School of Petroleum Management, PDPU

MBA (GM) Re-Test Assignment

Quantitative Methods-1
(To be submitted before 5th May, 2018)

(1) Albert Abbasi, VP of Operations at Ingleside International Bank (IIB), is

evaluating the service level provided to walk-in customers. Accordingly, his staff
prepared the following distribution of waiting time for walk-in customers.

Waiting Time Number of Customers

(in minutes)
0-under 2 120
2-under 4 40
4-under 6 25
6-under 8 10
8-under 10 5
In a recent survey, 70% of the walk-in customers indicated that waiting four minutes (or
more) was unacceptable. Presently, IIB has no direct competitors, but a competing bank
is under construction across the street.

Discuss the managerial and business implications of this situation. What alternatives
should Albert consider? What graphic depiction should he choose for his presentation to
the bank’s board of directors?

(2) Angelina Arnott, Director of National Industrial Sales, is concerned by a deteriorating

sales trend. Specifically, the number of customers is stable at 1,500, but they are
purchasing less each year. She orders her staff to search for causes of the downward
trend by surveying all 1,500 industrial customers. One question on the survey asked the
customers to rate “Merchandise is delivered on time” on a scale of 1 to 5, with 1 meaning
“never” and 5 meaning “always”.

Merchandise Delivered On Time Number of Customers

1 100
2 200
3 300
4 700
5 100
No Response 100

Discuss the managerial and business implications of Angelina’s situation. Identify some
possible causes of the trend. What corrective actions are available for each cause? What
graphic depiction(s) should she choose for her report to the VP of Marketing?

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(3) Annualized rates of return were calculated from closing prices of Caterpillar (CAT) and
General Mills (GIS) common stock. Descriptive statistics of these rates of return
presented in the following table.

CAT GIS

Mean 0.233621705 0.139744793

Standard Error 0.162775427 0.097267227

Median 0.194367839 0.122108626

Mode #N/A 0

Standard Deviation 1.091930758 0.652488394

Sample Variance 1.19231278 0.425741105

Kurtosis 6.478114897 -0.59713571

Skewness 1.647492156 0.058132445

Range 6.669350226 2.710777183

Minimum -1.770866463 -1.256246317

Maximum 4.898483762 1.454530866

Sum 10.51297674 6.288515695

Count 45 45

Describe what these descriptive statistics reveal about the market performance of these
two stocks.

(4) An Employee Involvement Team is studying a problem of quality with an aluminum

casting. Team members gather data on 400 castings and compiled the following table.

Castings Production Shift

Status Day Evening Night
No Defects 195 75 50
Reworked 5 15 30
Scrapped 0 10 20

Discuss the team's findings. What can the team conclude from these data? What
employment practices or other factors may explain the 'night shift problem?' What
graphic depiction should the team choose for the presentation to their supervisors?

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(5) Crosstabulation of responses from readers of newspaper comic strips produced the
following frequency distirbution of age categories and favorite comic.

Favorite Comic by Age

Comic

Age Tiger Sherman Dilbert Pickles Grand Total

Under 12 28 22 16 14 80

12 Under 18 14 11 8 7 40

18 Under 25 56 44 32 28 160

25 Under 50 28 22 16 14 80

50+ 14 11 8 7 40

Grand Total 140 110 80 70 400

Discuss what the frequency distribution reveals about the relation between age and
favorite comic.

(6) Alissa Roots has inherited $50,000 from her grandmother, and is evaluating investment
alternatives. One alternative, insured 12-month certificates of deposit, offers 3% interest
with no risk . Her other alternatives, a growth stock and a mutual fund, are risky. Their
rates of return fluctuate from year to year; there are no guarantees. Historical
performances of these alternatives are presented in the following probability
distributions of annual rates of return.
Growth Stock Mutual Fund
Return P(Return) Return P(Return)
-10% 0.1 -5% 0.1
0% 0.4 0% 0.3
40% 0.5 15% 0.6
Alissa has no immediate need for cash, but will need $10,000 in one year for a down
payment on a house. The remainder is available for long-term investments.

Evaluate Alissa's investment alternatives. Explain the relevance of the mean and the
variance of these distributions to Alissa. What advice would you give her? How (in
what amounts or proportions) should she allocate her inheritance among the
alternatives?

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(7) Duane Morgan, a market researcher at Kitchen Ease, Inc., is assessing alternative
promotional strategies for a new kitchen wrap product. He is concentrating on two
attributes of the product: (1) its low cost, and (2) its superior biodegradable
characteristics. In test market X, his promotional materials emphasized low cost, and he
emphasized the biodegradable properties in test market Y. During the test, Duane
carefully monitored repeat purchases by households in each test market. His findings
are summarized in the following probability distributions, where x is the percent of
households in the 'low cost' test market making repeat purchases, and y is the percent of
households in the 'biodegradable' test market making repeat purchases.

x P(x) y P(y)
0 .55 0 .05
5 .25 5 .10
10 .10 10 .35
15 .05 15 .35
20 .03 20 .10
25 .02 25 .05

Discuss the managerial and ethical considerations of this situation. What can Duane
conclude from these data? What other factors may help explain the differences between
the two distributions? What graphic depiction should he choose for his presentation to
the product managers?

(8) Richard Bowman, Purchasing Manager at Mid-West Medical Center, is reviewing the annual
vendor performance report. Richard is searching for opportunities to reduce Mid-West's
inventory costs, and pauses to study a table summarizing the delivery times (elapsed time from
placing an order until the material is received) for two suppliers of surgical dressings and related
materials.

Medco Supplies Gauze-R-US

(days) 17 9
(days) 5 2

Discuss the relevance of this information to Richard's objective of reducing inventory

costs. Which vendor should Mid-West favor? Why? What other factors should
Richard consider?

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 (9) Candace Maldonado, VP of Customer Services at Alamo Auto Insurance, Inc., is
reviewing the performance of the claims processing division of her company. Her staff
reports that the time required to process claims is normally distributed with = 14 days
and = 3 days. Even though Candace has received several complaint letters from
customers alleging lengthy delays in claims processing, she knows that Alamo out-
performs the industry. (For the industry, processing time is normal with = 25 days and
= 5 days.) Moreover, she knows that improving (decreasing) claims processing time
will reduce investment interest earned by the company -- putting a downward pressure
on corporate profits and an upward pressure on premiums.
Discuss Candace's dilemma. How should she respond to the complaining customers?
Should she share her statistics with other corporate managers?

(10) Monette Construction, Inc. is preparing to bid on a major roadway construction project.
PERT analysis indicates that project time is normallly distributed with a of 600 day and
a of 20 days. The Request for Bids states that the project must be complete within 635
days. The winner of the bid will be assess a penalty of $1,000 per day for each day the
project extends beyond 635 days.

0.45
0.40
0.35
0.30
0.25
f(x)

0.20
0.15
0.10
0.05
0.00
500 525 550 575 600 625 650 675 700
Project Time (days)

Discuss the risks to Monette Construction assuming it wins the bid.