Question 1

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:

Accepted Answer

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

Question 2

The Laplace criterion treats states of nature as being equally likely.

Accepted Answer

A) True 
 B)False

Question 3

Which phrase best describes the term "bounded rationality"?

Accepted Answer

A)  thinking a problem through clearly before acting 
B)  taking care not to exhaust limited resources 
C)  the result of departmentalized decision making 
D)  limits imposed on decision making by costs, time, and technology 
E)  the use of extremely structured steps in the decision-making process 
A)  thinking a problem through clearly before acting 
B)  taking care not to exhaust limited resources 
C)  the result of departmentalized decision making 
D)  limits imposed on decision making by costs, time, and technology 
E)  the use of extremely structured steps in the decision-making process

Question 4

Consider the following decision scenario:  
The minimax regret strategy would be:

Accepted Answer

A)  buy. 
B)  lease. 
C)  rent. 
D)  high. 
E)  low. 
A)  buy. 
B)  lease. 
C)  rent. 
D)  high. 
E)  low.

Question 5

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:  
If she uses the maximin criterion, what size outlet will she decide to lease?

Accepted Answer

A)  small 
B)  medium 
C)  large 
D)  either small or medium 
E)  either medium or large 
A)  small 
B)  medium 
C)  large 
D)  either small or medium 
E)  either medium or large

Question 6

The expected monetary value (EMV) criterion is the decision-making approach used with the decision environment of:

Accepted Answer

A)  certainty. 
B)  risk. 
C)  uncertainty. 
D)  aversion. 
E)  neutrality. 
A)  certainty. 
B)  risk. 
C)  uncertainty. 
D)  aversion. 
E)  neutrality.

Question 7

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars) will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high.
If she uses the Laplace criterion, how many beauticians will she decide to hire?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  either one or two 
E)  either two or three 
A)  one 
B)  two 
C)  three 
D)  either one or two 
E)  either two or three

Question 8

The local operations manager for the Internal Revenue Service must decide whether to hire one, two, or three temporary tax examiners for the upcoming tax season. She estimates that net revenues (in thousands of dollars) will vary with how well taxpayers comply with the new tax code just passed by Congress, as follows:  
If she uses the minimax regret criterion, how many new examiners will she decide to hire?

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  either one or two 
E)  either two or three 
A)  one 
B)  two 
C)  three 
D)  either one or two 
E)  either two or three

Question 9

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:  
If she uses the maximax criterion, what size outlet will she decide to lease?

Accepted Answer

A)  small 
B)  medium 
C)  large 
D)  either small or medium 
E)  either medium or large 
A)  small 
B)  medium 
C)  large 
D)  either small or medium 
E)  either medium or large

Question 10

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:   If she feels there is a 30 percent chance that demand will be high, what is her expected value of perfect information?

Accepted Answer

A)  $1,600 
B)  $1,100 
C)  $1,000 
D)  $900 
E)  $500 
A)  $1,600 
B)  $1,100 
C)  $1,000 
D)  $900 
E)  $500

Question 11

The maximin approach involves choosing the alternative that has the "best worst" payoff.

Accepted Answer

A) True 
 B)False

Question 12

The maximin approach involves choosing the alternative with the highest payoff.

Accepted Answer

A) True 
 B)False

Question 13

The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced.
What is the expected value of selecting script 1?

Accepted Answer

A)  $15,000,000 
B)  $9,060,000 
C)  $8,400,000 
D)  $7,200,000 
E)  $6,000,000 
A)  $15,000,000 
B)  $9,060,000 
C)  $8,400,000 
D)  $7,200,000 
E)  $6,000,000

Question 14

Which of the following would make decision trees an especially attractive decision-making tool?

Accepted Answer

A)  The need to think through a possible sequence of decisions. 
B)  The need to maximize the expected value of perfect information. 
C)  The need to minimize expected regret. 
D)  The need to avoid suboptimization. 
E)  The need to minimize costs for a single decision 
A)  The need to think through a possible sequence of decisions. 
B)  The need to maximize the expected value of perfect information. 
C)  The need to minimize expected regret. 
D)  The need to avoid suboptimization. 
E)  The need to minimize costs for a single decision

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:

The Laplace criterion treats states of nature as being equally likely.

Which phrase best describes the term "bounded rationality"?

Consider the following decision scenario: The minimax regret strategy would be:

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximin criterion, what size outlet will she decide to lease?

The expected monetary value (EMV) criterion is the decision-making approach used with the decision environment of:

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximax criterion, what size outlet will she decide to lease?

The maximin approach involves choosing the alternative that has the "best worst" payoff.

The maximin approach involves choosing the alternative with the highest payoff.

Which of the following would make decision trees an especially attractive decision-making tool?

Introduction to Operations Management

Competitiveness

Forecasting

Product and Service Design

RELIABILITY – Static

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

learning curve– Static

Location Planning and Analysis

The Transportation Model– Static

Management of Quality

Quality Control

Acceptance Sampling– Static

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

JIT and Lean Operations

Maintenance– Static

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters

Exam 7: Decision Theory– Static

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:

The Laplace criterion treats states of nature as being equally likely.

Which phrase best describes the term "bounded rationality"?

Consider the following decision scenario: The minimax regret strategy would be:

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximin criterion, what size outlet will she decide to lease?

The expected monetary value (EMV) criterion is the decision-making approach used with the decision environment of:

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximax criterion, what size outlet will she decide to lease?

The maximin approach involves choosing the alternative that has the "best worst" payoff.

The maximin approach involves choosing the alternative with the highest payoff.

Which of the following would make decision trees an especially attractive decision-making tool?

Introduction to Operations Management

Competitiveness

Forecasting

Product and Service Design

RELIABILITY – Static

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

learning curve– Static

Location Planning and Analysis

The Transportation Model– Static

Management of Quality

Quality Control

Acceptance Sampling– Static

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

JIT and Lean Operations

Maintenance– Static

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters