What is false about service level and stock out? Service level and stock out risk are probabilities of mutually exclusive events Service level is the probability of attending the demand and stock out risk it the probability of not attending the demand Service level and stock out risk are inversely related Service level and stock our risk are directly related

When a choice is communicated in terms of potential losses, most people choose the option with less risk. -True -False

A farmer must decide whether to take protective action to limit damage to his grapefruit crop in the event that the overnight temperature falls to a level well below freezing. If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. Based on the National Weather Service, the probability of such a temperature drop is 60%. He can insulate his crop by spraying water on all the trees, which will cost $20,000. This action might succeed in protecting the crop, with the following possible outcomes: Probability Damage 0.30 $0 0.15 $5,000 0.10 $10,000 0.15 $15,000 0.30 $20,000    Construct a decision tree to help the farmer make his decision. What should he do? Explain your answer.      Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop.     Suppose the farmer is uncertain about the reliability of the National Weather Service forecast. If he thinks the probability of…

Which statement regarding Time-Cost Models tradeoffs is true? Crashing a project reduces the duration of noncritical activities Projects with multiple critical paths cannot be crashed The crash time of an activity exceeds the normal time of the activity To crash a project, costs are increased on critical activities to reduce their duration Noncritical activities cannot become critical after crashing

Please answer everything in the photo.

Consider the case where the left tail of the implied distribution is thinner than that of the log-normal distribution and the right tail of the implied distribution is fatter than that of the log-normal distribution with the same mean and standard deviation. Which of the following statements is correct?     A) The implied volatility of a deep out-of-the money put is greater than the one obtained from the Black-Scholes price.     B) The implied volatility decreases as the strike price increases.     C) The implied volatility of a deep out-of-the money call is smaller than the one obtained from the Black-Scholes price.     D) The implied volatility increases as the strike price increases. Please explain and justify your choice. In your answer, discuss the shape of the relation of implied volatility to the strike price and explain how this is obtained.

Effective risk management would attempt to maximize the expected return for a given level of risk.   Select one: True False

The Astana airline always books more passengers on a flight than its capacity because of last minutes cancellations. The airline charges $835 per passenger from Almaty (Kazakhstan) to Frankfurt (Germany).  However, due to overbooking, it asks a few passengers travelling more than the plane’s capacity to take another flight and offers a coupon of $350, including hotel, meal, etc.  The experience has shown the following probability distribution corresponding to no-shows: Number of no-shows Probabillity 0 0.05 1 0.08 2 0.12 3 0.19 4 0.25 5 0.15 6 0.11 7 0.05 The airline hires you as a consultant because you have taken a course in supply chain management. What is the average number of no-shows based on the above distribution? How many overbookings should be made to minimize loss due to no shows, given the above probability distribution? Suppose you find out that last minute no-shows are normally distributed with a mean as determined in (a) above and a standard…

An expensive piece of equipment is used in the masking operation for semiconductor manufacture.A capacitor in the equipment fails randomly. The capacitor costs $7.50, but if it burns out while the machine is in use, the production process must be halted. Here the replacement cost is estimated to be $150. Based on past experience, the lifetime distribution of the capacitor is estimated to be                     Number of Months                    Probability of                           of Service                                Failure                                 1                                            .08                                 2                                            .12                                 3                                            .16                                 4                                            .26                                 5                                            .22                                 6…