ITIS 1P97

Final Exam Review

FALL 2015
 Exam Place and Time
• EXAM IS ON TUESDAY, DECEMBER 22, 2015, FROM 12:00 TO
15:00 IN THE BOB DAVIS GYMNASIUM (WCDVIS)

 BRING YOUR STUDENT ID CARD

 BRING PENCILS, PENS, ERASURES
 BRING A CALCULATOR

X CELL PHONES
X DICTIONARIES (PAPER OR ELECTRONIC)
X BACKPACKS, BOOK BAGS, ETC.
 Exam Format
Exactly:
• 35 Multiple Choice questions
• 25 True False questions
• 4 Short Answer questions worth 40 marks

Some questions show Excel printouts to use to

answer the questions. Some questions may ask
about Excel functions
 Exam Coverage
• The exam is on the following topics:
– Linear Programming
– Simulation
– Database Management and Development
– Decision Analysis
Linear Programming

x2

Production of fabric chairs

z = 300x1 + 250x2 = 1,500
C
G

O E
Production of leather chairs x1
 Sample Q1
All of the following are characteristics of
allocation problems except:
a) The quantity of resources available for
allocation is limited
b) Resources are used in producing services or
goods
c) The resources can only be used in one way
d) Limitations on the allocation process are called
constraints
 Linear Programming
• Prescriptive models
– Optimization
– Determines the “best” solution

• Used for Allocation Problems

– Best use of scarce resources to produce products
or services
– Subject to constraints
 Linear Programming
• Common allocation situations
– Product mix problems
– Blending problems

• LP Components
– Decision Variables
– Objective Function
• Profit or Cost Coefficients
– Constraints
• Constraint Coefficients
• Right-Hand-Side Constants
 Sample Question 2
The operations manager for the Blue Moon Brewing Co. produces two
beers: Lite (L) and Dark (D). Two of his resources are constrained:
production time, which is limited to 8 hours (480 minutes) per day; and
malt extract (one of his ingredients), of which he can get only 675 gallons
each day. To produce a keg of Lite beer requires 2 minutes of time and 5
gallons of malt extract, while each keg of Dark beer needs 4 minutes of
time and 3 gallons of malt extract. Profits for Lite beer are $3.00 per keg,
and profits for Dark beer are $2.00 per keg.

What is the objective function?

a) Z = $2 L + $3 D
b) Z >= $3 L + $2 D
c) Z = $3 L + $2 D
d) Z <= $3 L + $2 D
 Linear Programming
• LP Assumptions
– Certainty
– Linear objective function
– Linear constraints
– Non negativity
– Divisibility (decision variables are continuous
variables)
 Sample Q3
In using Excel to solve a linear programming
problem, ____________ is placed into the target
cell
a) The values of the decision variables
b) The equation that defines the restraints
c) A formula representing the objective function
d) A mathematical expression of the parameters
 Sample Problems
• Formulate a linear programming model
– What are the decision variables?
– What is the objective function?
– What are the constraints?
• Interpret Solver output
• Interpret Sensitivity Analysis output
(Slack/Surplus, Shadow Prices, Reduced Costs)
Simulation
 Sample Q4
Simulation uses more simplifications of reality
than other models
T/F
 Simulation
• Simulation models
• Conduct a series of experiments over a simulated period
of time
• Try specific values of independent variables and test
their impact on the dependent variable
• A descriptive modeling technique
• Used when a problem
– Is complex
– Does not conform to assumptions required in other
modeling techniques
 Sample Q5
If a managerial problem does not involve a need
to know the precise time of arrival of a
customer, a ____________ simulation can be
conducted
a) Visual interactive
b) Time dependent
c) Deterministic
d) Time independent
 Simulation
• Can be time dependent (e.g. waiting lines) or
time independent (e.g. inventory)
 Advantages of simulation
• Theory is straightforward and easily
understood
• Handles wide variation of problem types
• Allow manager to experiment with different
alternatives
• Can include real life complexities
 Disadvantages of Simulation
• No optimal solution is guaranteed
• Can be a costly modeling process
• Solutions or inferences are not transferable to
other situations
• Validation can be difficult
 Sample problems
• Identify the columns and cell contents that
would be used in a simulation model
– i.e. what value should be in cell Z20?
– What function or formula should be in cell c7?
• Interpret the results of a simulation model
that was run in Excel
• Use of if functions {=if(logic test, true, false)}
 Sample problems
• rand() function, generating specific values of a
random variable using the cumulative
distribution
• Use of the random number generator in the
Analysis Toolpak
Database Management and
Development
 The Database Approach
Engineering
• All data is stored in a
common database Accounting Marketing
• Each department or
business unit has its
own programs for data
processing DBMS

• Programs and users

access the data through
the DBMS
Database
 The DBMS
• Data dictionary (metadata)
– Data types
– Descriptions
– Formats (validation rules, input masks, etc.)
• Controls access
• Ensures integrity
 Data relationships
• One-to-many relationships
– Example: A painter may paint many paintings, but
each painting is only painted by one painter
• Many-to-many relationships
– Example: A student may take many course and
each course can be taken by many students
• One-to-one relationships
– Example: A salesperson is assigned to a company
car
 Sample Q6
In a database, referential integrity requires that
a) All records must be uniquely identified
b) Tables can have different fields that have
different formats
c) Foreign key values must match values in the
reference table
d) Every database must have at least one table
 Relational Database Model
• The database is a collection of tables or
relations
– Each column in the table is a field or attribute
– Each row in the table is a record or entity
• Primary Keys
• Foreign Keys
• Entity integrity
• Referential integrity
 MS Access
• Basic components
– Tables
• The basic building block of the database
• Where all of the data is stored
– Forms
• Simplify data input and maintenance
– Queries
• How you retrieve information from the database
• Links tables through primary and foreign keys
– Reports
• Makes output from tables or queries “sharable”
 Sample Problems
• For a given set of business rules, what tables
would be required in a database? Remember
if you have a M:M relationship create a linking
table!
• Design a query in MS Access
• Normalization – 1NF & 2NF
 Example question
• Your friend Dr Doolittle, DMV asks you to create a
database to prepare his invoices. He needs information
about owners (name, address, phone). An owner may have
many pets, but each pet has just one owner. He want to
keep information about pets such as name, species, breed,
gender, and colour. Each invoice must include the date and
the diagnosis.

• What tables would you create?

• What attributes would go in each table?
• What are the relationships between the tables?
Decision Analysis
 Sample Q7
Decision analysis is a business modeling process
that may be described by which of the following
conditions
a) The decision maker must make a decision
among alternative courses of action
b) Future conditions that will affect the outcome
are uncertain
c) Both a and b
d) None of the above
 Decision Tables
• Elements of a decision table

States of States of Nature

nature
s1 s2 … sm
Probabilities
p1 p2 … pm
of the states
Alternative Courses of Action of nature
a1 o11 o12 … o1m
a2 o21 o22 … o2m
. . . … .
. . . … .
Alternative
courses of an on1 on2 … onm
action Outcomes
 Sample Q8
In a decision table, which of the following are
the independent decision variables
a) States of nature
b) Payoffs
c) Probabilities of the states of nature
d) Alternative courses of action
 Sample Q9
Which of the following is descriptive of a state of
nature
a) The decision maker cannot control them
b) They are usually the result of the action of
one person or organization
c) Scenario analyses are of little value in
analyzing states of nature
d) A synonym is “decision horizon”
 Zones of Decision Making

Ignorance Uncertainty Risk Certainty

Increasing knowledge
 Decisions under Uncertainty
• There are 5 possible ways of deciding:
– Equal probabilities (LaPlace) criterion
– Pessimism (Maximin or Minimax) Criterion
– Optimism (Maximax or Minimin) Criterion
– Coefficient of Optimism (Hurwicz) Criterion
– Regret (Savage) Criterion

– Which one? Depends on the decision maker!

 Sample Q10
A decision maker who disregards risk and only
looks at opportunities is using the __________
criterion
a) Equal probabilities
b) Regret
c) Optimism
d) Pessimism
 Decisions under Risk
• Expected Payoff
– Calculate the expected value of the outcomes for each alternative
action Σ[pj*oij]
– Choose the highest value to maximize the outcome or the lowest value
to minimize the outcome

• Expected Opportunity Loss (EOL) or regret

– Calculate the regret for each outcome
– Expected regret = Σ[pj*regretij]
– Choose the smallest expected regret

• NOTE: These two methods will always result in the same

choice
 Decision Trees
• Used for sequential or multi-period decisions
• Decision points (squares)
– Points where decision-maker must make a choice of
alternative actions
– Alternatives are shown as branches from these points
• Chance points (circles)
– A chance event occurs at this point – one of a number
of states of nature will occur
– States of nature are shown as branches from these
points
 Decision Trees
• Compute expected values (EV’s) at state of
nature
• At decision points, choose the best payoff and
eliminate other alternatives
 Value of perfect information
Perfect information changes the decision from
one of risk to one of certainty
1. Select the best alternative under each state
of nature
2. Calculate the sum of these payoffs and their
probabilities
3. Compare this to the expected value without
the information
 Sample problems
• Solve a decision table using different criteria
• Create and solve a decision tree
• Given a decision tree, calculate expected
values to determine the best decision.
• Calculate the value of perfect information-
remember formula is different for profits or
for costs as outcomes. EVPI=EOL right?
 Answers to Sample Qs
1. c) 6. c)
2. c) 7. c)
3. c) 8. d)
4. F 9. a)
5. d) 10. c)