# 4008

1. Company Bankruptcy – Answer Sheet Name: _____________________________________

1. (6 points) Exploratory analysis: Does any ratio seem to have an effect on whether a company goes bankrupt? If so, name them?

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Attach a copy of the pivot table and label it as Exhibit 1ai.
Attach a copy of the box plots and label it as Exhibit 1aii.

1. (1 points) Partition the data set.
1. (10 points) Use logistics regression to classify companies as bankrupt or not, using all five of the accounting ratios.
1. Report the coefficient for each accounting ratio.

Coefficient for WC/TA: ______________
Coefficient forRE/TA: ______________
Coefficient for EBIT/TA: ______________
Coefficient for MVE/TA:______________
Coefficient for S/TA: ________________

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1. Attach a copy of the Confusion Matrix and Error Report on validation set and label it as Exhibit 1ci.
2. Attach a copy of the lift chart on validation set and label it as Exhibit 1cii.
3. Does this model do a good job of classifying? Are any of the ratios insignificant in the model?

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1. (8 points) Experiment with logistics regression that use only two of the accounting ratios. Which pair classifies about as well as in Part c), but with both ratios significant? For that pair,
1. Attach a copy of the regression coefficients and label it as Exhibit 1di.
2. Attach a copy of the Confusion Matrix and Error Report on validation set and label it as Exhibit 1dii.
3. Attach a copy of the lift chart on validation set and label it as Exhibit 1diii.

2. KEA, Inc. – Answer Sheet Name: _____________________________________
a) (10 points) Expected value of the project: _____________________
Attach a copy of your decision tree and label it Exhibit 2ai.
Find the risk profile for the project and the probability Pr(net profit³ 0).
Pr(net profit³ 0): ______________________ (Show how you get this number)
Create a table to list all possible values of the project’s net profits and their corresponding probabilities and label it as Exhibit 2aii.
Would you recommend that KEA pursue the project as described in Part a)? Why or why not?
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b) (5 points) How does the value of the project and optimal decisionobtained in Part a) vary as Pr(superior design) ranges from 0% to 100% (in an increment of 5%)?
Attach your data table, and label it as Exhibit 2b.
c) (10 points) Expected value of the “delay construction decision” alternative: ___________________
Maximum KEA should pay in additional costs to
secure the “delay construction decision” alternative: ___________________
Attach a copy of your decision tree and label it as Exhibit 2c.
3. Ming’s Restaurant – Answer Sheet Name: _____________________________________

1. (8 points)

i) Estimated expected profit per month? _____________
ii) 95% conf. interval for expected profit per month: _____________

1. (2 points)

i) Probability that Ming incurs a loss in a given month: _____________
ii) Probability that Ming makes more than \$15,000 per month: _____________
For Part a) and b), please attach a copy of the histogram for the monthly profit from your simulation, and label it as Exhibit 2ab.

1. (10 points)

i) Expected Profit for Location 1: _____________
ii) Expected Profit for Location 2: _____________
iii) Expected Profit for Location 3: _____________
The best location should be _______________

1. (5 points)

Is one location riskier than the others? Can you
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For Part c) and d), please attach a copy of the overlay chart for the monthly profits from your simulations, and label it as Exhibit 2cd.
4. Carolina Home Equipment– Answer SheetName:__________________________________

1. (2 points) Is it possible for CHE to meet the entire fulfillment requirement using existing manufacturing capacity in their current assignments? If so, how? If not, why not?

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Attach appropriate documentation and label it as Exhibit 4a.

1. (10 points) Given the availability of the Mexican manufacturer, what is the optimal production mix? That is, how many grills of each type should they make and how many should they buy?
Make in South Carolina Buy from Mexico
Discount Charcoal: _______________________ _____________________

Discount Gas: ___________________________ _____________________
Optimal cost: _______________
Attach appropriate documentation and label it Exhibit 4b.

1. (3 points) What is the minimum price CHEneeds to charge its customers for additional units of the Premium Charcoal grill? How many more units can they offer at this price?
Price: ________________ Number of additional units at this price: _______________________
2. (2 points) If CHE is able to reassign 3000-hour labor from one department to another department, should CHE make this reassignment? If so, how? If not, why?

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Attach appropriate documentation for Part c) and d) and label it Exhibit 4c..

1. (8 points) What are those types of grills that CHE should commit its SC capacity to? How much is the total cost in this case? What is the incremental cost of making such commitment?

The types of grills committed: _____________
The corresponding total cost:_____
Incremental cost of commitment: ______________________
Attach appropriate documentation and label it as Exhibit 4d.

Attachments:

CompanyBankru….xlsxOPRE4350-Fina….docxOPRE4350-Fina….docx