Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 1 An airline, wishing to understand the marketing of childrens tickets, carried out a survey of the ages of adults who were accompanying children under 12 years old on recent flights. The table below gives the results of a sample of 250 such adults. Age of Adult (Years) 18 to under 28 28 to under 33 33 to under 38 38 to under 43 43 to under 53 53 to under 63 63 to under 73 Frequency 20 49 72 53 28 15 13

(a) Using your calculator estimate the mean and standard deviation of this data. (4 marks) (b) Give two reasons why your results in (a) are only estimates. (2 marks)

(c) Construct a cumulative frequency curve (ogive) of the data and use it to estimate: i) the median age of accompanying adults ii) the interquartile range of the ages iii) the percentage of accompanying adults with ages over 50 years (11 marks) (d) Construct a histogram of the data, (note the unequal class widths). Use the histogram to: i) estimate the mode (8 marks)

ii) comment on the skewness

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Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 2 The Backyard Bovver Squad (BBS) specialise in doing extreme TV make-overs on derelict gardens. The aim is that the entire process (from design to completion) should be done within the space of a single day. There are five full-time members of the squad (two specialist gardeners, two carpenters and a general labourer). For other manpower they rely on volunteer labour from neighbours, relatives and friends of the person who owns the garden. For one particular project, the necessary activities are given in the chart below: Activity A B C D E F G H I J Description Design garden Get wood for decking Clear area of rubbish Get plants and turf Mark out areas on ground Cut wood for the decking Lay the decking Dig new plant beds Turf new areas Put plants in beds Preceding activity A A A C B E&F E D&E G, H & I Duration (hours) 6 2 4 4 1 4 2 4 3 2 People needed 1 2 4 2 2 2 2 6 2 3

(a) Draw a network diagram of the gardening project, determining the earliest and latest start and finish times. (7 marks) (b) Find the critical path and state the earliest possible completion time of the project. (2 marks) (c) What are the values of the floats of each activity? (2 marks)

(d) If one of the carpenters injures himself at the end of activity B and is not available for activity F, then activity F will take twice as long to complete. How does this affect the overall time to complete the project? (3 marks) (e) Draw a Gantt chart for the project in (a), (i.e. ignore (d)). (4 marks)

(f) Use the Gantt chart to construct a table of the hourly number of people needed, with the following headings, (the first row entry has been done for you): Hour(s) 0-6 Activities running A People needed 1 (3 marks) (g) Use the table in (f) to work out the maximum number of volunteers that will be required and at what stage in the project they will be needed. Is it possible to reduce the maximum number of volunteers without extending the duration of the project? Explain your answer carefully. (4 marks)

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Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 3 A book company has produced six comparable books. For each book the number of copies produced (in thousands) and the associated manufacturing costs (in thousands of pounds) are as follows: Number of copies produced Manufacturing costs (000s) ( 000s) 1 5.0 3 6.2 4 6.5 5 7.8 7 8.0 13 10.8 (a) Plot the data for the two variables on a scatter graph and comment briefly on the relationship between the two variables. (5 marks) (b) Use your calculator to find Pearsons correlation coefficient for these data. (3 marks) (c) Test at a 5% significance level whether the correlation coefficient may be regarded as being statistically significantly different from zero, i.e. whether there is correlation between the two variables. (4 marks) (d) i) Use your calculator to obtain the regression equation of the manufacturing costs on size of print run. State it in terms of the variables Manufacturing costs and Number of copies produced. (3 marks)

ii) Draw the regression line on your scatter plot, clearly showing the coordinates of the points you used to draw the line. (3 marks) iii) Explain carefully the practical interpretation of the two constants, (i.e. the regression coefficients), in the equation. (4 marks) (e) Calculate a statistic that measures the fit of the data, i.e. a measure of the reliability in using the regression line to make predictions. Interpret the statistic calculated. (3 marks)

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Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 4 An ice cream van seller wishes to forecast its sales figures for the year 2011. Its sales for the last four years and the relevant time series calculations are set out in the table below: Year 2007 Quarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Sales (000s) 15 30 40 18 16 36 44 14 16 38 52 18 15 41 53 18 4-pt. Moving Average Trend Seasonal Difference Residual

2008

2009

2010

25.75 26.0 27.5 28.5 27.5 27.5 28.0 30.0 A 30.75 31.5 31.75 31.75

25.875 26.75 28.0 28.0 27.5 27.75 29.0 30.5 30.875 31.125 31.625 31.75

14.125 -8.75 -12.0 8.0 16.5 -13.75 -13.0 7.5 21.125 -13.125 B 9.25

-3.125 3.125 1.875 -0.25 -0.75 -1.875 0.875 -0.75 3.875 -1.25 -2.75 D

Average seasonal differences 2007 Qtr 1 Qtr 2 Qtr 3 Qtr 4 (a) 2008 -12.0 8.0 16.5 -13.75 2009 -13.0 7.5 21.125 -13.125 2010 -16.625 9.25 Average Difference -13.875 8.25 C -11.875

14.125 -8.75

Plot the above sales data on a graph, leaving room on the x-axis for the first two quarters of 2011. Describe the main features exhibited by the time series data. (7 marks) On the same graph, plot the trend figures and use your judgment to plot a line of best fit through them. (3 marks) Calculate the values of A, B, C, and D (in this order) shown in the table. (8 marks)

(b)

(c) (d)

What type of time series model is being used here? Explain whether you think that this model was the appropriate model to use for this data? (3 marks) Forecast sales for the first two quarters of 2011.
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(e)

(4 marks)

Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 5 Exmoor Shoes plc make two types of walking boot: the Light (L) and the Sturdy (S). Every week, the company has the following production times available: i) 1800 hours in its Cutting & Stitching department, ii) 600 hours in its Finishing department, iii) 200 hours in its Packaging department. The production time requirements and profit per boot are given in the following table: Cutting & Stitching 2 hours 3 hours Finishing 1.2 hours 0.6 hours Packaging 0.25 hours 0.5 hours Profit per boot 10 16

Light (L) Sturdy (S)

The company wishes to identify a production schedule that will maximise its total profit. It is able to sell all the boots that it produces. (a) Formulate the company's problem as a linear programming model. (8 marks) (b) Solve the problem formulated in (a) by a graphical method. Identify the optimal production schedule and the resulting total profit. (12 marks) (c) For the optimal production schedule, how many hours of production time will be scheduled in each department? Identify the constraints that are tight (binding) and those that are slack (non-binding). (5 marks)

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Module Code: UFQEEQ-20-1 Year 2010/11 Module Title: Business Statistics and Decision Making Summer Examination __________________________________________________________________________________

Question 6 An electronics manufacturer is considering the launch of a state of the art 3D Blu-Ray Disc player. The company has three choices in its sales strategy: to sell the 3D Blu-Ray Disc players through electrical retailers, to sell the 3D Blu-Ray Disc players via the internet, to sell the patent of the 3D Blu-Ray Disc player to a rival manufacturer. An estimate is made of the likely profits in the event of High, Medium and Low sales, these figures are given in the table below (profit figures are in m): State of the market High Retailers Internet Sell patent 10.0 3.2 2.3 Medium 4.3 2.7 2.3 Low -2.5 1.7 2.3

(a) Based on each of the following decision making criteria, which sales strategy should the company adopt? (State the associated profit) i) Maximax (2 marks) (2 marks) (4 marks) ii) Maximin rule iii) Minimax regret rule

(b) The probabilities associated with the profit figures for High, Medium and Low sales levels are estimated to be 0.2, 0.5 and 0.3 respectively. What would be the best investment decision using the EMV (expected monetary value) criterion? (4 marks) (c) Using the information given above, calculate the expected value of perfect information and explain its significance from the companys point of view. (4 marks) (d) In the context of the companys problem, briefly discuss the possible limitations of using the EMV decision-making criterion. (4 marks) (e) A financial analyst believes that the probabilities associated with the profit figures quoted in (b) are too optimistic. Though she agrees that there is a probability of 0.5 of Medium sales, for High sales her figure is 0.1. Which, if any, of the decisions made in (a) and (b) above could be affected by this analysts estimates? Explain your answer and, if necessary, determine the revised decision(s). (5 marks)

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