CAIIB ABM Module A UNIT 9 MCQ – Simulation

Correct Answer: B. To study the effects of changes in a real system using models. Simulation involves using models to understand how modifications might impact an actual system.

Correct Answer: B. Imitating a real thing or process to predict behaviour. Simulation mimics reality to forecast outcomes under certain conditions.

Correct Answer: C. Conducting philosophical debates. Mathematical models, physical models, rehearsals, computer graphics, and games are simulation methods.

Correct Answer: B. They can be gross simplifications of reality. While useful, simulations might oversimplify the complex nature of real systems.

Correct Answer: C. A computer system to experiment on a model. Financial simulations often involve computer-based experiments on models of real financial systems.

Correct Answer: B. Size and/or complexity making other methods difficult. Simulation is useful when the scale or intricacy of a problem hinders the use of alternative analytical techniques.

Correct Answer: B. Queuing problems.

Correct Answer: B. By teaching how the real system operates and showing effects of changes. Simulation aids in training by demonstrating system operations and the impact of variable changes.

Correct Answer: C. Inventory reorder design. Inventory reorder design is explicitly listed among the applications of simulation.

Correct Answer: C. Order the demand of the previous day. The vendor initially ordered a quantity equal to the demand experienced on the preceding day.

Correct Answer: B. Profit = (Sold Quantity x 36) – (Ordered Quantity x 32). Profit is calculated as total revenue from sales minus the total cost of the ordered quantity.

Correct Answer: C. Using a probability distribution and random numbers. The simulation uses historical demand probabilities and random numbers to generate daily demand figures.

Correct Answer: C. It is the lesser of the demand (D) or the quantity ordered (Q). The actual sales cannot exceed the demand for that day, nor can it exceed the quantity available (ordered).

Correct Answer: B. Define the problem. The methodology starts with defining the problem, which includes specifying objectives and identifying relevant variables.

Correct Answer: C. Relevant controllable and uncontrollable variables. Defining the problem involves identifying both the variables the decision-maker can control and those they cannot.

Correct Answer: C. The ordering rule. The ordering rule is the factor that the decision-maker (the vendor) can choose or change.

Correct Answer: B. It must be representative of the system. A simulation model should accurately reflect the key elements and behaviours of the real system it is modelling.

Correct Answer: C. Fixed time increments and variable time increments. Simulation time can proceed in constant steps (fixed) or jump to the time of the next event (variable).

Correct Answer: B. When events occur with regularity. The fixed time method is appropriate when system events happen at predictable, regular intervals.

Correct Answer: C. Simulation models are typically custom-built for the specific problem. Unlike models like LP which can be applied widely by changing parameters, simulation models are often tailored to one specific problem.

Correct Answer: C. Run the simulation for a specified set period. One method to decide how long to run a simulation is to pre-determine a specific duration.

Correct Answer: B. When experiments would disrupt ongoing activities. Simulation is advantageous when performing experiments directly on the operational system would cause interference or problems.

Correct Answer: C. When the mathematical model is too complex and arduous to solve. Simulation can be a better choice if the corresponding mathematical model is excessively difficult or laborious to work with.

Correct Answer: C. It can be time-consuming. Developing and running simulations can take a significant amount of time.

Correct Answer: C. Due to the lack of rigid principles for model design and run decisions, requiring intuitive judgement. Aspects like model construction and determining run length often depend on the user’s judgement due to few guiding principles.

Correct Answer: C. 30%. The text states the supply variation probability is -10% for 30% of the time, 0% for 50% of the time, and +10% for 20% of the time.

Correct Answer: B. 800 – (1.5 x 100) = 650 cases. The demand is calculated as the mean minus the product of the random deviate and the standard deviation.

Correct Answer: B. Rs. 200. The shortage cost is stated to be equal to the mark-up, which is the selling price minus the cost price (Rs. 500 – Rs. 300).

Correct Answer: B. It increases the cost by Rs. 40. Flash-freezing adds Rs. 40 to the base cost, making the cost Rs. 340 per case.

Correct Answer: B. Rs. 20 per case per week. Storing flash-frozen shrimp incurs a holding cost of Rs. 20 per case per week at the local ice-house.

Correct Answer: C. 80-99. The text specifies the random number intervals as 00-29 for -10% variation, 30-79 for 0% variation, and 80-99 for +10% variation.

Correct Answer: B. Regular shrimp. The procedure states that regular shrimp should always be sold before flash-frozen shrimp.

Correct Answer: C. Deciding how many items per customer should be allowed in the fast checkout line. The consultant’s task is explicitly stated as using simulation to determine the item limit for the fast checkout.

Correct Answer: B. 9 lines. The data provided indicates an average size of 9 checkout lines per store, including the fast checkouts.

Correct Answer: D. Cost of newspaper advertising. The profit calculation detailed includes revenues from sales and excess, and costs of purchases (regular, frozen), holding, and shortages, but not advertising.