Quantitative Analysis SCMA*2000

Assignment (II) S13

Due Tuesday, June 25, 2013 Dr. H. Brand

Chapter 2
Page 64 Questions: 2-47
x is normal with =40 and =5 find a such that P(x>a)=.05 Using z as standard normal variable. P((x-40)/5)>(a-40)/5)=P(z>(a-40)/5)=.05 using tables P(0<z<(a-40)/5)=.5-.05=.45 so (a-40)/5=1.645 or a=40+1.645*540+8.225=48.225 weeks

and 2-49

Chapter 3
Page 107 Questions: 3-39 and 3-40 3-40 0.533; 0.109

Chapter 7
Page 294 296 Questions: 7-23; 7-31; and 7-38

Chapter 2
Page 64 Questions: 2-47 and 2-49

2-47 Market Researchers, Inc., has been hired to perform a study to determine if the market for a new product will be good or poor. In similar studies performed in the past, whenever the market actually was good, the market research study indicated that it would be good 85% of the time. On the other hand, whenever the market actually was poor, the market study incorrectly predicted it would be good 20% of the time. Before the study is performed, it is believed there is a 70% chance the market will be good. When Market Researchers, Inc. performs the study for this product, the results predict the market will be good. Given the results of this study, what is the probability that the market actually will be good?

2-49 Burger City is a large chain of fast-food restaurants specializing in gourmet hamburgers. A mathematical model is now used to predict the success of new restaurants based on location and demographic information for that area. In the past, 70% of all restaurants that were opened were successful. The mathematical model has been tested in the existing restaurants to determine how effective it is. For the restaurants that were successful, 90% of the time the model predicted they would be, while 10% of the time the model predicted a failure. For the restaurants that were not successful, when the mathematical model was applied, 20% of the time it incorrectly predicted a successful restaurant while 80% of the time it was accurate and predicted an unsuccessful restaurant. If the model is used on a new location and predicts the restaurant will be successful, what is the probability that it actually is successful?

Chapter 3
Page 107 Questions: 3-39 and 3-40

3-39 Peter Martin is going to help his brother who wants to open a food store. Peter initially believes that there is a 5050 chance that his brothers food store would be a success. Peter is considering doing a market research study. Based on historical data, there is a 0.8 probability that the marketing research will be favorable given a successful food store. Moreover, there is a 0.7 probability that the marketing research will be unfavorable given an unsuccessful food store. (a) If the marketing research is favorable, what is Peters revised probability of a successful food store for his brother? (b) If the marketing research is unfavorable, what is Peters revised probability of a successful food store for his brother? (c) If the initial probability of a successful food store is 0.60 (instead of 0.50), find the probabilities in parts a and b. 3-40 Mark Martinko has been a class A racquetball player for the past five years, and one of his biggest goals is to own and operate a racquetball facility. Unfortunately, Marks thinks that the chance of a successful racquetball facility is only 30%. Marks lawyer has recommended that he employ one of the local marketing research groups to conduct a survey concerning the success or failure of a racquetball facility. There is a 0.8 probability that the research will be favorable given a successful racquetball facility. In addition, there is a 0.7 probability that the research will be unfavorable given an unsuccessful facility. Compute revised probabilities of a successful racquetball facility given a favorable and given an unfavorable survey

Chapter 7
Page 294 296 Questions: 7-23; 7-31; and 7-38 7-23 Consider this LP formation Minimize Cost Subject to

= $X+2Y X+3Y>_ 90 8X+2Y >_ 160 3X+2Y>_120 Y_< 70 X,Y >_0

Graphically Illustrate the feasible region and apple the isocost line procedure to indicate which corner point produces optimal solution. What is the cost of this solution?

7-31 Consider the following LP problem: Maximize profit = 5X+6Y Subject to 2X+Y_< 120 2X+3Y_<240 X,Y>_0 (a) What is the optimal solution to this problem? Solve it graphically. (b) If a technical breakthrough occurred that raised the profit per unit of X to $8, would this affect the optimal solution? (c) Instead of an increase in the profit coefficient X to $8, suppose that profit was overestimated and should only have be $3. Does this change the optimal solution? 7-38 Refer to the Bhavika Investments (Problem 7-37) situation once again. It has been decided that, rather than minimize risk, the objective should be to maximize return while placing restriction on the amount of risk. The average risk should be no more than 11 (with a total risk of 2,200,000 for the $200,000 invested). The linear program was reformulated, and the QM for Windows output is shown on the next page. (a) How much money should be invested in the money market fund and the stock fund? What is the total return? What rate of return is this? (b) What is the total risk? What is the average risk? (c) Would the solution change if return for each dollar in the stock fund were 0.09 instead of 0.10? (d) For each additional dollar that is available, what is the marginal rate of return? (e) How much would the total return change if the amount that must be invested in the money market fund were changed from $40,000 to $50,000?