of the following points satisfies both of the constraints?

X= 7, Y =

5 X = 2, Y

=4

X = 2, Y

=1

X = 6, Y

=2 5. Suppose the objective function of a minimization problem is X + 3Y. What is the

objective value for X = 2 and Y = 5?

1

5

1

0

1

1

1

7 6. There are three equally likely states of nature (High, Medium, and Low demand).

Suppose the option &quot;Build a large factory&quot; will post profits of \$50,000, \$20,000, and \$10,000, respectively, in the three states of nature. What is the EMV of the option?

Find the closest value.

\$40,0

00

\$20,0

00

\$10,0

00

7. Suppose a maximization LP model has the following four corner points: (0, 0), (10, 3),

(5, 6), and (0, 7). If the objective function is X+ 2Y, what is the optimal objective

value?

0

1

6

1

7 1

4 8. What are the key questions to be answered by most inventory control models?

When to place an order and the cost of

the order

When to place an order and the order size

Order size and the cost of the order

Order size and with whom the order

should be placed

9. Which of the following statements is INCORRECT regarding the level curves of the

same objective function?

Level curves can be used to represent any feasible objective

values.

Level curves of the same objective function are always

parallel to each other.

Level curves cannot be parallel to the boundary line of a

constraint.

Level curves must be straight lines on a graph for LP models. 10. Which of the following is NOT a characteristic of optimization problem?

Decisions

Constraints

Corner points

Objective

The uncertainty in the situation has an impact on

the outcome.

11. Suppose a supplier offers an incremental quantity discount for a product. The

supplier charges \$10 per unit for the first 1,000 units in an order, \$8 per unit for the

next 1,000 units, and \$7 per unit for any additional units in the order. What is the

average cost per unit of an order of 4,000 units? Find the closest value.

\$8.0 0

\$8.2

5

\$8.6

7

\$9.5

0

12. Suppose the standard deviation of demand is 8 units per week and demand is 30

units per week on average. If the order lead time is 2 weeks and the desired service

level is 97%, how much safety stock should we hold using the continuous review

model? Find the closest value.

1

5

2

1

8

1

4

2 13. A certain type of computer costs \$400 per unit to build and the annual inventory

holding cost is 20% of the unit cost. Annual demand is 20,000 units and the setup

cost is \$50 per order. What is the economic order quantity (EOQ)? Find the closest

value.

15

8

25

3

17

9 14. A plant manager needs to decide whether to expand the capacity of the plant. There

are two states of nature: favorable and unfavorable. In favorable market conditions,

the plant would make an additional \$40,000 when expanded. In unfavorable market

conditions, the plant would lose an additional \$30,000 when expanded. Of course,

the manager can choose not to expand and make \$0 additional profit in favorable

market conditions and lose \$0 additional profit in unfavorable market conditions. If

the two states of nature are equally likely to occur, should the manager expand the

capacity of the plant based on the calculations of EMV?

Yes, the manager should expand the capacity of the plant.

No, it is better not to expand.

Either is fine. The two options have the same EMV.

Not enough information is available to calculate the EMVs

of the options. 15. Consider the following Linear Programming model:

Maximize 3X + 5Y

Subject to (1) 2X + Y &lt;= 6

(2) 3X + 4Y &lt;= 24

(3) X &gt;= 0, Y &gt;= 0.

What is the optimal solution? X = 0, Y

=0

X = 3, Y

=0

X = 0, Y

=6

X = 8, Y

=0 16. Which of the following is specifically characterized by a focus on continuous

improvement, respect for people, and standard work practices?

Just-in-time (JIT) Toyota Production System

(TPS)

Lean operations

Kanban

17. Which of the following location decision method is able to take factors such as

political stability and currency risks into account?

Transportation model

Locational breakeven

method

Factor-rating method

Center-of-Gravity

method

18. Suppose a hospital uses a periodic review model to control inventory. During the past

year, the mean daily demand for bandage BX-5 was 200 and the demand was

normally distributed. The standard deviation of the daily demand was 10. The

inventory level was reviewed once every 3 days. It takes 1 day to receive the

deliveries of the bandage after an order is placed. Suppose the required &quot;z&quot; value is

1.88 to ensure a satisfactory service level of 97%. Then how many bandages should

the hospital order each time? Find the closest value.

838

840

1,50

4

1,85

6

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