Exam 1

MGMT 5315

The total available points are 100.

A. All session are remaining open for your reference.
B. You may discuss but DO NOT COPY each other.
C. I will answer general questions but will not give specifics.
D. The title Questions about exam is a discussion board and I will monitor that
board.
E. I hope everyone earns a 100! Good luck!

1. A decision-maker is using the maximax, maximin, and LaPlace criteria for the problem below.
Develop the information and identify the possible decisions for each method. (15 Points)

States of nature
1 2 3
Alternative A 50 55 60
Alternative B 30 50 80
Alternative C 70 80 70
Alternative D -100 -10 140

2. What is the EMV for Option 1 and 2 in the following decision table? Which one would you choose
and why? (10 Points)

States of nature
Alternatives S
1
S
2

p .3 .7
Option 1 15,000 20,000
Option 2 10,000 30,000

3. The construction manager for Acme Construction, Inc. must decide whether to build single family
homes, apartments, or condominiums. This is not a product-mix problem, but an all-or nothing
decision. He will hire workers and rent equipment appropriate for one action only. He estimates
annual profits (in thousands of dollars) will vary with population trends as follows: (15 Points)

Dwelling type Population steady Population grows slowly Population grows rapidly
Single family $100 $90 $70
Apartments 50 170 90
Condominiums -20 100 220

a. If he uses the maximin criterion, which type of dwellings will he choose to build? Show your
supporting calculations.
b. If he uses the equally likely criterion, which kind of dwellings will he choose to build? Show
your supporting calculations.
c. If the construction manager were an optimist, what criterion would he choose? What would be
the choice of dwelling for that criterion? Show your supporting calculations.


4. List the dimensions of product quality identified in class. Describe each of them in a sentence or
two. (15 Points)

5. A refrigeration and heating companyone that installs and repairs home central air and heating
systemshas asked your advice on how to analyze their service quality. They have logged
customer complaints. Here's a recent sampling. Construct a conventional cause-and-effect (aka:
fishbone and Ishakawa) diagram. Place each of the complaints onto a main cause; justify your
choice with a brief comment as necessary. (15 Points)

1. "I was overchargedyour labor rates are too high."
2. "The repairman left trash where he was working."
3. "You weren't here when you said you would be. You should call when you must be late."
4. "Your repairman smoked in my house."
5. "The part you installed is not as good as the factory original."
6. "Your repairman was here for over two hours, but he wasn't taking his work seriously."
7. "You didn't tighten some of the fittings properlythe system's leaking."
8. "Your estimate of repair costs was WAY off."
9. "I called you to do an annual inspection, but you've done morework that I didn't authorize."
10. "Your mechanic is just changing partshe doesn't have a clue what's really wrong."
11. "Your bill has only a totalI wanted to see detail billing."
12. "Your testing equipment isn't very neware you sure you've diagnosed the problem?"
13. "One of the workmen tracked mud into my living room."


6. Describe how a statistical process control method is selected. (10 Points)

7. Cartons of Plaster of Paris are supposed to weigh exactly 32 oz. Inspectors want to develop process
control charts. They take ten samples of six boxes each and weigh them. Based on the following
data, compute the lower and upper control limits and determine whether the process is in control.
= 1 (10 Points)

Sample Mean Range
1 33.8 1.1
2 34.6 0.3
3 34.7 0.4
4 34.1 0.7
5 34.2 0.3
6 34.3 0.4
7 33.9 0.5
8 34.1 0.8
9 34.2 0.4
10 34.4 0.3











8. McDaniel Shipyards wants to develop control charts to assess the quality of its steel plate. They
take ten sheets of 1" steel plate and compute the number of cosmetic flaws on each roll. Each sheet
is 20' by 100'. Based on the following data, develop limits for the control chart, plot the control
chart, and determine whether the process is in control. (10 Points)

Sheet
Number of
flaws
1 1
2 1
3 2
4 0
5 1
6 5
7 0
8 2
9 0
10 2