MGT 2070 Sample Midterm

This examination will give you some additional practice and experience with the type of
problems to be expected on the midterm examination.
Information on the Actual Midterm Examination
Time: Three hours
Questions: 40% multiple choice, 60% problem / calculation
Materials: Closed-book and closed-notes. The formulae shown will be provided in the
midterm examination.
Calculators: Any calculator may be used, but programmable calculators containing notes or
additional formulae will be considered cheating.
Chapters Covered: 1 through 9 inclusive

Formulae
1. Moving Average Forecast =

demand in previous n periods

n

2. Weighted Moving Average Forecast =

(weight for period n ) (demand in period n )

weights

3. Exponential Smoothing Forecast Ft = Ft-1 + (At-1 Ft-1)

4. Mean Absolute Deviation =

5. Mean Squared Error =

forecast errors
n

forecast errors

6. Exponential Smoothing with Trend Adjustment Forecast F t = (At-1) + (1 - )(Ft-1 + Tt-1)

7. Exponential Smoothing with Trend Adjustment Trend T t = (Ft Ft-1) + (1 - )T t-1
8. Least Squares Trend Projection

xy - nxy
x nx

a bx , b
y

9. Seasonal Forecast Average Monthly Demand =

, a y - bx

Average Annual Demand

12 months

Average Annual Demand

10. Seasonal Forecast Seasonal Index = Average Monthly Demand

11. Regression Analysis

a bx , b
y

14. Statistical Process Control

n x

12. Standard Error of Estimate S y,x

13. Correlation Coefficient r

xy - nxy
x nx
2

, a y - bx

a y - b xy
n2

n xy x y
2

x n y 2 y
2

UCL X X A2 R
LCL X X A2 R

UCLR D4 R
LCLR D3 R

Multiple Choice
1. Which of the following is not a typical service attribute?

a) intangible product
c) customer interaction is high

b) often easy to automate

d) simultaneous production and consumption

2. Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves
each 8-hour shift. If the production is increased to 2400 valves each 8-hour shift, the productivity will
increase by
a) 50%
c) 25%

b) 40%
d) 20%

3. Which of the following statements about organizational missions is false?

a) They reflect a companys purpose.
c) They provide guidance for functional
area missions.

b) They define a companys reason for existence.

d) They are formulated after strategies are known.

4. Which of the following is not an operations strategy?

a) response
c) differentiation

b) low cost
d) technology

5. Firms are dispersing production processes to take advantage of national differences in

a) labour cost
c) capital

b) facilities
d) all of the above

6. Which of the international operations strategies involves high cost reductions and high local
responsiveness?
a) international strategy
c) transnational strategy

b) global strategy
d) multidomestic strategy

7. A forecast with a time horizon of about 3 months to 3 years is typically called a

a) long-range forecast
c) short-range forecast

b) medium-range forecast
d) strategic forecast

8. What is the approximate forecast for May using a four-month moving average?
Nov
39

Dec
36

Jan
40

Feb
38

Mar
48

Apr
46

a) 38
c) 42

b) 41
d) 43

9. In which stage of the product life cycle should product strategy focus on process modifications?
a) introduction
c) maturity

b) growth
d) decline

10. The dimensions, tolerances, materials, and finishes if a component are typically shown on
a) an engineering drawing
c) an assembly drawing

b) a bill of materials
d) a route sheet

11. ISO 9000 seeks standardization in terms of

a) products
c) procedures to manage quality

b) production procedures
d) suppliers specification

12. The process improvement technique that sorts the vital few from the trivial many is
a) Pareto analysis
c) brainstorming

b) benchmarking
d) Yamaguchi analysis

__
13. The purpose of an X chart is to determine whether there has been a
a) gain or loss in uniformity
c) change in the number of defects in a sample

b) change in the percent defective

d) change in the central tendency of the process
output

14. The mean and the standard deviation for a process for which we have a substantial history are 160
and 2, respectively. What is the mean of the sampling distribution?
a) 0.125
c) 40

b) 2
d) none of the above

15. A job shop is an example of a(n)

a) repetitive process
c) continuous process

b) intermittent process
d) line process

16. A drawing of the movement of material, product, or people is a(n)

a) process chart
c) process map

b) service blueprinting
d) flow diagram

17. Automatic placement and withdrawal of parts and products into and from designated places in a
warehouse describes
a) ASRS
c) CAD/CAM

b) AGV
d) CIM

18. A location decision for a traditional department store (The Bay) would tend to have a(n)
a) cost focus
c) labour focus

b) revenue focus
d) environmental focus

19. The main issue in designing process layouts concerns the relative positioning of
a) work stations
c) departments

b) raw materials
d) entrances, loading docks, etc.

20. In a product layout, the process of deciding how to assign tasks to work stations is referred to as
a) process balancing
c) line balancing

b) task allocation
d) work allocation

Problem / Calculation
1. Weekly sales of copy paper at Cubicle Suppliers are in the table below. Forecast week 8 with a
three-period moving average and with a four-period moving average. Compute MAD for each forecast.
Which model is more accurate?
Week Sales (cases)
1
17
2
22
3
27
4
32
5
19
6
18
7
22
2. The following trend projection is used to predict quarterly demand: Y = 350 2.5t, where t = 1 in
the first quarter of 1998. Seasonal (quarterly) relatives are Quarter 1 = 1.5, Quarter 2 = 0.8, Quarter 3 =
1.1, and Quarter 4 = 0.6. What is the seasonally adjusted forecast for the four quarters of 2000?
3. Favors Distribution Company purchases small imported trinkets in bulk, packages them, and sells
them to retail stores. They are conducting an inventory control study of all their items. The following
data are for one such item, which is not seasonal.
a) Use trend projection to estimate the relationship between time and sales (state the equation).
b) Calculate forecasts for the first four months of the next year.
Month Jan
Sales 51

Feb
55

Mar
54

Apr
57

May
50

Jun
68

Jul
66

Aug
59

Sep
67

Oct
69

Nov
75

Dec
73

4. Marie Bain is the product manager at a company that manufactures hot water heaters. Marie needs a
demand forecast for the next few years to help decide whether to add new production capacity. The
companys sales history (in thousands of units) is shown in the table below. Use exponential smoothing
with trend adjustment, to forecast demand for period 6. The initial forecast for period 1 was 10 units;
the initial estimate of trend was 0. The smoothing constants are = 0.4 and = 0.3.
Period
Actual

1
12

2
15

3
16

4
16

5
18

6
20

5. Arnold Tofu owns and operates a chain of 12 vegetable protein hamburger restaurants in northern
Louisiana. Sales figures and profits for the stores are in the table below. Sales are given in millions of
dollars; profits are in hundreds of thousands of dollars. Calculate a regression line for the data. What is
your forecast of profit for a store with sales of a) $24 million, and b) $30 million?
Store
1
2
3
4
5

Sales
7
2
6
4
14

Profits
15
10
13
15
25

Store
7
8
9
10
11

Sales
16
12
14
20
15

Profits
24
20
27
44
34

15

27

12

17

6. A contractor for the military is looking for a new location for a supply depot. The depot will supply
four bases whose tonnage (demand) and map coordinates are shown below. If management wants the
depot to have a central location, what should its map coordinates be?
Base
Fort Able
Base Baker
Camp Charlie
Camp Delta

(X,Y) Coordinates
(35,120)
(70,45)
(100,15)
(60,90)

Tonnage
40,000
50,000
25,000
80,000

7. An assembly line has been designed to make battery-powered beverage mixers. Task details are
shown in the table below:
Station
1
2
3
4
5
6

Task Assigned
1
3; 4
2; 5; 6
7
8
9; 10; 11

a) What is the assigned cycle time (in minutes).

b) What is the maximum output rate of this line in mixers per hour?
c) What is the total idle time per cycle?
d) What is the assembly lines efficiency?

Task Time (minutes)

3.0
1.5; 2.0
0.5; 1.5; 1.0
3.0
2.5
2.0; 1.0; 0.5

Answers Multiple Choice

1. b

2. a

3. b

4. d

5. d

6. c

7. b

8. d

9. a

10. a

11. c

12. a

13. d

14. d

15. b

16. d

17. a

18. b

19. c

20. c

Answers Problem / Calculation

1. The forecast with 3ma is 19.7; with 4ma the forecast is 22.8. The four-week moving average is more
accurate.
2.

Period
9
10
11
12

Projection
327.5
325
322.5
320

Adjusted
491.25
260
354.75
192

3. The trend equation is Y = 48.32 + 2.105 T. The next four months are forecast to be 75.68, 77.79,
79.89, and 82.00.
4. FIT = 19.24
5. The regression equation is Y = 5.0601 + 1.593X where Y = profit, X = sales.
a) $43.3
b) $52.85
6. The depot should be located near X=63, Y=75
7. a) 3.5 minutes (governed by stations 2 and 6)
b) 60 / 35 = 17.14 units per hour
c) 0.5 + 0 + 0.5 + 0.5 + 1.0 + 0 = 2.5 minutes
d) 18.5 / 21 = 88.1%