Activity – Module 1 Problems
Complete the following problems and submit the results in either a Microsoft Word document or a Microsoft Excel spreadsheet. If you choose to use an Excel spreadsheet, place each problem on a separate sheet and label the tab with problem number. Save your document with a descriptive file name, including the assignment and your name.
These problems are similar to problems in the text, but have been altered by the course monitor.
1-1 Jay White sells handmade decorations. He had to purchase specialized equipment for $4000 and buy a retail license for $1000. It cost Jay $125 in time and materials to make each item. He expects to sell each decoration for $150.
a. How many units will he need to sell to breakeven?
b. Jay has been told that the market for his products may not be as large as he originally anticipated. What price would he have to charge to make the Breakeven Point 100 units?
c. This new price represents what percentage change in the price?
1-2. Farris Billiard Supply sells all types of billiard equipment and is considering manufacturing their own brand of pool cues. Mysti Farris, the production manager, is currently investigating the production of a specialize pool cue that should be very popular. Upon analyzing the costs, Mysti determines that the materials and labor cost for each cue is $50 and the fixed cost that must be covered is $2400 per week.
a. With an expected selling price of $80 each, how many pool cues must be sold to breakeven?
b. What is the total revenue at that point?
c. What would the profit (or loss) be if they sold 100 per week?
d. What would the selling price have to be to make the BEP 60?
1-3 Holdtight a leading manufacturer of quality nails, produces 1-, 2-, 3-, 4-, and 5-inch nails for all kinds of applications. In the production process, if there is an overrun or the nails are slightly defective, they are placed in a common bin. Yesterday, 736 of the 1-inch nails, 223 of the 2-inch nails, 89 of the 3-inch nails, 455 of the 4-inch nails, and 377 of the 5-inch nails were placed in the bin.
a. What is the probability of reaching into the bin and getting a 5-inch nail?
b. What is the probability of getting a 3-inch nail?
c. If a particular application requires a nail that is 3 inches or longer, what is the probability of getting a nail that will satisfy the requirements of the application?
1-4 The oasis outpost of Abu Ilan, in the heart of the Neveg dessert, has population of 24 Bedouin tribesmen and 16 Farima tribesman. El Kamin, a nearby oasis, has a population of 8 Bedouin s and 36 Farima. A lost Israeli soldier, accidently separated from his Army unit, is wandering through the desert and arrives at the edge of one of the oases. The soldier has no idea which oasis he has found, but the first person he spots at distance is a Bedouin.
a. What is the probability that he wandered into Abu Ilan?
b. What is the probability he is in El Kamin?
1-5 In a sample of 1,000 representing a survey from the entire population, 600 people were from Laketown and the rest were from River City. Of the sample, 19 had some form of cancer. Twelve of those were from Laketown.
a. Are the events of living in Laketown and having cancer of some sort of cancer independent?
b. Which city would you prefer to live in, assuming that your main objective was to avoid having cancer?
1-6 Gary Schwartz is the top salesman for his company. Records indicate that he makes a sale on 70% of his sales calls.
a. If he calls on 6 potential clients, what is the probability he makes exactly 4 sales?
b. What is the probability he make fewer than 3 sales?
1-7 Susan Williams has been the production manager of Medical Supplies, Inc. for the past 17 years. Medical Supplies Inc. is a producer of bandages and arm slings. During the past 5 y ears, the demand for No-Stick bandages has been fairly constant. On the average, sales have been about 87,000 packages of No-Stick. Susan has reason to believe that the distribution of No-Stick follows a normal curve, with a standard deviation of 4,500 packages.
What is the probability that sales will be less than 80,000 packages?
1-8 The time to complete a construction project is normally distributed with a mean of 45 weeks and standard deviation of 4.5 weeks.
a. What is probability the project will be finished in 53 weeks or less?
b. What is the probability the project will be finished in 40 weeks or less?
c. What is probability the project will take more than 57 weeks?
You may submit just the answers or you may submit the answers and the QM worksheets you used to arrive at the answer. Choosing the latter will afford instructors the opportunity to review your work and determine if you understand the concept but have made some minor computational error, therefore allowing them to assign some credit based on your understanding. Submitting just the answers does not provide for any partial credit.
(2) Discuss the differences between decision making under certainty, decision making under risk, and decision making under uncertainty. Give an example of each.