Exam 3: Decision Analysis

A manager needs to hire short-term employees to meet production demands.The manager would like to hire one of three possible short-term workers.Ten hours are demanded with 50% probability,20 hours are demanded with 30% probability,and 30 hours are demanded with 20% probability.The table below represents the alternatives and possible states of nature. a)Which alternative will minimize the expected monetary value? b)What is the expected value of perfect information?

List the five major decision criteria used when making decisions under uncertainty.

The assignment of a utility value of 1 to an alternative implies that alternative is preferred to all others.

The following is an opportunity loss table. What decision should be made based on the minimax regret criterion?

It is sometimes said that,"Those who gamble the most are the ones who can least afford to lose." These people gamble because

The criterion of realism is also called the Laplace criterion.

A manager needs to hire short-term employees to meet production demands.The manager would like to hire one of three possible short-term workers. (a)Which alternative is most optimistic? (b)Which alternative is most pessimistic? (c)Using the Hurwicz criterion with a coefficient of realism,α = 0.70,what is the best alternative?

In a decision table,all of the alternatives are listed down the left side of the table,while all of the possible outcomes or states of nature are listed across the top.

Which of the following is true about the expected value of perfect information?

A plant manager considers the operational cost per hour of five machine alternatives.The cost per hour is sensitive to three potential weather conditions: cold,mild,and warm.The following table represents the operations cost per hour for each alternative-state of nature combination: Using the pessimistic criterion,which alternative is best?

Optimistic decision makers tend to discount favorable outcomes.

A market research survey is available for $10,000.Using a decision tree analysis,it is found that the expected monetary value with no survey is $62,000.If the expected value of sample information is -$7,000,what is the expected monetary value with the survey?

The three decision-making environments are decision making under

Before a marketing research study was done,John Colorado believed there was a 50/50 chance that his music store would be a success.The research team determined that there is a 0.9 probability that the marketing research will be favorable given a successful music store.There is also a 0.8 probability that the marketing research will be unfavorable given an unsuccessful music store. (a)If the marketing research is favorable,what is the revised probability of an unsuccessful music store? (b)If the marketing research is unfavorable,what is the revised probability of an unsuccessful music store?

A utility curve showing utility increasing at an increasing rate as the monetary value increases represents

Dr.Mac,a surgeon,must decide what mode of treatment to use on Mr.Samuels.There are three modes of treatment: Mode A,B,and C;and three possible states of nature: 1.Treatment succeeds and patient leads a normal life,2.Patient survives treatment but is permanently disabled,and 3.Patient fails to survive treatment.Dr.Mac has prepared the decision table below.What mode of treatment maximizes the expected value?

A utility curve that shows utility increasing at a decreasing rate as the monetary value increases represents the utility curve of a risk seeker.

Bayes' theorem enables decision makers to revise probabilities based on

In Bayesian analysis,conditional probabilities are also known as which of the following?

The following is a payoff table giving profits for various situations. The probabilities for states of nature A,B,and C are 0.3,0.5,and 0.2,respectively.If a perfect forecast of the future were available,what is the expected value with this perfect information?