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: \[\begin{array} { | l | l | l | l | } \hline { \begin{array} { l } \text { NUMBER } \\ \text { OF } \\ \text { EXAMINERS } \end{array} } & { \text { COMPLIANCE } } \\ \hline & \text { LOW } & \text { NORMAL } & \text { HIGH } \\ \hline \text { One } & 50 & 50 & 50 \\ \hline \text { Two } & 100 & 60 & 20 \\ \hline \text { Three } & 150 & 70 & - 10 \\ \hline \end{array}\] If she feels the chances of low, medium, and high compliance are 20 percent, 30 percent, and 50 percent respectively, what is her expected value of perfect information?

A) $16,000 B) $26,000 C) $46,000 D) $48,000 E) $50,000 A) $16,000 B) $26,000 C) $46,000 D) $48,000 E) $50,000

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. \[\begin{array} { | l | l | l | l | } \hline { \begin{array} { l } \text { NUMBER } \\ \text { OF } \\ \text { BEAUTICIANS } \end{array} } & { \text { DEMAND } } \\ \hline & \text { LOW } & \text { MEDIUM } & \text { HIGH } \\ \hline \text { One } & 50 & 75 & 100 \\ \hline \text { Two } & 0 & 100 & 100 \\ \hline \text { Three } & - 100 & 70 & 300 \\ \hline \end{array}\] If she uses the minimax regret criterion, how many beauticians will she decide to hire?

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

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: \[\begin{array} { | l | l | l | l|} \hline { \text { Strategy } } & { \text { Cable Network } } \\ \hline & \text { Successful } & &\text { Failure } \\ \hline \text { Print } & \$ 10 && 10 \\ \hline \text { Mixed } & 4 & &14 \\ \hline \text { Television } & 1 && 21 \\ \hline \end{array}\] If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits") under certainty?

A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00 A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00

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: $\begin{array}{|l|l|l|l|} \hline\text {SIZE}\\ \text {OF}&\text {DEMAND}\\ \hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\ \hline \text { Small } & \$ 1,000 && 1,000 \\ \hline \text { Medium } & 500 && 2,500 \\ \hline \text { Large } & 0 && 3,000 \\ \hline \end{array}$ For what range of probability that demand will be high, will she decide to lease the small facility?

A) 0-.25 B) 0-.33 C) .25-.5 D) .33-1 E) .5-1 A) 0-.25 B) 0-.33 C) .25-.5 D) .33-1 E) .5-1

Consider the following decision scenario: \[\begin{array} {r} { \text { State of Nature } } \\ \begin{array} { | l | l | l | } \hline & \text { Yes } & \text { No } \\ \hline \text { Small } & \$ 10 ^ { * } & 30 \\ \hline \text { Medium } & 20 & 40 \\ \hline \text { Med.-Large } & 30 & 45 \\ \hline \text { Large } & 40 & 35 \\ \hline \text { Ex-Large } & 60 & 20 \\ \hline \end{array}\end{array}\] *PV for profits ($000) The maximax strategy would be:

A) small. B) medium. C) med.-large. D) large. E) ex-large. A) small. B) medium. C) med.-large. D) large. E) ex-large.

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: \[\begin{array} { | l | l | l | l|} \hline { \text { Strategy } } & { \text { Cable Network } } \\ \hline & \text { Successful } & &\text { Failure } \\ \hline \text { Print } & \$ 10 && 10 \\ \hline \text { Mixed } & 4 & &14 \\ \hline \text { Television } & 1 && 21 \\ \hline \end{array}\] If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits") for the strategy she will select?

A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00 A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: \[\begin{array} { | l | l | l | l|} \hline { \text { Strategy } } & { \text { Cable Network } } \\ \hline & \text { Successful } & &\text { Failure } \\ \hline \text { Print } & \$ 10 && 10 \\ \hline \text { Mixed } & 4 & &14 \\ \hline \text { Television } & 1 && 21 \\ \hline \end{array}\] If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?

A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00 A) $3.40 B) $4.60 C) $8.00 D) $9.00 E) $10.00

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: \[\begin{array} { | l | l | l | l | } \hline { \begin{array} { l } \text { NUMBER } \\ \text { OF } \\ \text { EXAMINERS } \end{array} } & { \text { COMPLIANCE } } \\ \hline & \text { LOW } & \text { NORMAL } & \text { HIGH } \\ \hline \text { One } & 50 & 50 & 50 \\ \hline \text { Two } & 100 & 60 & 20 \\ \hline \text { Three } & 150 & 70 & - 10 \\ \hline \end{array}\] If she uses the Laplace criterion, how many new examiners will she decide to hire?

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

A) an algebraic representation of alternatives. B) a behavioral representation of alternatives. C) a matrix representation of alternatives. D) a schematic representation of alternatives. E) limited to a maximum of 12 branches. A) an algebraic representation of alternatives. B) a behavioral representation of alternatives. C) a matrix representation of alternatives. D) a schematic representation of alternatives. E) limited to a maximum of 12 branches.

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: \[\begin{array} { | l | l | l | l | } \hline { \begin{array} { l } \text { NUMBER } \\ \text { OF } \\ \text { EXAMINERS } \end{array} } & { \text { COMPLIANCE } } \\ \hline & \text { LOW } & \text { NORMAL } & \text { HIGH } \\ \hline \text { One } & 50 & 50 & 50 \\ \hline \text { Two } & 100 & 60 & 20 \\ \hline \text { Three } & 150 & 70 & - 10 \\ \hline \end{array}\] If she uses the maximin criterion, how many new examiners will she decide to hire?

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

Exam 5: Extension: Decision Theory

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: NUMBER OF EXAMINERS COMPLIANCE LOW NORMAL HIGH One 50 50 50 Two 100 60 20 Three 150 70 -10 If she feels the chances of low, medium, and high compliance are 20 percent, 30 percent, and 50 percent respectively, what is her expected value of perfect information?

(Multiple Choice)

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Question 21

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. NUMBER OF BEAUTICIANS DEMAND LOW MEDIUM HIGH One 50 75 100 Two 0 100 100 Three -100 70 300 If she uses the minimax regret criterion, how many beauticians will she decide to hire?

(Multiple Choice)

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Question 22

The difference between expected payoff under certainty and expected payoff under risk is the expected:

(Multiple Choice)

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Question 23

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: Strategy Cable Network Successful Failure Print \ 10 10 Mixed 4 14 Television 1 21 If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits") under certainty?

(Multiple Choice)

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Question 24

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: SIZE OF DEMAND OUTLET LOW HIGH Small \ 1,000 1,000 Medium 500 2,500 Large 0 3,000 For what range of probability that demand will be high, will she decide to lease the small facility?

(Multiple Choice)

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Question 25

Consider the following decision scenario: State of Nature Yes No Small \ 1 30 Medium 20 40 Med.-Large 30 45 Large 40 35 Ex-Large 60 20 *PV for profits ($000) The maximax strategy would be:

(Multiple Choice)

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Question 26

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: Strategy Cable Network Successful Failure Print \ 10 10 Mixed 4 14 Television 1 21 If she uses the maximin criterion, which advertising strategy will she use?

(Multiple Choice)

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Question 27

In reaching a decision, the alternative with the lowest cost should be ranked number 1.

(True/False)

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Question 28

A systemic view of the organization and its operations processes can help minimize the risk of __________ leading to a poor decision.

(Multiple Choice)

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Question 29

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: Strategy Cable Network Successful Failure Print \ 10 10 Mixed 4 14 Television 1 21 If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits") for the strategy she will select?

(Multiple Choice)

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Question 30

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

(Multiple Choice)

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Question 31

Bounded rationality refers to the limits imposed on decision making because of costs, human abilities, time, technology, and/or availability of information.

(True/False)

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Question 32

Suppose a firm has decided to break its departments down into smaller units. While this likely will help with issues, it raises the possibility that poor decisions will result due to .

(Multiple Choice)

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Question 33

If the minimum expected regret is computed, it indicates to a decision maker the expected:

(Multiple Choice)

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Question 34

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers) will vary depending upon the success of the new cable television network she plans to use, as follows: Strategy Cable Network Successful Failure Print \ 10 10 Mixed 4 14 Television 1 21 If she feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?

(Multiple Choice)

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Question 35

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: NUMBER OF EXAMINERS COMPLIANCE LOW NORMAL HIGH One 50 50 50 Two 100 60 20 Three 150 70 -10 If she uses the Laplace criterion, how many new examiners will she decide to hire?

(Multiple Choice)

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Question 36

A decision tree is:

(Multiple Choice)

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Question 37

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: NUMBER OF EXAMINERS COMPLIANCE LOW NORMAL HIGH One 50 50 50 Two 100 60 20 Three 150 70 -10 If she uses the maximin criterion, how many new examiners will she decide to hire?

(Multiple Choice)

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Question 38

Which phrase best describes the term "bounded rationality"?

(Multiple Choice)

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Question 39

One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What is the probability that the heart lab will be funded in both the first and second years?

(Multiple Choice)

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Question 40

The difference between expected payoff under certainty and expected payoff under risk is the expected:

Consider the following decision scenario: State of Nature Yes No Small \ 1 30 Medium 20 40 Med.-Large 30 45 Large 40 35 Ex-Large 60 20 *PV for profits ($000) The maximax strategy would be:

In reaching a decision, the alternative with the lowest cost should be ranked number 1.

A systemic view of the organization and its operations processes can help minimize the risk of __________ leading to a poor decision.

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

Bounded rationality refers to the limits imposed on decision making because of costs, human abilities, time, technology, and/or availability of information.

Suppose a firm has decided to break its departments down into smaller units. While this likely will help with issues, it raises the possibility that poor decisions will result due to .

If the minimum expected regret is computed, it indicates to a decision maker the expected:

A decision tree is:

Which phrase best describes the term "bounded rationality"?

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Extension: Reliability

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Extension: Learning Curves

Location Planning and Analysis

Extension: The Transportation Model

Management of Quality

Quality Control

Extension: Acceptance Sampling

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

Jit and Lean Operations

Extension: Maintenance

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters

Exam 5: Extension: Decision Theory

The difference between expected payoff under certainty and expected payoff under risk is the expected:

Consider the following decision scenario: State of Nature Yes No Small \ 1 30 Medium 20 40 Med.-Large 30 45 Large 40 35 Ex-Large 60 20 *PV for profits ($000) The maximax strategy would be:

In reaching a decision, the alternative with the lowest cost should be ranked number 1.

A systemic view of the organization and its operations processes can help minimize the risk of __________ leading to a poor decision.

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

Bounded rationality refers to the limits imposed on decision making because of costs, human abilities, time, technology, and/or availability of information.

Suppose a firm has decided to break its departments down into smaller units. While this likely will help with __________ issues, it raises the possibility that poor decisions will result due to __________.

If the minimum expected regret is computed, it indicates to a decision maker the expected:

A decision tree is:

Which phrase best describes the term "bounded rationality"?

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Extension: Reliability

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Extension: Learning Curves

Location Planning and Analysis

Extension: The Transportation Model

Management of Quality

Quality Control

Extension: Acceptance Sampling

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

Jit and Lean Operations

Extension: Maintenance

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters

Suppose a firm has decided to break its departments down into smaller units. While this likely will help with issues, it raises the possibility that poor decisions will result due to .