Question 1

A key trade-off in most portfolio optimization models must be made between risk and return.

Accepted Answer

A) True 
 B)False  True

Question 2

The Eastern Washington County School Corporation is interested in comparing educational performance at four elementary schools and has hired you to prepare a DEA model to do so.After detailed conversations with the corporation administrative staff and the building principals,you have isolated the following input and output $$\begin{array} { l l } 
\text { Input Measures } & \text { Output Measures } \
\hline \text { Average classroom size } & \text { Percent of children in remedial classes } \
\text { Percent of students on reduced price lunch } & \text { Average first grade score on standard test } \
\text { Average number of parent volunteer hours per week } & \text { Average fifth grade score on standard test }
\end{array}$$ Data is collected for each school on each measure $$\begin{array} { l | c c c c } 
& { \quad\quad\quad\quad\text { School } } \
& \text { Archer } & \text { Hayes } & \text { Ralston } & \text { Creekside } \
\hline \text { Inputs } & & & & \
\text { Classroom size } & 21 & 28 & 32 & 20 \
\text { \% reduced lunch } & 10 & 8 & 25 & 2 \
\text { Avg. vol. hours } & 30 & 46 & 15 & 64 \
\text { Outputs } & & & & \
\hline \text { \% remediation } & 15 & 12 & 19 & 3 \
\text { 1st grade score } & 83 & 84 & 62 & 85 \
\text { 5th grade score } & 76 & 72 & 53 & 79
\end{array}$$ Develop the DEA model that would evaluate the efficiency of Ralston Elementary School.

Accepted Answer

Let $A =$ the weight applied to inputs and outputs for Archer Elementary
$H =$ the weight applied to inputs and outputs for Hayes Elementary
$R =$ the weight applied to inputs and outputs for Ralston Elementary
$C =$ the weight applied to inputs and outputs for Creekside Elementary
$$\begin{array} { l l } 
\text { Min } & E \
\text { s.t. } & A + H + R + C = 1 \
& .15 A + .12 H + .19 R + .03 C \geq .19 \
& 83 A + 84 H + 62 R + 85 C \geq 62 \
& 76 A + 72 H + 53 R + 79 C \geq 53 \
& 21 A + 28 H + 32 R + 20 C \leq 32 E \
& 10 A + .08 H + .25 R + .02 C \leq .25 E \
& 30 A + 46 H + 15 R + 64 C \leq 15
\end{array}$$

Question 3

Explain the logic of a DEA model.On what basis can the facility being evaluated be judged as relatively inefficient?

Accepted Answer

The logic of a DEA (Data Envelopment Analysis) model is to evaluate the relative efficiency of decision-making units (DMUs) by comparing their input and output levels. The DEA model uses linear programming to determine the efficiency of each DMU by comparing their input-output ratios to those of other DMUs.

The basis for judging a facility as relatively inefficient in a DEA model is when it is unable to achieve the same level of outputs as other facilities while using the same or fewer inputs. In other words, if a facility is using more resources (inputs) to produce the same level of outputs as another facility, it would be considered relatively inefficient.

The DEA model allows for the identification of inefficient facilities and provides insights into how they can improve their performance by either reducing their inputs or increasing their outputs. This can help organizations make informed decisions about resource allocation and process improvement to enhance their overall efficiency.

Question 4

Nonlinear programming algorithms are more complex than linear programming algorithms.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not true regarding a concave function?

Accepted Answer

A) It is bowl-shaped down. 
B) It is relatively easy to maximize. 
C) It has multiple local maxima. 
D) It has a single global maximum. 
A) It is bowl-shaped down. 
B) It is relatively easy to maximize. 
C) It has multiple local maxima. 
D) It has a single global maximum.

Question 6

For a minimization problem,a point is a global minimum if there are no other feasible points with a smaller objective function value.

Accepted Answer

A) True 
 B)False

Question 7

A convex function is

Accepted Answer

A) bowl-shaped up. 
B) bowl-shaped down. 
C) elliptical in shape. 
D) sinusoidal in shape. 
A) bowl-shaped up. 
B) bowl-shaped down. 
C) elliptical in shape. 
D) sinusoidal in shape.

Question 8

List several types of organizations with multiple operating units where data envelopment analysis might be applied and give examples of possible inputs and outputs for each organization.

Accepted Answer

Data envelopment analysis (DEA) can be a

Question 9

Functions that are convex have a single local maximum that is also the global maximum.

Accepted Answer

A) True 
 B)False

Question 10

The Markowitz mean-variance portfolio model is a classic application of non-linear programming.

Accepted Answer

A) True 
 B)False

Question 11

The overall goal of portfolio models is to create a portfolio that provides the best balance between

Accepted Answer

A) short-term and long-term investments. 
B) gains and losses. 
C) risk and return. 
D) liquidity and stability. 
A) short-term and long-term investments. 
B) gains and losses. 
C) risk and return. 
D) liquidity and stability.

Question 12

Many linear programming algorithms such as the simplex method optimize by examining only the extreme points of the feasible region.

Accepted Answer

A) True 
 B)False

Question 13

Portfolio manager Max Gaines needs to develop an investment portfolio for his clients who are willing to accept a moderate amount of risk.His task is to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the portfolio provides an annual return of no less than 3%.Formulate the appropriate linear program. $$\begin{array} { c | r r r r } 
& { \text { Annual Returns (Planning Scenarios) } } \
\text { Mutual Fund } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \
\hline \text { International Stock } & 22.37 & 26.73 & 6.46 & - 3.19 \
\text { Large-Cap Blend } & 14.88 & 18.61 & 10.52 & 5.25 \
\text { Mid-Cap Blend } & 19.45 & 18.04 & 5.91 & - 1.94 \
\text { Small-Cap Blend } & 13.79 & 11.33 & - 2.07 & 6.85 \
\text { Intermediate Bond } & 7.29 & 8.05 & 9.18 & 3.92
\end{array}$$

Accepted Answer

The answer of Portfolio manager Max Gaines needs to develop...

Question 14

The function f (x,y)= x 2 + y 2 has a single global minimum and is relatively easy to minimize.

Accepted Answer

A) True 
 B)False

Question 15

Revenue management methodology can be applied in the case of nonperishable assets.

Accepted Answer

A) True 
 B)False

Question 16

Each point on the efficient frontier graph associated with the Markowitz portfolio model is the

Accepted Answer

A) maximum possible risk for the given return. 
B) minimum possible risk for the given return. 
C) maximum return for the least risk. 
D) minimum diversification for the least risk. 
A) maximum possible risk for the given return. 
B) minimum possible risk for the given return. 
C) maximum return for the least risk. 
D) minimum diversification for the least risk.

Question 17

A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives is

Accepted Answer

A) game theory. 
B) asset allocation. 
C) revenue management. 
D) data envelopment analysis. 
A) game theory. 
B) asset allocation. 
C) revenue management. 
D) data envelopment analysis.

Question 18

Write a summary of the DEA approach and explain how you would interpret the solution.

Accepted Answer

The DEA (Data Envelopment Analysis) appr

Question 19

Revenue management methodology was originally developed for the banking industry.

Accepted Answer

A) True 
 B)False

Question 20

Portfolio manager Max Gaines needs to develop an investment portfolio for his conservative clients.His task is to determine the proportion of the portfolio to invest in each of the five mutual funds listed below so that the portfolio provides the best return possible with a minimum risk.Formulate the maximin linear program. $$\begin{array} { c | r r r r } 
& { \text { Annual Returns (Planning Scenarios) } } \
\text { Mutual Fund } & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Year 4 } \
\hline \text { International Stock } & 22.37 & 26.73 & 6.46 & - 3.19 \
\text { Large-Cap Blend } & 14.88 & 18.61 & 10.52 & 5.25 \
\text { Mid-Cap Blend } & 19.45 & 18.04 & 5.91 & - 1.94 \
\text { Small-Cap Blend } & 13.79 & 11.33 & - 2.07 & 6.85 \
\text { Intermediate Bond } & 7.29 & 8.05 & 9.18 & 3.92
\end{array}$$

Accepted Answer

The answer of Portfolio manager Max Gaines needs to develop...

A key trade-off in most portfolio optimization models must be made between risk and return.

Explain the logic of a DEA model.On what basis can the facility being evaluated be judged as relatively inefficient?

Nonlinear programming algorithms are more complex than linear programming algorithms.

Which of the following is not true regarding a concave function?

For a minimization problem,a point is a global minimum if there are no other feasible points with a smaller objective function value.

A convex function is

List several types of organizations with multiple operating units where data envelopment analysis might be applied and give examples of possible inputs and outputs for each organization.

Functions that are convex have a single local maximum that is also the global maximum.

The Markowitz mean-variance portfolio model is a classic application of non-linear programming.

The overall goal of portfolio models is to create a portfolio that provides the best balance between

Many linear programming algorithms such as the simplex method optimize by examining only the extreme points of the feasible region.

The function f (x,y)= x ² + y ² has a single global minimum and is relatively easy to minimize.

Revenue management methodology can be applied in the case of nonperishable assets.

Each point on the efficient frontier graph associated with the Markowitz portfolio model is the

A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives is

Write a summary of the DEA approach and explain how you would interpret the solution.

Revenue management methodology was originally developed for the banking industry.

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Project Scheduling: Pertcpm

Inventory Models

Waiting Line Models

Simulation

Markov Processes

Filters

Exam 12: Advanced Optimization Applications

A key trade-off in most portfolio optimization models must be made between risk and return.

Explain the logic of a DEA model.On what basis can the facility being evaluated be judged as relatively inefficient?

Nonlinear programming algorithms are more complex than linear programming algorithms.

Which of the following is not true regarding a concave function?

For a minimization problem,a point is a global minimum if there are no other feasible points with a smaller objective function value.

A convex function is

List several types of organizations with multiple operating units where data envelopment analysis might be applied and give examples of possible inputs and outputs for each organization.

Functions that are convex have a single local maximum that is also the global maximum.

The Markowitz mean-variance portfolio model is a classic application of non-linear programming.

The overall goal of portfolio models is to create a portfolio that provides the best balance between

Many linear programming algorithms such as the simplex method optimize by examining only the extreme points of the feasible region.

The function f (x,y)= x 2 + y 2 has a single global minimum and is relatively easy to minimize.

Revenue management methodology can be applied in the case of nonperishable assets.

Each point on the efficient frontier graph associated with the Markowitz portfolio model is the

A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives is

Write a summary of the DEA approach and explain how you would interpret the solution.

Revenue management methodology was originally developed for the banking industry.

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Project Scheduling: Pertcpm

Inventory Models

Waiting Line Models

Simulation

Markov Processes

Filters

The function f (x,y)= x ² + y ² has a single global minimum and is relatively easy to minimize.