OUR LADY OF FATIMA UNIVERSITY - VALENZUELA

1|Page MSCI111 – MANAGEMENT SCIENCE

SHADE A IF THE STATEMENT IS TRUE, AND D IF THE Where A is the number of units of the first product;
STATEMENT IS FALSE B is the number of units of the second product. What is
1. At break-even, profit equal zero. the maximum possible profit?
2. At break-even, gross profit equal zero. a. P48 c. P160
3. At break-even, sales equals total costs. b. P80. d. P128
4. At break-even, fixed costs equals contribution
margin. ITEMS 25-30
5. Every real-life decision situation may be modeled Chooch Company produces two types of its product,
mathematically under certain assumptions and a Regular and Special. Pertinent data about the two
deterministic solution may be achieved. products are as follows:
6. Quantitative or mathematical models are usually over Mixing Packing Contribution Margin
simplifications of the real world; to perform the Regular (R) 4 hours 2 hours P20
calculations, assumptions must be made. Special (S) 8 hours 6 hours 28
7. In applying quantitative methods, behavioral issues Total available time per period: 200 hours for Mixing;
should never be taken into account. 180 hours for Packing
8. In applying quantitative methods, some relevant
variables may not be quantified and are therefore not (25-27) How should the objective function
included, and the quantitative techniques can be very (maximization of contribution margin) be expressed?
complex and costly. a. 20M + 28P c. 20R + 28S
9. The first step of decision making is to identify and b. 46 (R + S) d. 20R + 28S < 380
define the problem.
10. Decision –making process includes identifying (28-30) How should the restrictions (constraints) for the
alternatives, determining criteria, and evaluating two processes (mixing and packaging) be expressed?
alternatives. Mixing Packaging
11. To successfully apply quantitative analysis to a. 4R + 2R < 20 8S + 6S < 28
decision making, the management scientist b. 4M + 8M < 200 2P + 6P < 180
must work closely with the manager or user of the c. 4R + 8S < 200 2R + 6S < 180
results. d. 6R + 14S < 200 6R + 14S < 180
12. Sensitivity analysis is the study of how the changes
in the coefficients of an optimization model affect the (31-35) A toothbrush manufacturer asks your advice on
optimal solution. how to maximize his profit by achieving the best
13. In a linear programming model, the measure of product mix given certain scarce resources. You decide
effectiveness that is to be maximized or minimized is that a linear programming technique should be of help.
the constraints function. The following information has been gathered:
14. In linear programming, sensitivity analysis is used to HOURS PER BATCH Cont. Margin
develop coefficients for the objective function. Molding Finishing Per Batch
15. The graph does not depict the optimal corner point. Small toothbrush 2.5 4.0 P30
Big toothbrush 2.0 1.0 15
MULTIPLE CHOICE Hours available 1,500 1,400
(16-18) It is the level of output or sales at which total
revenue equal total costs, that is the point at which Which of the following correctly formulates this linear
operating income is zero. programming problem?
a. Indifference point c. Sangley point a. Maximize 30x + 15y c. Maximize 1,500x + 1,400y
b. Break-ever point d. Order point Subject to: Subject to:
e. Answer not given 2.5x + 4y < 1,500 2.5x + 4y > 30
2x + y < 1,400 2x + y > 15
(19-21) It is the excess of sales price over the related x, y > 0 x, y > 0
variable cost, contributing to the recovery of fixed b. Maximize 30x + 15y d. Maximize 30x + 15y
expenses. Subject to: Subject to:
a. Gross margin c. Contributor margin 2.5x + 2y < 1,500 2.5 + 2y > 1,500
b. Margin of safety d. Gross profit 4x + y < 1,400 4x + y > 1,400
e. Answer not given x, y > 0 x, y > 0

(22-24) Cheen Corporation makes two products that are (36-40) Linear programming is used most commonly to
processed in two machines. The objective function and determine the
the constraints are as follows: a. Fastest timing.
Max P = 16A + 8B b. Best use of scarce resources.
8A + 12B ≤ 72 c. Most advantageous prices.
8A + 4B ≤ 40 d. Mix of variables that will result in the largest
A ≥ 0; B ≥ 0 quantity.
OUR LADY OF FATIMA UNIVERSITY - VALENZUELA
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ITEMS 41-50 (60-62) These mathematical functions are an example

The following information were taken from the solution of a(n)
to a linear programming problem involving a. Parametric model. c. EOQ model.
maximization of contribution margin: B. Present value model. d. Linear programming model.

Objective function: CM = 15x + 25y (63-65) The two inequality functions are
Subject to: a. Constraints. c. Conditions.
Material A constraint: 3x + 6y < 600 b. Objectives. d. Shadow prices.
Material B constraint: 6x + 4y < 880
Non-negativity constraints: x > 0; y > 0 (66-68) The point where N = 2 and S = 3 would
Optimal solution: 120 units of X and 40 units of Y a. Be the optimal solution point c. Lie in a corner
CM at optimal mix: CM = 120(15) + 40(25) = P2,800 b. Be a feasible point d. Minimize cost

(41-45) What is the shadow price if one unit is added to (69-71) A transportation model is a special case of
the Material B constraint? a. Dynamic programming c. Linear programming
a. P6.75 c. P62.50 b. PERT/CPM d. Economic order quantity model
b. P0.625 d. P40
(72-76) Phil-Fuji Co. manufactures two types of
(46-50) Should the company acquire additional unit of electronic components, both of which must pass
Material B if the cost per unit is P0.20? through the Assembly and Finishing Departments. The
a. Yes, because the acquisition cost is less than the following constraints apply:
shadow price of Material B. Product Selling Price CM
b. Yes, because the acquisition cost is greater than the 818 P120 P30
shadow price of Material B. 810 P180 P45
c. Yes, because the contribution margin will increase by For Assembly, hours required to complete 818 and 810
P0.20 per unit. are 3 and 4, respectively; for Finishing, hours required
d. No, because the company's capacity is limited to 880 to complete 818 and 810 are 4 and 6, respectively.
units of Material B. Demand for Component 818 far exceeds the company’s
capacity, but the company can only sell 60 units of
(51-53) AB Woods Co. is planning to expand its component 810 each week. Workers in the Assembly
production facilities, which is at present, a constraint. department work a total of 200 hours per week, and
You are asked to review the linear programming model. workers in the Finishing department work a total of 250
Among the items in the model, which will not be found? hours per week. The company wants to know how
a. Constraints. c. Decision variables. many units of each component to produce to maximize
b. Slack variables. d. Networks. profit. If X represents the number of units of
Component 818 and Y represents the number of units
(54-56) In a linear programming maximization problem of Component 810, the objective function would be
for business problem solving, the coefficient of the a. Maximize 120X + 180Y c. Minimize 90X + 135Y
objective function usually is b. Maximize 30X + 45Y d. Minimize 30X + 45Y
a. Usage rates for scarce resources.
b. Profit based on allocations of overhead and all (77-81) A mathematical technique that can be used to
indirect costs. find the best possible combination of the company’s
c. Variable costs. limited resources is called linear programming. Star
d. Marginal contributions per unit. Electronics manufactures two types of calculators, Star
1 and Star 2. Each calculator is processed in two
(57-59) Linear programming models are mathematical departments, departments 1 and 2. Daily labor
techniques in which an objective function is maximized requirements are as follows:
or minimized subject to constraints. These constraints Hours per Calculator
must be fully specified before a linear programming Department Star 1 Star 2 Hours Available
problem can be solved, and generally described: 1 15 5 450
a. Costs. c. Inefficiencies. 2 18 9 720
b. Resources. d. Dependent variables. The marginal contributions are P15 on Star 1 and P0.10
on Star 2. From the items listed below what are the
ITEMS 60-68 labor constraints? (Assume X represents the number of
ReMetal, Inc. uses the following model to determine units of Star 1, Y represents the number of units of Star
blends of new (n) metal and scrap (s) metal. 2, P represents profit).
Max Z = $30N + $70S a. X > 0 ; Y > 0
Subject to: b. P = 15X + 10Y; P = 15X + 5Y
3N + 2S < 15 c. 15X + 5Y < 450; 18X + 9Y < 720
2N + 4S < 18 d. combination of (b) and (c)
OUR LADY OF FATIMA UNIVERSITY - VALENZUELA
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(82-86) Consider the following linear programming

problem and assume that non-negativity constraints (107-111) What is the feasible range for the production
apply to the independent variables: of Y?
Max CM = $14X + $23Y a. 840 to 1,500 units c. 0 to 631 units
Subject to b. 0 to 840 units d. 0 to 1500 units
Constraint 1: 4X + 5Y < 3,200
Constraint 2: 2X + 6Y < 2,400 (112-116) A solution of X = 500 and Y = 600 would
Which of the following are feasible solutions to the violate
linear programming problem? a. Constraint 1. c. both constraints.
a. X = 600, Y = 240 c. X = 0, Y = 400 b. Constraint 2. d. neither constraint.
b. X = 800, Y = 640 d. X = 1,200, Y = 0
(117-120) If plant capacity for cutting time and shaping
(87-91) The Katangalan Company makes toys Y and Z time is 80 hours and 100 hours, respectively, and it
each of which needs two processes, cutting and takes four hours to cut and two hours to shape a
sanding. The contribution margin is P3.00 for product Y standard model and two hours to cut and five hours to
and P4.00 for product Z. The table below shows the shape a deluxe model, the maximum number of
maximum number of units (constraints) of each product standard and deluxe models that can be produced are:
that may be processed in the two departments. a. 50 standard and 40 deluxe
Maximum Capacities (in Product Units) b. 20 standard and 40 deluxe
Product Cutting Sanding c. 40 standard and 20 deluxe
Y 30 40 d. 20 standard and 20 deluxe
Z 30 20 e. 20 standard and 50 deluxe
Considering the constraint on processing, which
combination of product Y and Z maximizes the total
contribution margin?
A. B. C. D.
Product Y 20 30 40 0 Prepared by:
Product Z 10 0 0 20

ITEMS 92-101 Jeffrey Tillo

D Company has available production capacity of Faculty, College of Business and Accountancy
180,000 hours. This can be used to produce 3 products
in any combination. Total fixed cost is P180,000, other
facts are: Checked by:
X Y Z
Selling price P8 P23 P5
Variable cost 7 12 2 Julieta Dillena
No. of hours per unit 1 hr. 10 hrs. 2hrs. Program Head, College of Accountancy
Market limits 5,000 50,000

(92-96) The best possible combination of product is: Noted by:

a. b. c. d.
Product X 30,000 4,000 30,000 80,000
Product Y 5,000 4,000 3,000 0 Dr. Ignacio Cordova Jr.
Product Z 50,000 50,000 50,000 50,000 Dean, College of Business and Accountancy

(97-101) The net profit associated with the best

combination of products is:
a. P55,000 c. P50,000
b. P54,000 d. P33,000

ITEMS 102-116
In the two following constraint equations, X and Y
represent two products (in units) produced by the
Generic Co.
Constraint 1: 3X + 5Y < 4,200
Constraint 2: 5X + 2Y > 3,000

(102-106) What is the maximum number of units of

Product X that can be produced?
a. 4,200 b. 3,000 c. 600 d. 1,400