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Test Bank for Introduction to Management Science, 13th Edition

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    1 Introduction to Management Science, 13e (Taylor) Chapter 1 Management Science 1) A management science solution can be either a recommended decision or information that helps a manager make a decision. Answer: TRUE Diff: 2 Page Ref: 5 Section Heading: The Management Science Approach to Problem Solving Keywords: model, management science techniques AACSB: Analytical thinking 2) A variable is a value that is usually a coefficient of a parameter in an equation. Answer: FALSE Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: variable AACSB: Analytical thinking 3) Parameters are known, constant values that are usually coefficients of variables in equations. Answer: TRUE Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: parameter AACSB: Analytical thinking 4) Data are pieces of information from the problem environment. Answer: TRUE Diff: 1 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: data AACSB: Analytical thinking 5) A model is a mathematical representation of a problem situation including variables, parameters, and equations. Answer: TRUE Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: model, management science techniques AACSB: Analytical thinking 6) A management science technique usually applies to a specific model type. Answer: TRUE Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: models, management science techniques AACSB: Analytical thinking

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    2 7) The first step of the management science process is to define the problem. Answer: FALSE Diff: 2 Page Ref: 2 Section Heading: The Management Science Approach to Problem Solving Keywords: management science process AACSB: Analytical thinking 8) The term big data refers to numbers of large magnitude, i.e., greater than or equal to one billion. Answer: FALSE Diff: 1 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge 9) A key component of business analytics is the recent availability of large amounts of data. Answer: TRUE Diff: 1 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge 10) Business analytics brings together the disciplines of information systems, management science, statistics, and mathematical modeling. Answer: TRUE Diff: 1 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge 11) Management science modeling techniques provide results that are known with certainty. Answer: FALSE Diff: 2 Page Ref: 18 Section Heading: Management Science Modeling Techniques Keywords: management science modeling techniques, certainty AACSB: Analytical thinking 12) The term sensitivity analysis refers to testing how a problem solution reacts to changes in one or more of the model parameters. Answer: TRUE Diff: 1 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: sensitivity analysis, parameter changes AACSB: Application of knowledge

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    3 13) Variable costs depend on the number of items produced. Answer: TRUE Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: variable cost, break-even analysis AACSB: Application of knowledge 14) Fixed cost is the difference between total cost and total variable cost. Answer: TRUE Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: total cost, break-even analysis AACSB: Application of knowledge 15) The break-even point is the volume that equates total revenue with total cost. Answer: TRUE Diff: 1 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 16) In general, an increase in price increases the break-even point if all costs are held constant. Answer: FALSE Diff: 1 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 17) If variable costs increase, but price and fixed costs are held constant, the break-even point will decrease. Answer: FALSE Diff: 2 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 18) Managers utilize spreadsheets to conduct their own analyses in management science studies. Answer: TRUE Diff: 2 Page Ref: 14 Section Heading: Computer Solution Keywords: spreadsheets AACSB: Analytical thinking

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    4 19) Management science techniques focus primarily on observation, model construction, and implementation to find an appropriate solution to a problem. Answer: FALSE Diff: 2 Page Ref: 16 Section Heading: Management Science Modeling Techniques Keywords: management science modeling techniques, steps of the scientific method AACSB: Analytical thinking 20) Management science modeling techniques focus on model construction and problem solution. Answer: TRUE Diff: 2 Page Ref: 16 Section Heading: Management Science Modeling Techniques Keywords: management science model techniques, model construction, problem solution AACSB: Analytical thinking 21) A typical objective function might be written as 3S + 2R + 5Z ≤ 20. Answer: FALSE Diff: 2 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: objective function AACSB: Analytical thinking 22) Decision Support Systems (DSS) use computers to help decision makers address complex problems. Answer: TRUE Diff: 1 Page Ref: 21 Section Heading: Management Science Models in Decision Support Systems Keywords: decision making, management science AACSB: Application of knowledge 23) In both an objective function and a constraint, the decision variables are represented by numbers. Answer: FALSE Diff: 1 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: decision variables AACSB: Analytical thinking 24) A DSS is a type of ERP system. Answer: FALSE Diff: 2 Page Ref: 22 Section Heading: The Management Science Approach to Problem Solving Keywords: DSS, ERP AACSB: Analytical thinking

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    5 25) A key element of a decision support system (DSS) is the person using the system. Answer: TRUE Diff: 2 Page Ref: 21 Section Heading: Management Science Models in Decision Support Systems Keywords: decision support systems AACSB: Analytical thinking 26) An ERP system is software that is capable of connecting functions and processes across an entire company. Answer: TRUE Diff: 1 Page Ref: 22 Section Heading: The Management Science Approach to Problem Solving Keywords: ERP, enterprise resource planning AACSB: Analytical thinking 27) A company may use an intranet for communication among its own business units that are scattered geographically. Answer: TRUE Diff: 1 Page Ref: 22 Section Heading: The Management Science Approach to Problem Solving Keywords: intranet AACSB: Analytical thinking 28) ________ are pieces of information from the problem environment. Answer: Data Diff: 1 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: data AACSB: Application of knowledge 29) A(n) ________ is a functional relationship including variables, parameters, and equations. Answer: model Diff: 1 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: model AACSB: Application of knowledge 30) ________ is the term used to describe a collection of numbers that is massive in size. Answer: Big data Diff: 1 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge

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    6 31) ________ uses large amounts of data with management science techniques and modeling to help managers make decisions. Answer: Business analytics Diff: 1 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge 32) Management science techniques include ________ techniques, models that are represented as diagrams, presenting a pictorial representation of the system being analyzed. Answer: network Diff: 1 Page Ref: 16 Section Heading: Management Science Modeling Techniques Keywords: management science, networks AACSB: Application of knowledge 33) An increase in output typically results in an increase in the ________ cost. Answer: total variable, total Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 34) ________ techniques provide results that contain uncertainty, unlike mathematical programming techniques which are deterministic. Answer: Probabilistic Diff: 1 Page Ref: 18 Section Heading: Management Science Modeling Techniques Keywords: management science techniques, probabilistic techniques AACSB: Analytical thinking 35) ________ costs are independent of the volume of goods produced and remain constant. Answer: Fixed Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: fixed cost, break-even analysis AACSB: Analytical thinking 36) Total revenue minus total cost equals ________. Answer: profit Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: profit, break-even analysis AACSB: Analytical thinking

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    7 37) The ________ is the volume that equates total revenue with total cost. Answer: break-even point Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 38) A(n) ________ represents a limitation to achieving maximum profits due to limited resources. Answer: constraint Diff: 1 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: constraint, model development AACSB: Analytical thinking 39) One way to test how a management science model reacts to changes in its parameters is to conduct ________ analysis. Answer: sensitivity Diff: 1 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: sensitivity analysis AACSB: Analytical thinking 40) ________ consist of models that are represented as diagrams rather than as strictly mathematical techniques. Answer: Networks Diff: 2 Page Ref: 16 Section Heading: Management Science Modeling Techniques Keywords: network flow models AACSB: Analytical thinking 41) A management science technique that does not assume that all parameters are known with certainty is a(n) ________ technique. Answer: probabilistic Diff: 2 Page Ref: 18 Section Heading: Management Science Modeling Techniques Keywords: probabilistic techniques AACSB: Analytical thinking 42) A(n) ________ is a computer-based system that helps decision-makers address complex problems that involve different parts of an organization and operations. Answer: decision support system, DSS Diff: 1 Page Ref: 21 Section Heading: Management Science Models in Decision Support Systems Keywords: decision support systems AACSB: Analytical thinking

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    8 43) The databases, management science models, and internet interact with the decision maker via the ________. Answer: user interface Diff: 2 Page Ref: 22 Section Heading: Management Science Models in Decision Support Systems Keywords: decision support system, user interface AACSB: Analytical thinking 44) ________ systems connect the business functions of an entire company. Answer: Enterprise resource planning, ERP Diff: 1 Page Ref: 21 Section Heading: Management Science Models in Decision Support Systems Keywords: ERP, enterprise resource planning AACSB: Analytical thinking 45) The steps of the management science process are: A) problem definition, model construction, observation, model solution, implementation. B) observation, problem definition, model construction, model solution, implementation. C) model construction, problem definition, observation, model solution, implementation. D) observation, implementation, problem definition, model construction, model solution. Answer: B Diff: 1 Page Ref: 2 Section Heading: The Management Science Approach to Problem Solving Keywords: steps of sci method, problem solving approach, management sci process AACSB: Analytical thinking 46) A model is a functional relationship that includes: A) variables. B) parameters. C) equations. D) all of the above Answer: D Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: model AACSB: Analytical thinking

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    9 47) Which of the following is an equation or an inequality that expresses a resource restriction in a mathematical model? A) a decision variable B) an objective function C) a constraint D) a parameter Answer: C Diff: 2 Page Ref: 4 Section Heading: The Management Science Approach to Problem Solving Keywords: model, constraint AACSB: Analytical thinking 48) There is considerable overlap in the scientific method and management science techniques. Which of the following steps is shared between them? A) observation B) problem definition C) model construction D) implementation Answer: C Diff: 2 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: scientific approach AACSB: Analytical thinking 49) Which of the following is incorrect with respect to the use of models in decision making? A) They improve understanding of the problem. B) They promote subjectivity in decision making. C) They are generally easy to use. D) They provide a systematic approach to problem solving. Answer: B Diff: 3 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: model, problem solving AACSB: Analytical thinking 50) The field of management science: A) approaches decision making irrationally with techniques based on the scientific method. B) is another name for management or human resources management. C) concentrates on the use of quantitative methods to assist managers in decision making. D) is completely separate and distinct from all other disciplines. Answer: C Diff: 1 Page Ref: 2 Section Heading: The Management Science Approach to Problem Solving Keywords: management science, operations research AACSB: Analytical thinking

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    10 51) The processes of problem observation: A) cannot be done until alternatives are proposed. B) requires consideration of multiple criteria. C) is the first step of decision making. D) is the final step of problem solving. Answer: C Diff: 1 Page Ref: 2 Section Heading: The Management Science Approach to Problem Solving Keywords: observation, problem observation, management science process AACSB: Analytical thinking 52) The limits of the problem and the degree to which it pervades other units in the organization must be included during the ________ step of the management science process. A) observation B) definition C) solution D) implementation Answer: B Diff: 1 Page Ref: 2 Section Heading: The Management Science Approach to Problem Solving Keywords: management science process AACSB: Analytical thinking 53) ________ involves determining the functional relationship between variables, parameters, and equations. A) Problem observation B) Problem definition C) Model construction D) Model solution Answer: C Diff: 1 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: management science process, model construction AACSB: Analytical thinking 54) Which steps of the management science process can either be a recommended decision or information that helps a manager make a decision? A) model implementation B) problem definition C) model solution D) problem formulation Answer: C Diff: 2 Page Ref: 3 Section Heading: The Management Science Approach to Problem Solving Keywords: management science process, model solution AACSB: Analytical thinking

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    11 55) The result of an effective decision-making process should be monitored in order to: A) reveal the break-even point. B) reveal errors in the implementation. C) keep fixed and variable costs distinct. D) change the scientific method. Answer: B Diff: 2 Page Ref: 7 Section Heading: The Management Science Approach to Problem Solving Keywords: decision making process AACSB: Analytical thinking 56) Which of these disciplines typically does not fall under the umbrella of analytics? A) information systems B) statistics C) management science D) operations management Answer: D Diff: 2 Page Ref: 7 Section Heading: Management Science and Business Analytics Keywords: big data, analytics AACSB: Application of knowledge 57) The indicator that results in total revenues being equal to total cost is called the: A) marginal cost. B) marginal volume. C) break-even point. D) profit mix. Answer: C Diff: 1 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 58) Variable cost: A) depends on the number of units produced. B) plus marginal cost equals fixed cost. C) is equal to total cost in deterministic models. D) is the same as average cost. Answer: A Diff: 2 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking

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    12 59) The components of break-even analysis are: A) cost and profit. B) volume and cost. C) volume, cost and profit. D) volume and profit. Answer: C Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 60) ________ are generally independent of the volume of units produced and sold. A) Fixed costs B) Variable costs C) Profits D) Average cost Answer: A Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 61) The purpose of break-even analysis is to determine the number of units of a product to sell that will: A) appeal to the consumer. B) result in a profit. C) result in a loss. D) result in zero profit. Answer: D Diff: 2 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 62) Variable cost does not include: A) raw materials and resources. B) staff and management salaries. C) material handling and freight. D) direct labor and packaging. Answer: B Diff: 2 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking

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    13 63) Which variable is not a component of break-even analysis? A) fixed costs B) variable costs C) number of employees D) number of customers Answer: C Diff: 1 Page Ref: 9 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 64) At the break-even point: A) total revenue equals total cost. B) profit is maximized. C) revenue is maximized. D) costs are minimized. Answer: A Diff: 1 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 65) If the price increases, but fixed and variable costs do not change, the break-even point: A) decreases. B) increases. C) remains the same. D) may increase or decrease, depending on sales. Answer: A Diff: 2 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 66) If the price decreases, but fixed and variable costs do not change, the break-even point: A) decreases. B) increases. C) remains the same. D) may increase or decrease, depending on sales. Answer: B Diff: 2 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking

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    14 67) The term ________ refers to testing how a problem solution reacts to changes in one or more of the model parameters. A) graphical solution B) decision analysis C) sensitivity analysis D) break-even analysis Answer: C Diff: 2 Page Ref: 12 Section Heading: Model Building: Break-Even Analysis Keywords: sensitivity analysis, modeling process AACSB: Analytical thinking 68) If fixed costs decrease, but variable cost and price remain the same, the break-even point: A) decreases. B) increases. C) remains the same. D) may increase or decrease depending on sales. Answer: A Diff: 2 Page Ref: 13 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 69) If fixed costs increase, but variable cost and price remain the same, the break-even point: A) decreases. B) increases. C) remains the same. D) may increase or decrease depending on sales. Answer: B Diff: 2 Page Ref: 13 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 70) Administrators at a university will charge students $175 to attend freshman orientation. It costs $10,000 to reserve a room, hire extra security, and bring in a moonwalk. Assume it costs $15 per student for the administrators to provide the course materials. How many students would have to register for orientation for the university to break even? A) 54.25 B) 58 C) 56 D) 62.5 Answer: D Diff: 2 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking

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    15 71) A university is planning a seminar. It costs $3000 to reserve a room, hire an instructor, and bring in the equipment. Assume it costs $25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even? A) $120 B) $150 C) $175 D) $200 Answer: C Diff: 2 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 72) A university is planning an online seminar. It costs $30 to live stream an instructor from Elbonia. Assume it costs $25 per student for the administrators to provide the course materials. If we know that 20 people will attend, what price should be charged per person to break even? A) $55 B) $15 C) $26.50 D) $75.75 Answer: C Diff: 2 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking 73) It costs $50,000 to start a production process. Variable cost is $25 per unit and revenue is $45 per unit. What is the break-even point? A) 1000 units B) 1111 units C) 2000 units D) 2500 units Answer: D Diff: 1 Page Ref: 10 Section Heading: Model Building: Break-Even Analysis Keywords: break-even analysis AACSB: Analytical thinking

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