MSIS 3223 FINAL EXAM QUESTIONS WITH CORRECT
ANSWERS LATEST UPDATE
Variable Cost of Production
•Logic suggests that variable cost is the unit variable cost times the quantity of item
produced. Thus, a descriptive model would be:
•Variable Cost = Unit Variable Cost * Quantity Produced
•Total Cost = Fixed Cost + Variable Cost * Quantity Produced
•Also written as C=F+VQ
Demand
•Demand has an influence on profit by predicting how many units of a product will be
sold. Quantity produced is a decision option typically based on demand.
•The spreadsheet model for profit is revenue minus variable cost minus fixed cost:
•Profit = Revenue - Variable Cost - Fixed Cost
Data Tables
•Multiple outputs may be evaluated using one way data tables. For example, profit and
revenue.
•Two-way data tables can evaluate only one output variable. To evaluate multiple output
variables, you must construct multiple two-way tables.
Net Income
gross profit - operating expenses
Gross Profit
Sales - Cost of Goods Sold (COGS)
Operating Expenses
Sum of Administrative expenses, selling expenses, and depreciation expenses
Net Operating Income
gross profit - operating expenses
Earnings before Taxes
Net Operating Income- Interest Expense
Net Income Value
Earnings before tax- Taxes
Predictive Decision Models
•Predictive models focus on understanding the future.
•Practical business models focus on predicting financial performance, customer
retention, and product sales.
•Sales levels are often used to plan inventory levels.
•Predictive models usually involve multiple time periods.
•Predictive models incorporate the uncertainty element.
Optimization
•Optimization models have been used extensively in operations and supply chains,
finance, marketing, and other disciplines.
•Optimization is the process of selecting values of decision variables that minimize or
maximize some quantity of interest.
ANSWERS LATEST UPDATE
Variable Cost of Production
•Logic suggests that variable cost is the unit variable cost times the quantity of item
produced. Thus, a descriptive model would be:
•Variable Cost = Unit Variable Cost * Quantity Produced
•Total Cost = Fixed Cost + Variable Cost * Quantity Produced
•Also written as C=F+VQ
Demand
•Demand has an influence on profit by predicting how many units of a product will be
sold. Quantity produced is a decision option typically based on demand.
•The spreadsheet model for profit is revenue minus variable cost minus fixed cost:
•Profit = Revenue - Variable Cost - Fixed Cost
Data Tables
•Multiple outputs may be evaluated using one way data tables. For example, profit and
revenue.
•Two-way data tables can evaluate only one output variable. To evaluate multiple output
variables, you must construct multiple two-way tables.
Net Income
gross profit - operating expenses
Gross Profit
Sales - Cost of Goods Sold (COGS)
Operating Expenses
Sum of Administrative expenses, selling expenses, and depreciation expenses
Net Operating Income
gross profit - operating expenses
Earnings before Taxes
Net Operating Income- Interest Expense
Net Income Value
Earnings before tax- Taxes
Predictive Decision Models
•Predictive models focus on understanding the future.
•Practical business models focus on predicting financial performance, customer
retention, and product sales.
•Sales levels are often used to plan inventory levels.
•Predictive models usually involve multiple time periods.
•Predictive models incorporate the uncertainty element.
Optimization
•Optimization models have been used extensively in operations and supply chains,
finance, marketing, and other disciplines.
•Optimization is the process of selecting values of decision variables that minimize or
maximize some quantity of interest.
