Question 1

________ is the expected payout or value of a variable that has different possible states of nature,each with an associated probability.

Accepted Answer

Expected m

Question 2

Identify and describe three methods used for decision making under conditions of uncertainty.

Accepted Answer

(1)Maximax is a criterion that finds an

Question 3

Which decision rule under uncertainty results in an optimistic decision? Why?

Accepted Answer

Maximax,because it locates the

Question 4

A decision maker using the maximin criterion on the problem below would choose Alternative ________ because the maximum of the row minimums is ________.

Accepted Answer

A) A;55 
B) B;30 
C) C;70 
D) D;140 
E) D;10 
A) A;55 
B) B;30 
C) C;70 
D) D;140 
E) D;10

Question 5

A(n)________ is a graphical means of analyzing decision alternatives and states of nature.

Accepted Answer

The answer of A(n)________ is a graphical means of analyzing...

Question 6

Miles is considering buying a new pickup truck for his lawn service firm.The economy in town seems to be growing,and he is wondering whether he should opt for a subcompact,compact,or full-size pickup truck.The smaller truck would have better fuel economy,but would sacrifice capacity and some durability.A friend at the Bureau of Economic Research told him that there is a 30% chance of lower gas prices in his area this year,a 20% chance of higher gas prices,and a 50% chance that gas prices will stay roughly unchanged.Based on this information,Miles has developed a decision table that indicates the profit amount he would end up with after a year for each combination of truck and gas prices.
   Calculate the expected monetary value for each decision alternative.Which decision yields the highest EMV?

Accepted Answer

The expected values are: subco

Question 7

What is the expected value with perfect information in the following decision table?

Accepted Answer

A) 50 
B) 200 
C) 260 
D) 300 
E) 350 
A) 50 
B) 200 
C) 260 
D) 300 
E) 350

Question 8

Earl Shell owns his own Sno-Cone business and lives 30 miles from a beach resort.The sale of Sno-Cones is highly dependent upon his location and upon the weather.At the resort,he will profit $120 per day in fair weather,$10 per day in bad weather.At home,he will profit $70 in fair weather,$55 in bad weather.Assume that on any particular day,the weather service suggests a 40% chance of foul weather.
a.Construct Earl's decision tree.
b.What decision is recommended by the expected value criterion?

Accepted Answer

Resort has

Question 9

A decision tree is a(n):

Accepted Answer

A) algebraic representation of alternatives and states of nature. 
B) behavioral representation of alternatives and states of nature. 
C) matrix representation of alternatives and states of nature. 
D) graphical representation of alternatives and states of nature. 
E) tabular representation of alternatives and states of nature. 
A) algebraic representation of alternatives and states of nature. 
B) behavioral representation of alternatives and states of nature. 
C) matrix representation of alternatives and states of nature. 
D) graphical representation of alternatives and states of nature. 
E) tabular representation of alternatives and states of nature.

Question 10

A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is:

Accepted Answer

A) an optimist. 
B) a pessimist. 
C) an economist. 
D) an optometrist. 
E) making a serious mistake;maximin is not appropriate for conditions of uncertainty. 
A) an optimist. 
B) a pessimist. 
C) an economist. 
D) an optometrist. 
E) making a serious mistake;maximin is not appropriate for conditions of uncertainty.

Question 11

If a decision maker is a pessimist,what decision-making criterion is appropriate? Why?

Accepted Answer

Maximin assumes that the worst

Question 12

Expected monetary value is most appropriate for problem solving that takes place:

Accepted Answer

A) when conditions are average. 
B) when all states of nature are equally likely. 
C) when all alternatives are equally likely. 
D) under conditions of uncertainty. 
E) under conditions of risk. 
A) when conditions are average. 
B) when all states of nature are equally likely. 
C) when all alternatives are equally likely. 
D) under conditions of uncertainty. 
E) under conditions of risk.

Question 13

An example of a conditional value would be the payoff from selecting a particular alternative when a particular state of nature occurs.

Accepted Answer

A) True 
 B)False

Question 14

What is the outcome of an alternative/state of nature combination called?

Accepted Answer

A) price 
B) conditional value 
C) expected value 
D) conditional probability 
E) conditional expectation 
A) price 
B) conditional value 
C) expected value 
D) conditional probability 
E) conditional expectation

Question 15

Decision trees and decision tables can both solve problems requiring a single decision,but decision tables are the preferred method when a sequence of decisions is involved.

Accepted Answer

A) True 
 B)False

Question 16

What is the EMV for Option 1 in the following decision table?

Accepted Answer

A) 15,000 
B) 17,000 
C) 17,500 
D) 18,500 
E) 20,000 
A) 15,000 
B) 17,000 
C) 17,500 
D) 18,500 
E) 20,000

Exam 22: Decision-Making Tools

________ is the expected payout or value of a variable that has different possible states of nature,each with an associated probability.

Identify and describe three methods used for decision making under conditions of uncertainty.

Which decision rule under uncertainty results in an optimistic decision? Why?

A decision maker using the maximin criterion on the problem below would choose Alternative ________ because the maximum of the row minimums is ________.

A(n)________ is a graphical means of analyzing decision alternatives and states of nature.

What is the expected value with perfect information in the following decision table?

A decision tree is a(n):

A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is:

If a decision maker is a pessimist,what decision-making criterion is appropriate? Why?

Expected monetary value is most appropriate for problem solving that takes place:

An example of a conditional value would be the payoff from selecting a particular alternative when a particular state of nature occurs.

What is the outcome of an alternative/state of nature combination called?

Decision trees and decision tables can both solve problems requiring a single decision,but decision tables are the preferred method when a sequence of decisions is involved.

What is the EMV for Option 1 in the following decision table?

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Process Strategy

Location Strategies

Layout Strategies

Human Resources,job Design,and Work Measurement

Supply Chain Management

Inventory Management

Aggregate Planning and Sop

Material Requirements Planning Mrpand Erp

Short-Term Scheduling

Jit,tps,and Lean Operations

Maintenance and Reliability

Sustainability in the Supply Chain

Statistical Process Control

Capacity and Constraint Management

Supply Chain Management Analytics

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters

A decision maker using the maximin criterion on the problem below would choose Alternative because the maximum of the row minimums is .