Exam 6: Decision Analysis and Expected Value

The A-Life Corporation has 320 employees. The Human Resource manager of the corporation documents the frequency with which employees call in sick. In the month of December, 16 employees called in sick 3 times, 48 employees called in sick 2 times, 64 employees called in sick once, and 160 did not call in sick at all. a) What type of variable is x = 'the number of times employees called in sick'? b) Develop a probability distribution for the x.

Dianna Ivy is evaluating a plan to expand the production facilities of International Compressors Company which manufactures natural gas compressors. Dianna feels that the price of coal is a significant factor in her decision, but she cannot control it. For her decision, the different prices of coal represent the ___.

The number of finance majors within the School of Business is an example of ___.

A recent analysis of the number of rainy days per month found the following outcomes and probabilities: The mean of this distribution is ___.

A recent analysis of the number of rainy days per month found the following outcomes and probabilities: The standard deviation of this distribution is ___.

In a decision analysis problem, variables (such as general macroeconomic conditions) which are $\textbf{ not }$ under the decision maker's control are called prior probabilities.

A dream car lottery is valued at $100,000. The probability of winning the car is 0.001. What is the expected value of the lottery if it costs $50 to play?

In a decision analysis problem, variables (such as investing in common stocks or corporate bonds) which are under the decision maker's control are called ___.

In a decision-making under risk scenario, the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.

Variables which take on values only at certain points over a given interval are called continuous random variables.

The number of visitors to a website each day is an example of a discrete random variable.

In a decision-making under risk scenario, the expected monetary value of a decision alternative is the weighted average (using the probability of each state of nature as the weight) of the payoffs to the decision alternative in each state of the nature.

The mean or the expected value of a discrete distribution is the long-run average of the occurrences.

The expected monetary payoff of perfect information is the value of perfect information.

A market research team compiled the following discrete probability distribution. In this distribution, x represents the number of automobiles owned by a family: Which of the following statements is true?

In a decision-making scenario, if it is $\textbf{ not }$ known which of the states of nature will occur and further if the probabilities of occurrence of the states are also unknown the scenario is called decision-making under double risk.

In decision-making under risk, the expected monetary value without information is the largest of the expected monetary values for the various decision alternatives.

A variable that can take on values at any point over a given interval is called a discrete random variable.

A market research team compiled the following discrete probability distribution for families residing in Pictou County. In this distribution, x represents the number of evenings the family dines outside their home during a week: The standard deviation of x is ___.

A market research team compiled the following discrete probability distribution on the number of soft drinks the average adult drinks each day. In this distribution, x represents the number of sodas which an adult drinks: The standard deviation of x is ___.