EBTM 350 - CHAPTER 11 -TEST QUESTIONS WITH
VERIFIED ANSWERS
The accompanying spreadsheet shows the production model for the Blue Sunset Band
recording a new album. Which of the following formulas is used to calculate the total
studio recording cost?
A. =SUM(B6:B12) - B10
B. =B6 + B7*B12 - B16
C. =(B6 + B7 - B16)B12
D. =B6 + B7*B12 - Answers - D. =B6 + B7*B12
(Fixed + Unit*Volume)
The accompanying spreadsheet shows the production model for the Blue Sunset Band
recording a new album. Which of the following formulas is used to calculate the total in-
house recording cost?
A. =B6 +B10*B12
B. =B10*B12 - B17
C. =B10*B12
D. =SUM(B6:B12) - B7 - Answers - C. =B10*B12
(Unit Cost*Volume)
The total cost of reaching consumers (C) depends upon the number of consumers (N),
advertising costs (A), and transportation costs (T). The linear cost prediction model is
represented as
C = c - nN + aA + tT, where c, n, a, and t are constants and c estimates the total cost
when the remaining variables are zero. Which of the following interpretations is true
about this model?
A. Change in variables N, A, and T will not reflect any changes in c.
B. Change in variables N, A, and T will cause n, a, and t to change.
C. When variables N, A, and T are zero, C = c - n + a + t.
D. As n decreases, c will increase. - Answers - A. Change in variables N, A, and T will
not reflect any changes in c.
c is a constant and is unaffected by the variables
Let TC be the total cost of manufacturing, let V be the unit variable cost, let F be the
fixed cost, and let Q be the quantity produced. Which of the following is the
mathematical model for deriving the total cost of manufacturing?
, A. TC = V + Q
B. TC = F + (V * Q)
C. TC = F + C
D. TC = F + (C * Q) - Answers - B. TC = F + (V * Q)
Determine whether the following statement is true or false:
In predictive modeling, validity refers to how well a model represents reality. - Answers -
True
Determine whether the following statement is true or false:
Two-way data tables can evaluate only one output variable. - Answers - True
Which of the following is the root cause for the newsvendor problem?
A. High total production cost
B. Uncertainty in demand
C. Uncertainty in supply
D. High cost per unit sale - Answers - B. Uncertainty in demand
Which of the following conditions is the optimal solution to the newsvendor problem,
where Q is the quantity to be purchased, and D is demand?
A. Q < D
B. Q = D
C. Q/D = 0
D. Q > D - Answers - B. Q = D
Sujito Electronix makes headphones for $22 and sells them for $32. Sujito has sold at
least 50 headphones on average per week in the past, though the actual demand is
unknown. Sujito has also often run short of supply in the past. After three months of
release, the headphones are sold at 40 percent discount. The accompanying
spreadsheet shows Sujito's sales and demand for the headphones. We take demand at
51, and quantity produced at 55. Which of the following is the value for quantity sold?
A. 51
B. 55
C. 50
D. 4 - Answers - A. 51
Sold - anticipated demand
VERIFIED ANSWERS
The accompanying spreadsheet shows the production model for the Blue Sunset Band
recording a new album. Which of the following formulas is used to calculate the total
studio recording cost?
A. =SUM(B6:B12) - B10
B. =B6 + B7*B12 - B16
C. =(B6 + B7 - B16)B12
D. =B6 + B7*B12 - Answers - D. =B6 + B7*B12
(Fixed + Unit*Volume)
The accompanying spreadsheet shows the production model for the Blue Sunset Band
recording a new album. Which of the following formulas is used to calculate the total in-
house recording cost?
A. =B6 +B10*B12
B. =B10*B12 - B17
C. =B10*B12
D. =SUM(B6:B12) - B7 - Answers - C. =B10*B12
(Unit Cost*Volume)
The total cost of reaching consumers (C) depends upon the number of consumers (N),
advertising costs (A), and transportation costs (T). The linear cost prediction model is
represented as
C = c - nN + aA + tT, where c, n, a, and t are constants and c estimates the total cost
when the remaining variables are zero. Which of the following interpretations is true
about this model?
A. Change in variables N, A, and T will not reflect any changes in c.
B. Change in variables N, A, and T will cause n, a, and t to change.
C. When variables N, A, and T are zero, C = c - n + a + t.
D. As n decreases, c will increase. - Answers - A. Change in variables N, A, and T will
not reflect any changes in c.
c is a constant and is unaffected by the variables
Let TC be the total cost of manufacturing, let V be the unit variable cost, let F be the
fixed cost, and let Q be the quantity produced. Which of the following is the
mathematical model for deriving the total cost of manufacturing?
, A. TC = V + Q
B. TC = F + (V * Q)
C. TC = F + C
D. TC = F + (C * Q) - Answers - B. TC = F + (V * Q)
Determine whether the following statement is true or false:
In predictive modeling, validity refers to how well a model represents reality. - Answers -
True
Determine whether the following statement is true or false:
Two-way data tables can evaluate only one output variable. - Answers - True
Which of the following is the root cause for the newsvendor problem?
A. High total production cost
B. Uncertainty in demand
C. Uncertainty in supply
D. High cost per unit sale - Answers - B. Uncertainty in demand
Which of the following conditions is the optimal solution to the newsvendor problem,
where Q is the quantity to be purchased, and D is demand?
A. Q < D
B. Q = D
C. Q/D = 0
D. Q > D - Answers - B. Q = D
Sujito Electronix makes headphones for $22 and sells them for $32. Sujito has sold at
least 50 headphones on average per week in the past, though the actual demand is
unknown. Sujito has also often run short of supply in the past. After three months of
release, the headphones are sold at 40 percent discount. The accompanying
spreadsheet shows Sujito's sales and demand for the headphones. We take demand at
51, and quantity produced at 55. Which of the following is the value for quantity sold?
A. 51
B. 55
C. 50
D. 4 - Answers - A. 51
Sold - anticipated demand
