Question 1

The first choice in a decision tree is the leftmost decision node.

Accepted Answer

A) True 
 B)False  True

Question 2

Use the following to answer the questions below.
In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
  
-Use the information in Table A.3 and the Laplace decision rule. The weighted payoff is:

Accepted Answer

A)  less than $200,000 if the high-flying consultant job is selected. 
B)  more than $280,000 if the research assistant job is selected. 
C)  more than $280,000 if the utility analyst job is selected. 
D)  highest for the research assistant position. 
A)  less than $200,000 if the high-flying consultant job is selected. 
B)  more than $280,000 if the research assistant job is selected. 
C)  more than $280,000 if the utility analyst job is selected. 
D)  highest for the research assistant position. C

Question 3

The decision rule ________ chooses the alternative with the best weighted payoff.

Accepted Answer

Laplace

Question 4

Use the following to answer the questions below.
A proposal for implementing a new product line has an annual fixed cost of $60,000, variable cost of $35 per unit of output, and revenue (selling price) of $55 per unit of output.
-Refer to the instruction above. What selling price would be necessary to generate an annual profit of $90,000, if expected volume is 6,000 units per year (assume fixed costs remain at $60,000, and variable cost per unit at $35)?

Accepted Answer

A)  $30 / unit 
B)  $40 / unit 
C)  $50 / unit 
D)  $60 / unit 
A)  $30 / unit 
B)  $40 / unit 
C)  $50 / unit 
D)  $60 / unit

Question 5

The decision rule in decision making under uncertainty that is most appropriate for the pessimistic manager would be:

Accepted Answer

A)  maximin. 
B)  maximax. 
C)  Laplace. 
D)  minimax regret. 
A)  maximin. 
B)  maximax. 
C)  Laplace. 
D)  minimax regret.

Question 6

Use the following to answer the questions below.
A proposal for implementing a new product line has an annual fixed cost of $60,000, variable cost of $35 per unit of output, and revenue (selling price) of $55 per unit of output.
-Refer to the instruction above. What volume of output will be necessary for an annual profit of $60,000?

Accepted Answer

A)  2,000 units 
B)  3,000 units 
C)  6,000 units 
D)  20,000 units 
A)  2,000 units 
B)  3,000 units 
C)  6,000 units 
D)  20,000 units

Question 7

The Forsite Company is screening three new product ideas. Resource constraints allow only one idea to be commercialized at the present time. The following estimates have been made for the five performance criteria that management feels are most important. If the five criteria are equally weighted, what are the best and worst alternatives?

Accepted Answer

A)  A is best, and B is worst. 
B)  B is best, and C is worst. 
C)  B is best, and A is worst. 
D)  C is best, and A is worst. 
A)  A is best, and B is worst. 
B)  B is best, and C is worst. 
C)  B is best, and A is worst. 
D)  C is best, and A is worst.

Question 8

Use the following to answer the questions below.
A company is considering two suppliers for the purchase of a part needed for manufacturing. Particulars are as follows:
  
-Refer to the instruction above. What is the annual break-even quantity for choosing between the two suppliers?

Accepted Answer

A)  1,000 units 
B)  2,000 units 
C)  6,000 units 
D)  12,000 units 
A)  1,000 units 
B)  2,000 units 
C)  6,000 units 
D)  12,000 units

Question 9

A preference matrix is a table that allows the manager to rate an alternative according to one performance criterion.

Accepted Answer

A) True 
 B)False

Question 10

Use the following to answer the questions below.
In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
  
-Use the information in Table A.3 and the expected-value rule. Which statement is True?

Accepted Answer

A)  The expected value of the consultant job is more than $300,000. 
B)  The expected value of the utility analyst job is more than $300,000. 
C)  The expected value of the research assistant job is less than $250,000. 
D)  The job with the highest expected value is the research assistant. 
A)  The expected value of the consultant job is more than $300,000. 
B)  The expected value of the utility analyst job is more than $300,000. 
C)  The expected value of the research assistant job is less than $250,000. 
D)  The job with the highest expected value is the research assistant.

Question 11

When faced with a decision where multiple non-financial criteria should be assessed, the savvy manager should employ a(n) ________ as a decision tool.

Accepted Answer

The answer of When faced with a decision where multiple...

Question 12

Use the following information to answer the questions below.
You currently make a part for old equipment at a cost of $20 / unit. The annual fixed cost for this equipment is $50,000. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year (see table).
  
-Refer to the instruction above. For what range of output would you prefer to make?

Accepted Answer

A)  30,000 or more units per year 
B)  0 - 30,000 units per year 
C)  0 - 40,000 units per year 
D)  40,000 or more units per year 
A)  30,000 or more units per year 
B)  0 - 30,000 units per year 
C)  0 - 40,000 units per year 
D)  40,000 or more units per year

Question 13

A company that is introducing a new product has to choose between four marketing plans, A through D. The marketing plans are forecasted to have varying payoffs, depending on the level of advertising. The probability of high demand is 0.6 and of low demand 0.4. Use the following decision rules to select the marketing plan: maximin, maximax, minimax regret, Laplace, and expected value.

Accepted Answer

The answer of A company that is introducing a new...

Question 14

Making a decision under risk using the expected value criterion is the equivalent of using the Laplace decision rule under uncertainty.

Accepted Answer

A) True 
 B)False

Question 15

Use the following to answer the questions below.
In choosing between three new jobs, Joe MBA considers the potential payoffs over the next three years. The following table contains the payoffs, given the speed of promotion in each of the organizations. The probability of fast promotion is 0.6, and the probability of slow promotion is 0.4.
  
-Use the information in Table A.3 and the minimax regret decision rule. The maximum regret is:

Accepted Answer

A)  less than $300,000 if the high-flying consultant job is selected. 
B)  less than $300,000 if the utility analyst job is selected. 
C)  less than $300,000 if the research assistant job is selected. 
D)  lowest for the research assistant job. 
A)  less than $300,000 if the high-flying consultant job is selected. 
B)  less than $300,000 if the utility analyst job is selected. 
C)  less than $300,000 if the research assistant job is selected. 
D)  lowest for the research assistant job.

Question 16

A(n) ________ shows the amount of revenue or expenses for each alternative if each possible event occurs.

Accepted Answer

The answer of A(n) ________ shows the amount of revenue...

Question 17

What assumptions are made when using break-even analysis?

Accepted Answer

Break-even analysis is useful to evaluat

Question 18

A company is screening ideas for new services. Five alternative service ideas are being considered. Management identified four criteria and weighted them as follows: A = 30, B = 10, C = 20, and D = 40. They have also come up with scored values for the five alternatives and the four criteria as shown below. Management has decided that if an alternative has less than a total scored value of 600, it should automatically be rejected. Use the preference matrix technique to determine which idea should be accepted.

Accepted Answer

A)  service #1 or #2 
B)  service #3 or #4 
C)  service #5 
D)  none 
A)  service #1 or #2 
B)  service #3 or #4 
C)  service #5 
D)  none

Question 19

Analyze the following decision tree. After determining the missing probabilities, identify which alternative (Option 1 or Option 2) has the higher expected payoff. What is the expected payoff?

Accepted Answer

A)  Option 1, with an expected payoff of less than $25 
B)  Option 1, with an expected payoff of $25 or more 
C)  Option 2, with an expected payoff of less than $25 
D)  Option 2, with an expected payoff of $25 or more 
A)  Option 1, with an expected payoff of less than $25 
B)  Option 1, with an expected payoff of $25 or more 
C)  Option 2, with an expected payoff of less than $25 
D)  Option 2, with an expected payoff of $25 or more

Question 20

Why should a decision maker engage in sensitivity analysis?

Accepted Answer

Sensitivity analysis is a technique for

The first choice in a decision tree is the leftmost decision node.

The decision rule ________ chooses the alternative with the best weighted payoff.

The decision rule in decision making under uncertainty that is most appropriate for the pessimistic manager would be:

Use the following to answer the questions below. A company is considering two suppliers for the purchase of a part needed for manufacturing. Particulars are as follows: -Refer to the instruction above. What is the annual break-even quantity for choosing between the two suppliers?

A preference matrix is a table that allows the manager to rate an alternative according to one performance criterion.

When faced with a decision where multiple non-financial criteria should be assessed, the savvy manager should employ a(n) ________ as a decision tool.

Making a decision under risk using the expected value criterion is the equivalent of using the Laplace decision rule under uncertainty.

A(n) ________ shows the amount of revenue or expenses for each alternative if each possible event occurs.

What assumptions are made when using break-even analysis?

Analyze the following decision tree. After determining the missing probabilities, identify which alternative (Option 1 or Option 2) has the higher expected payoff. What is the expected payoff?

Why should a decision maker engage in sensitivity analysis?

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Inventory Management

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Supplement J Operations Scheduling

Supplement K Layout

Supplement B Waiting Lines

Supplement C Special Inventory Models

Supplement D Linear Programming

Supplement E Simulation

Supplement F Financial Analysis

Supplement G Acceptance Sampling Plans

Supplement H Measuring Output Rates

Supplement I Learning Curve Analysis

Filters

Exam 16: Supplement A Decision Making

The first choice in a decision tree is the leftmost decision node.

The decision rule ________ chooses the alternative with the best weighted payoff.

The decision rule in decision making under uncertainty that is most appropriate for the pessimistic manager would be:

Use the following to answer the questions below. A company is considering two suppliers for the purchase of a part needed for manufacturing. Particulars are as follows: -Refer to the instruction above. What is the annual break-even quantity for choosing between the two suppliers?

A preference matrix is a table that allows the manager to rate an alternative according to one performance criterion.

When faced with a decision where multiple non-financial criteria should be assessed, the savvy manager should employ a(n) ________ as a decision tool.

Making a decision under risk using the expected value criterion is the equivalent of using the Laplace decision rule under uncertainty.

A(n) ________ shows the amount of revenue or expenses for each alternative if each possible event occurs.

What assumptions are made when using break-even analysis?

Analyze the following decision tree. After determining the missing probabilities, identify which alternative (Option 1 or Option 2) has the higher expected payoff. What is the expected payoff?

Why should a decision maker engage in sensitivity analysis?

Using Operations to Create Value

Process Strategy and Analysis

Quality and Performance

Capacity Planning

Constraint Management

Lean Systems

Project Management

Forecasting

Inventory Management

Operations Planning and Scheduling

Resource Planning

Supply Chain Design

Supply Chain Logistic Networks

Supply Chain Integration

Supply Chain Sustainability

Supplement J Operations Scheduling

Supplement K Layout

Supplement B Waiting Lines

Supplement C Special Inventory Models

Supplement D Linear Programming

Supplement E Simulation

Supplement F Financial Analysis

Supplement G Acceptance Sampling Plans

Supplement H Measuring Output Rates

Supplement I Learning Curve Analysis

Filters