Exam 20: Decision Making Online

SCENARIO 20-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Scenario 20-2, what is the optimal action using the EMV criterion?

SCENARIO 20-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Scenario 20-2, what is the best action using the maximin criterion?

SCENARIO 20-4 A stock portfolio has the following returns under the market conditions listed below. -Referring to Scenario 20-4, what is the standard deviation?

SCENARIO 20-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature. where: -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the expected opportunity loss (EOL)for A1 is

SCENARIO 20-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature. where: -Referring to Scenario 20-1, if the probability of S1 is 0.5, then the coefficient of variation for A1 is

SCENARIO 20-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Scenario 20-2, what is the action with the preferable coefficient of variation?

Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses.The opportunity loss for buying 200 dozen roses and selling 100 dozen roses at the full price is

SCENARIO 20-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam with scores out of 100 possible points.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy. -Referring to Scenario 20-6, what is the opportunity loss of spending 8 hours per week on average studying for the exam when the exam turns out to be difficult?

In using the maximax criteria one chooses the highest of the possible payoffs while in using the maximin criteria one chooses the highest of the minimum possible payoffs from the payoff table.

Which of the following is NOT a decision making criterion?

SCENARIO 20-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam with scores out of 100 possible points.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy. -Referring to Scenario 20-6, the optimal strategy using the maximin criterion is to study 8 hours per week on average for the exam.

SCENARIO 20-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Scenario 20-2, what is the action with the preferable return to risk ratio?

SCENARIO 20-5 The following payoff table shows profits associated with a set of 2 alternatives under 3 possible events. Suppose that the probability of Event 1 is 0.2, Event 2 is 0.5, and Event 3 is 0.3. -Referring to Scenario 20-5, what is the standard deviation for Action A?

Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses.Given 0.2, 0.4, and 0.4 are the probabilities for the sale of 100, 200, or 400 dozen roses, respectively, then the EOL for buying 200 dozen roses is

Opportunity loss is the difference between the lowest profit for an event and the actual profit obtained for an action taken.

SCENARIO 20-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam with scores out of 100 possible points.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy. -Referring to Scenario 20-6, what is the return-to-risk ratio of spending 8 hours per week on average studying for the exam?

SCENARIO 20-5 The following payoff table shows profits associated with a set of 2 alternatives under 3 possible events. Suppose that the probability of Event 1 is 0.2, Event 2 is 0.5, and Event 3 is 0.3. -Referring to Scenario 20-5, what is the return to risk ratio for Action B?

A company that manufactures designer jeans is contemplating whether to increase its advertising budget by $1 million for next year.If the expanded advertising campaign is successful, the company expects sales to increase by $1.6 million next year.If the advertising campaign fails, the company expects sales to increase by only $400,000 next year.If the advertising budget is not increased, the company expects sales to increase by $200,000.Identify the payoffs in this decision-making problem.

SCENARIO 20-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam with scores out of 100 possible points.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy. -Referring to Scenario 20-6, what is the expected value of perfect information?

SCENARIO 20-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature. where: -Referring to Scenario 20-1, the opportunity loss for A3 when S2 occurs is