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MAS.2813 DIY - Quantitative Techniques in Management MAY 2020

1. The most likely outcome represents: Variable overhead per

a. the expected value. unit 0.40 0.20
b. the actual outcome. Production tooling* 48,000.00 25,000.00
c. the average outcome that is expected to occur. Advertising 30,000.00 20,000.00
d. the outcome with the highest probability.
*Trasco treats production tooling as a current
2. The expected value represents: operating expense rather than capitalizing it as a fixed
a. the weighted average of the possible asset.
b. the most likely outcome. 5. According to Trasco’s market study, the expected
c. the outcome with the highest probability. value of the sales volume of the breakfast rolls is
d. none of the above. a. 125,000 units c. 275,000 units
b. 260,000 units d. 250,000 units
3. A company is designing a new regional distribution
warehouse. To minimize delays in loading and 6. Applying a deterministic approach, Trasco’s
unloading trucks, an adequate number of loading revenue from sales of frozen desserts would be
docks must be built. The most relevant technique a. P549,000 c. P540,000
to assist in determining the proper number docks b. P195,000 d. P216,000
a. Cost-volume-profit analysis 7. The expected value of Trasco’s operating profit
b. PERT/CPM analysis directly traceable to the sale of frozen desserts is
c. Linear programming a. P198,250 c. P471,000
d. Queuing theory b. P150,250 d. P120,250

4. Tough Distributors has decided to increase its daily 8. In order to recover the costs of production tooling
muffin purchases by 100 boxes. A box of muffins and advertising for the breakfast rolls, Trasco’s
costs P2 and sells for P3 through regular stores. sales of the breakfast rolls would have to be
Any boxes not sold through regular stores are sold a. 37,500 units c. 60,000 units
through Tough’s thrift store for P1. TDough b. 100,000 units d. 54,000 units
assigns the following probabilities to selling
additional boxes: 9. The cost incurred by Trasco for the market study is
Additional sales Probability a. an incremental cost c. an opportunity cost
60 0.6 b. a prime cost d. a sunk cost
100 0.4
What is the expected value of Tough’s decision to 10. Hennepin Co. used 30 hours to produce the first
buy 100 additional boxes of muffins? batch of units. The second batch took an
a. P28 c. P52 additional 18 hours. How many total hours will the
b. P40 d. P68 first four batches require?
a. 76.8 hours. c. 120.0 hours.
Use the following information for the next five b. 96.2 hours. d. 61.44 hours.
Trasco, Inc. has two products, a frozen dessert and 11. Clerks A, B, and C process 50%, 20%, and 30% of
ready-to-bake breakfast rolls, ready for introduction. the sales orders, respectively. The percentage of
However, plant capacity is limited, and only one errors made in processing a sales order by Clerks
product can be introduced at present. Therefore, A, B, and C are 2%, 5%, and 10%, respectively.
Trasco has conducted a market study, at a cost of A sales order is audited and found to be in error.
P26,000, to determine which product will be more What is the probability that this invoice was
profitable. The results of the study show the following processed by Clerk C?
sales patterns. a. .30 c. .10
Sales of Desserts at Sales of Rolls at P1.20 per b. .60 d. .03
P1.80 per unit unit
Volume Probability Volume Probability 12. Tie Co. is considering the sale of banners at the
250,000 .30 200,000 .20 state university football championship game. Tie
300,000 .40 250,000 .50 Company could purchase these banners for P.60
350,000 .20 300,000 .20 each. Unsold banners would be unreturnable and
400,000 .10 350,000 .10 worthless after the game. Tie would have to rent
a booth at the stadium for P250. Tie estimates
The costs associated with the two products have been sales of 500 banners at P2.00 each. If Tie’s
estimated by Trasco’s cost accounting department and prediction proves to be incorrect and only 300
are shown below: banners were sold, the cost of this prediction error
Dessert Rolls would be
Ingredients per unit P 0.40 P 0.25 a. P120 c. P170
Direct labor per unit 0.35 0.30 b. P130 d. P280

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13. Given the following activity’s optimistic, most If the company desires an 85% service level in
likely, and pessimistic time estimates of 7, 9, and satisfying sales demand, what should the initial
12 days, respectively, compute the PERT time for balance be for each day?
this activity. a. 191 c. 225
a. 9.00 c. 9.33 b. 234 d. 250
b. 9.17 d. 5.00
20. Tonic Goods is a distributor of videotapes. Tape-
14. A quantitative method that deals with the problem Disk Mart is a local retail outlet which sells blank
of supplying sufficient facilities to meet the needs and recorded videos. Tape-Disk Mart purchases
of production lines or individuals that demand tapes from Tonic Goods at P3.00 per tape; tapes
service unevenly is are shipped in packages of 20. Tonic Goods pays
a. Regression analysis c. PERT all incoming freight, and Tape-Disk Mart does not
b. Queuing theory d. Nonlinear analysis inspect the tapes due to Tonic Goods' reputation
for high quality. Annual demand is 104,000 tapes
15. The critical path of a network is the at a rate of 4,000 tapes per week. Tape-Disk Mart
a. shortest time path through the network. earns 20% on its cash investments. The purchase-
b. path with the fewest activities. order lead time is two weeks. The following cost
c. path with the most activities. data are available:
d. longest time path through the network.
Relevant ordering costs per
16. Slack time in a network is the purchase order P90.50
a. time consuming job or task that is a key Carrying costs per package per year:
subpart of the total project. Relevant insurance, materials handling,
b. shortest amount of time that could be required breakage, etc., per year P 4.50
to complete the activity.
c. amount of time that you would expect it would What is the required annual return on investment
take to complete the activity. per package?
d. amount of time that an activity can be delayed a. P60.00 c. P12.00
without delaying the entire project. b. P 2.50 d. P 0.60

17. Tempe Company uses the EOQ model for inventory 21. The following represent the expected values and
control. The company has an annual demand of standard deviations for alternatives W-Z:
50,000 units for part number 6702 and has a. Alternative W has an expected profit of
computed an optimal lot size of 6,250 units. Per- P100,000 and a standard deviation of P18,000
unit carrying costs and stockout costs are P9 and b. Alternative X has an expected profit of
P4, respectively. The following data have been P300,000 and a standard deviation of P54,000
gathered in an attempt to determine an c. Alternative Y has an expected profit of
appropriate safety stock level: P500,000 and a standard deviation of P90,000
Units Short Because d. Alternative Z has an expected profit of
of Excess Number of Times Short P700,000 and a standard deviation of
Demand during the in the last 40 Reorder P126,000
Lead Time Period Cycles
100 8 Which of the following statements are true?
200 10 a. Alternative Z has the highest amount of
300 14 relative risk.
400 8 b. Alternative W has the lowest amount of
What is the optimal safety stock level? relative risk.
a. 100 units c. 300 units c. All of the alternatives have an equal amount of
b. 200 units d. 400 units relative risk.
d. None of the above statements are true.
18. In a Program Evaluation and Review Technique
(PERT) system, activities along the critical path: 22. The Toxic Company has decided to introduce a
a. intersect at a corner point described by the new product. The company estimates that there is
feasible area a 30 percent probability that the product will
b. may be delayed without affecting completion contribute P700,000 to profits, a 30 percent
time probability that it will contribute P200,000, and a
c. follow the line of best fit 40 percent probability that the contribution will be
d. have a slack of zero a negative P400,000. The expected contribution of
the new product is
19. The manager of Telo Company has developed the a. P500,000 c. P166,667
following probability distribution of dairy sales of a b. P110,000 d. P380,000
highly perishable product. The company restocks
the product each morning: Use the following information for the next two
X (Units Sold P (Sales =X) questions.
150 0.20 TruCraft is evaluating the launching of a new product.
175 0.40 If the product becomes successful, the present value
200 0.15 of future cash flows (excluding investment) is
225 0.10 estimated at P2,000,000. If the product is not
250 0.10 successful, the present value of this flow is estimated
275 0.05 at P400,000. The required investment is P1,000,000.

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23. What are the probabilities that would have to be each, and the cost per pretzel is P0.30. Any unsold
assigned to the events “success” and “not success” pretzels are discarded because they will be stale
to make TruCraft indifferent between the two before the next home game.
actions “invest” and “do not invest”? The frequency distribution of the demand for pretzels
a. b. c. d. per game is presented below.
Probability of Unit Sales Volume Probability
success 37.5% 40% 45.5% 50% 2,000 pretzels .10
Probability of 3,000 pretzels .15
not success 62.5% 60% 54.5% 50% 4,000 pretzels .20
5,000 pretzels .35
24. If TruCraft thinks the probability of “success” is 6,000 pretzels .20
60%, how much higher would be the expected
value of the act “invest” over the expected value 30. The estimated demand for pretzels at the next
of the act “do not invest”? home football game using an expected value
a. P360,000 c. P600,000 approach is
b. P400,000 d. P1,000,000 a. 4,000 c. 4,400
b. 5,000 d. 6,000
25. Torch Manufacturing uses an average of 150
components per day, although usage can run as 31. The estimated demand for pretzels at the next
high as 175 components per day. If lead time is home football game using a determinate approach
three days, how much safety stock should March based on the most likely outcome is
have on hand? a. 4,000 c. 5,000
a. 75 components c. 510 components b. 4,400 d. 6,000
b. 450 components d. 150 components
32. The conditional profit per game of having 4,000
26. Timer Manufacturing uses an average of 150 units pretzels available but only selling 3,000 pretzels is
per day, although usage can run as high as 175 a. P1,800 c. P2,800
units per day. If July maintains a recommended b. P2,100 d. P3,500
amount of safety stock and lead time is three
days, what is July's reorder point? 33. The conditional profit per game of having 4,000
a. 450 units c. 525 units pretzels available and selling all 4,000 pretzels is
b. 510 units d. 600 units a. P1,200 c. P2,800
b. P2,100 d P800
27. The following data refer to various annual costs
relating to the inventory of a single-product 34. The conditional profit (loss) per game of having
company: 4,000 pretzels available but being able to sell
Unit transportation-in on purchases P0.20 5,000 pretzels if they had been available is
Storage per unit 0.12 a. P2,800. c. P4,025.
Insurance per unit 0.10 b. P(1,225). d. P3,500.
Annual interest foregone from alternate
investment of funds P800 35. Tofte has a target total labor cost of P1,500 for the
Annual number of units required 10,000 first four batches of a product. Labor is paid P10
an hour. If Tofte expects an 80% learning rate,
What is the annual carrying cost per unit? how many hours should the first batch take?
a. P0.30 c. P0.50 a. 150 hours.
b. P0.42 d. P0.32 b. 58.6 hours.
c. 96.0 hours.
28. Consider the following linear programming d. 73.2 hours.
Maximize 12X + 10Y - end of MAS.2813 DIY –
Subject to: 4X + 3Y ≤ 480
2X + 3Y ≤ 360
all variables ≥ 0

The maximum possible value for the objective

function is
a. 360. c. 1520.
b. 480. d. 1560.

29. A plant has 6,000 male and 4,000 female

employees. Twenty percent of these employees
work overtime. A random sample of 100 plant
employees would be expected to contain about
a. 60 males who work overtime
b. 50 males
c. 8 females who work overtime
d. 20 females

Use the following information for the next five

The College Honor Society sells hot pretzels at the
home football games. The pretzels are sold for P1.00

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