Business Analytics, 2nd Edition Test Bank

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Business Analytics, 2e 365
Business Analytics (Evans)
Supplementary Chapter A Nonlinear and Non-Smooth Optimization
Use the table below to answer the following question(s).
Bolton Computer's
Laptop
Pricing Decision
Inputs
Price
Model
Sales -3.85 × price + 1150.9
Outputs
Total revenue sales × price
1) Bolton Computers are planning to release a new line of low-end laptops. Using Excel's Solver,
develop a nonlinear model to calculate the optimal price for the laptops, given that sales = -3.85
× price + 1150.9.
A) 342.40
B) 380.90
C) 719.70
D) 149.47
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

366 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
2) According to the nonlinear model, which of the following is the expected sales figure based
on the computed price?
A) 149.47
B) 719.7
C) 575.45
D) 500
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
3) According to the nonlinear model, which of the following is the total revenue expected from
the sales?
A) 22,340.91
B) 86,011.09
C) 107,571.78
D) 74,733.77
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Business Analytics, 2e 367
Use the table below to create a nonlinear model based on the table to answer the following
question(s).
The Atlas Movies Theater is planning to reprice their ticket rates to maximize revenues. They
have three classes of tickets: Classic, Silver, and Gold. The table below provides information on
the average ticket sales, revenue and price elasticity on demand. They have a total seating
capacity of 300. The table also provides the price range within which they plan to reduce their
ticket rates.
Atlas Movie
Theater
Ticketing
Data
Ticket Class Current
Rate
Average
Daily
Sold
Elasticity Total
Seating
Capacity
Price Range
Classic $8.45 150 -1.5 300 $6.50 $7.50
Silver $13.25 80 -2 $11.50 $12.50
Gold $17.50 30 -1 $15.50 $16.50
4) According to the nonlinear model, what is the new price for Classic tickets?
A) $7.50
B) $12.45
C) $6.50
D) $8.20
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
5) According to the nonlinear model, what is the new price for Silver tickets?
A) $7.40
B) $12.17
C) $11.50
D) $12.50
Answer: B
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.

368 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
LO2: Use a modern software tool to perform statistical calculations.
6) According to the nonlinear model, what is the new price for Gold tickets?
A) $16.50
B) $15.50
C) $16
D) $16.11
Answer: A
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
7) According to the nonlinear model, which of the following is the projected sales figure for
Classic tickets at the new price?
A) 32
B) 90
C) 175
D) 202
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
8) According to the nonlinear model, which of the following is the projected sales figure for
Silver tickets at the new price?
A) 93
B) 178
C) 202
D) 101
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
9) According to the nonlinear model, which of the following is the projected sales figure for
Gold tickets at the new price?
A) 32
B) 90
C) 33

Business Analytics, 2e 369
D) 178
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
10) According to the nonlinear model, which of the following is the projected revenue figure for
Classic tickets based on its new price?
A) $1,314.72
B) $1,116.03
C) $521.68
D) $1,312.52
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
11) According to the nonlinear model, which of the following is the projected revenue figure for
Silver tickets based on its new price?
A) $1,163.02
B) $1,132.08
C) $1,224.63
D) $1,316.92
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 6...

370 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
12) According to the nonlinear model, which of the following is the projected revenue figure for
Gold tickets based on its new price?
A) $432.93
B) $1,316.92
C) $1,116.03
D) $523.29
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
13) According to the nonlinear model, which of the following is the total projected revenue for
the new sales figures?
A) $1,637.72
B) $2,970.09
C) $1,316.92
D) $2,865.89
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
14) Which of the following is true of the nonlinear model created for the Atlas movie ticket
repricing scenario?
A) The projected revenue for the Gold class is infeasible within the price range provided.
B) The projected value for most tickets sold is for the Silver class.
C) The total projected tickets sold exceed the total seating capacity.
D) The projected revenue is lowest for the Gold tickets.
Answer: D
Diff: 3
Blooms: Understand
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 7...

Business Analytics, 2e 371
15) Which of the following is the rectilinear distance between the points A(13,15) and B(10,12)?
A) 4
B) 25
C) 6
D) 10
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
Use the table below to answer the following question(s).
Shirley Templeton is a real estate agent for Paralol Realty. Shirley is given the responsibility to
manage potential customers for 5 of the Realty's bungalows. These 5 bungalows are situated in
close proximity. In order to make traveling easier, Shirley decides to move to a location closer to
the 5 bungalows. The table below gives the location (X and Y coordinates) of the 5 bungalows
along with the number of trips she would have to make to each bungalow. Create a nonlinear
model based on the data given in the table below noting that the objective is to reduce the
weighted distance between Shirley's accommodation and the 5 bungalows.
Bungalow Location
Data
Location X-coordinate Y-coordinate Trips/Month
Bungalow 1 0 0 6
Bungalow 2 25 100 30
Bungalow 3 20 75 15
Bungalow 4 90 80 28
Bungalow 5 60 100 10
16) According to the model, what is the X-coordinate for the location of Shirley's new
accommodation?
A) 54.62
B) 36.53
C) 25
D) 23.12
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

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372 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
17) According to the model, what is the Y-coordinate for the location of Shirley's new
accommodation?
A) 91.16
B) 25.08
C) 98.21
D) 54.62
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
18) According to the model, what is the distance between Shirley's new accommodation and
Bungalow 1?
A) 36.53
B) 14.53
C) 98.21
D) 23.12
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
19) According to the model, what is the distance between Shirley's new accommodation and
Bungalow 2?
A) 91.16
B) 23.12
C) 98.21
D) 14.53
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 9...

Business Analytics, 2e 373
20) According to the model, what is the distance between Shirley's new accommodation and
Bungalow 3?
A) 54.62
B) 25.08
C) 36.53
D) 23.12
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
21) According to the model, what is the distance between Shirley's new accommodation and
Bungalow 4?
A) 14.53
B) 250.78
C) 54.62
D) 98.21
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
22) According to the model, what is the distance between Shirley's new accommodation and
Bungalow 5?
A) 54.62
B) 25.08
C) 14.53
D) 91.16
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 10...

374 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
23) According to the model, what is the weighted distance between Shirley's new
accommodation and Bungalow 1?
A) 589.25
B) 435.89
C) 346.77
D) 3152.08
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
24) According to the model, what is the weighted distance between Shirley's new
accommodation and Bungalow 2?
A) 435.89
B) 250.78
C) 1529.39
D) 589.25
Answer: A
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
25) According to the model, what is the weighted distance between Shirley's new
accommodation and Bungalow 3?
A) 3152.08
B) 1529.39
C) 346.77
D) 250.78
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 11...

Business Analytics, 2e 375
26) According to the model, what is the weighted distance between Shirley's new
accommodation and Bungalow 4?
A) 589.25
B) 346.77
C) 1529.39
D) 3152.08
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
27) According to the model, what is the weighted distance between Shirley's new
accommodation and Bungalow 5?
A) 435.89
B) 1529.39
C) 589.25
D) 250.78
Answer: D
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
28) According to the model, what is the total weighted distance that Shirley would travel
between the bungalows?
A) 4151.29
B) 1529.39
C) 3152.08
D) 4305.30
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 12...

376 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
29) According to the model, which of the following bungalows is Shirley's new accommodation
closest to?
A) Bungalow 1
B) Bungalow 5
C) Bungalow 2
D) Bungalow 4
Answer: C
Diff: 2
Blooms: Understand
AACSB: Analytic Skills
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
30) Given that Q = order quantity, D = annual demand, C = unit cost of the item, C0 = cost per
order placed, i = inventory carrying charge per unit, which of the following represents the
holding cost per unit?
A) D/Q
B) iC
C) (D/Q)C0
D) iCQ/2
Answer: B
Diff: 2
Blooms: Remember
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
31) In an Economic Order-Quantity (EOQ) model, ________ is the estimate on how long it takes
an order to be received after it is placed.
A) lead time
B) safety stock
C) time limit
D) cycle time
Answer: A
Diff: 2
Blooms: Remember
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.

Loading page 13...

Business Analytics, 2e 377
32) Which of the following is the ideal next step if you get the message "Solver has converged to
the current solution./All constraints are satisfied," when using Solver for nonlinear optimization
models?
A) Accept the values, but run Solver again from the current solution.
B) Do not accept the Solver values and re-run Solver with the starting values.
C) Accept the values and run simulations with different values.
D) Accept the values, and then tweak the values, and re-run Solver on tweaked values.
Answer: A
Diff: 2
Blooms: Understand
Topic: Modeling and Solving Nonlinear Optimization Problems
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 14...

378 Supplementary Chapter A: Nonlinear and Non-Smooth Optimization
Use the table below to answer the following question(s).
Jonathan Reese is considering three stocks in which to invest with a fixed budget. The table
below provides information on Jonathan's expected returns for each stock. The table also
provides information, collected from market researchers, on the variance-covariance matrix of
the individual stocks. He expects a total return of at least 10%.
Reese's Stock
Investment
Plan
Data
Expected Variance-Covariance Matrix
Return Stock 1 Stock 2 Stock 3
Stock 1 10% Stock 1 0.021 0.018 -0.003
Stock 2 11% Stock 2 0.018 0.070 0.006
Stock 3 9% Stock 3 -0.003 0.006 0.003
Target
Return 10%
Develop a quadratic optimization model to find the optimal allocation of the budget to each
stock, and variance calculations for squared terms and cross-products based on the variance-
covariance matrix.
33) According to the model, what percentage of the budget should be allocated to Stock 1?
A) 10%
B) 25%
C) 50%
D) 40%
Answer: C
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Quadratic Optimization
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

Loading page 15...

Business Analytics, 2e 379
34) According to the model, what percentage of the budget should be allocated to Stock 2?
A) 90%
B) 25%
C) 50%
D) 75%
Answer: B
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: Quadratic Optimization
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
35) According to the model, what percentage of the budget should be allocated to Stock 3?
A) 40%
B) 20%
C) 25%
D) 75%
Answer: C
Diff: 1
Blooms: Apply
AACSB: Analytic Skills
Topic: Quadratic Optimization
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.
36) According to the model, what is the squared term value for Stock 1 variance?
A) 0.00065
B) 0.00535
C) 0.01132
D) 0.00283
Answer: B
Diff: 2
Blooms: Apply
AACSB: Analytic Skills
Topic: Quadratic Optimization
LO1: Develop and solve nonlinear optimization models for different applications.
LO2: Use a modern software tool to perform statistical calculations.

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