Grading Summary

Question 1. Which equation best describes the loss corridor? (> means greater than, < meansless than, ≥ means greater than or equal to, and ≤ means less than or equal to.)

• Total cost (TC) > total revenue (TR)
• TC < TR
• TC ≤ TR
• TC ≥ TR

Question 2. Question : The formula for efficiency is

• actual output ÷ effective capacity.
• actual output ÷ design capacity.
• effective capacity × utilization.
• None of the above

Question 3. The receipts for ZXY are estimated to be $5,000 in the first year, $4,000 in the second, and $2,000 in the third. Using an interest rate of 6%, what is the present value of these expected receipts? The second option is to invest and receive $3,500 a year. Which choice is more profitable?

Question 4. Bob’s Automated Carwash can service 14 cars per hour. On the average, 16 cars show up every hour. Determine the waiting model to be used, average cars in the system, and average time in the system each hour.

Question 5. List three of the uses for linear programming, and briefly explain how the use solves an operations management issue.