9. A furniture maker would like to determine the most profitable mix of items to produce. There are
well-known budgetary constraints. Each piece of furniture is made of a predetermined amount of
material with known costs, and demand is known. Which of the following analytical techniques is
the MOST appropriate one to solve this problem?
a) Optimization
b) Multiple regression
c) Data mining
d) Forecasting
10. You have simulated the net present value (NPV) of a decision. It ranges between -$10 million and
+$10 million. To BEST present the likelihood of possible outcomes, you should:
a) present a single NPV estimate to avoid confusion.
b) present a histogram to show likelihood of various NPV ranges.
c) trim all outliers to present the most balanced diagram.
d) relax constraints associated with extreme points in the simulation.
11. A company ships products from a single dock at their warehouse. The time to load shipments
depends on the experience of the crew, products being shipped and weather. The company is
considering building another dock in order to meet unmet demand. Which is the MOST appropriate
modeling approach to determine if the revenue from the additional products sold will cover the cost
of the second dock within two years of it becoming operational?
a) Optimization because it is a transportation problem.
b) Optimization because the company’s objective to maximize profit and capacity at the dock
is a limited resource.
c) Forecasting because you can determine the throughput at the dock, calculate the net
revenue and compare this with the cost of the new dock.
d) Discrete event simulation because there are a sequence of discrete random events
through time.
12. Two investors who have the same information about the stock market buy an equal number of shares
of a stock. Which of the following statements must be true?
a) The risks for the two investors are statistically independent.
b) Both investors have the same risk profile.
c) Both investors are subject to the same uncertainty.
d) If the investors are optimistic, they should have borrowed, rather than bought the shares.
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