Final Study Guide

MGMT 3100 – SEC 05 – Fall 2013 - Homework 2 – Due December 9th by the Start of Class through Blackboard 100 Points Total
1. Using Sheet “Population of Arizona” in HW 2 perform the following functions in Excel and answer the following questions.
a. Use a 2 period moving average to forecast the Population of Arizona for the year 2010 – do the calculations from 1929-2010. (5 Points)
b. Calculate the Mean Absolute Deviation for this Data Set (5 Points)
c. Use a 3 period weighted moving average (previous Year 60%, 2 years Previous 30% and 3 years previous 10%) to forecast the Population of Arizona for the year 2010 – do the calculations from 1929-2010 (5 Points)
d. Calculate the Mean Absolute Deviation for this Data Set (5 Points)

2.
a. Using Sheet “Population of Arizona” using the Exponential Smoothing Model to build a Matrix of Values with the Smoothing Constant from 0.1 to 0.9 in 0.1 increments (10 Points)
b. Calculate the Mean Absolute Deviation for Each Increment (5 Points)
c. Explain which Smoothing Constant gives the greatest accuracy in forecasting and why. (5 Points)

3. Worley Fluid Supplies produces three types of fluid handling equipment: control valves, metering pumps, and hydraulic cylinders. All three products require assembly and testing before they can be shipped to customers (30 Points)

Control valve Metering pump Hydraulic cylinder
Assembly time (min) 45 20 30
Testing time (min) 20 15 25
Profit/unit $372.00 $174.00 $288.00
Maximum sales 20 50 45
Minimum sales 5 12 22

A total of 3,150 minutes of assembly time and 2,100 minutes of testing time are available next week.
a. Develop a linear optimization model to determine how many pieces of equipment the company should make next week to maximize profit contribution.
b. Implement your model on a spreadsheet and find an optimal solution.
c. Due to scheduled maintenance, the assembly time is expected to be only 3,000 minutes. How will this affect the solution?
d. A worker in the testing department has to take a personal leave because of a death in the family and will miss three days (24 hours). How will this affect the optimal solution?
e. Comment on the optimal solution and its feasibility

4. Slaggert Systems is considering becoming certified to the ISO 9000 series of quality standards. Becoming certified is expensive, but the company could lose a substantial amount of business if its major customers suddenly demand ISO certification and the company does not have it. At a management retreat, the senior executives of the firm developed the following payoff table, indicating the NPV of profits over the next five years. What decision should they make under the average payoff, aggressive, conservative, and opportunity loss decision strategies? Think about the decision – what decision would you take and why – use evidence where necessary. (30 Points)

Customer Response Standards Required Standards Not Required
Become certified $600,000 $475,000
Stay uncertified $325,000 $525,000