Consider the following decision scenario: \[\begin{array} { | l | l | l | l | l | } \hline { \text { Alternative } } & { \text { State of Nature } } & & \\ \hline & \# 1 & \# 2 & \# 3 & \# 4 \\ \hline \text { A } & 1 & 0 & 1 & 6 \\ \hline \text { B } & 1 & 5 & 4 & 2 \\ \hline \text { C } & 3 & 2 & 2 & 3 \\ \hline \end{array}\] If you are uncertain which state of nature will occur, and use the Laplace criterion, which alternative will you select?

The answer of Consider the following decision scenario: \[\begin{array} {...

Consider the following decision scenario: \[\begin{array} { c } { \text { State of Nature } } \\ \begin{array} { | l | l | l | } \hline & \text { High } & \text { Low } \\ \hline \text { Buy } & \$ 80 ^ { * } & 0 \\ \hline \text { Rent } & 70 & 30 \\ \hline \text { Lease } & 30 & 50 \\ \hline \end{array}\end{array}\] *PV for profits ($000) The minimax regret strategy would be:

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

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: $\begin{array}{|l|l|l|l|} \hline\text {SIZE}\\ \text {OF}&\text {DEMAND}\\ \hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\ \hline \text { Small } & \$ 1,000 && 1,000 \\ \hline \text { Medium } & 500 && 2,500 \\ \hline \text { Large } & 0 && 3,000 \\ \hline \end{array}$ If she uses the maximin criterion, what size outlet will she decide to lease?

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

Consider the following decision scenario: \[\begin{array} { c} { \text { State of Nature } } \\ \begin{array} { | l | l | l | l | } \hline { } & \text { High } & \text { Med. } & \text { Low } \\ \hline \text { A } & \$ 20 ^ { * } & 20 & 5 \\ \hline \text { B } & 25 & 30 & 11 \\ \hline \text { C } & 30 & 12 & 13 \\ \hline \text { D } & 10 & 12 & 12 \\ \hline \text { E } & 50 & 40 & - 28 \\ \hline \end{array}\end{array}\] *PV for profits ($000) The minimax regret strategy would be:

A) A. B) B. C) C. D) D. E) E. A) A. B) B. C) C. D) D. E) E.

Consider the following decision scenario: \[\begin{array} { c} { \text { State of Nature } } \\ \begin{array} { | l | l | l | l | } \hline { } & \text { High } & \text { Med. } & \text { Low } \\ \hline \text { A } & \$ 20 ^ { * } & 20 & 5 \\ \hline \text { B } & 25 & 30 & 11 \\ \hline \text { C } & 30 & 12 & 13 \\ \hline \text { D } & 10 & 12 & 12 \\ \hline \text { E } & 50 & 40 & - 28 \\ \hline \end{array}\end{array}\] *PV for profits ($000) With equally likely states of nature, the alternative that has the largest expected monetary value is:

A) A. B) B. C) C. D) D. E) E. A) A. B) B. C) C. D) D. E) E.

The construction manager for Acme Construction, Inc., must decide whether to build single-family homes, apartments, or condominiums. He estimates annual profits (in $000) will vary with the population trend as follows: \[\begin{array} { | l | l | l | l | } \hline { \text { Type } } & { \text { POPULATION TREND } } \\ \hline & \text { Declining } & \text { Stable } & \text { Growing } \\ \hline \text { Single Family } & 200 & 90 & 70 \\ \hline \text { Apartments } & 70 & 170 & 90 \\ \hline \text { Condos } & - 20 & 100 & 220 \\ \hline \end{array}\] If he feels the chances of declining, stable, and growing population trends are 40 percent, 50 percent, and 10 percent, respectively, which kind of houses will he decide to build?

A) single family B) apartments C) condos D) either single family or apartments E) either apartments or condos A) single family B) apartments C) condos D) either single family or apartments E) either apartments or condos

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 large 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: \[\begin{array} { | l | l | l | l | l | } \hline { \text { Alternative } } & { \text { State of Nature } } & & \\ \hline & \# 1 & \# 2 & \# 3 & \# 4 \\ \hline \text { A } & 1 & 0 & 1 & 6 \\ \hline \text { B } & 1 & 5 & 4 & 2 \\ \hline \text { C } & 3 & 2 & 2 & 3 \\ \hline \end{array}\] If you are uncertain which state of nature will occur, and use the minimax regret criterion, which alternative will you select?

The answer of Consider the following decision scenario: \[\begin{array} {...

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: \[\begin{array} { | l | l | l | l|} \hline { \text { Strategy } } & { \text { Cable Network } } \\ \hline & \text { Successful } & &\text { Failure } \\ \hline \text { Print } & \$ 10 && 10 \\ \hline \text { Mixed } & 4 & &14 \\ \hline \text { Television } & 1 && 21 \\ \hline \end{array}\] For what range of probability that the new cable network will be successful will she select the television media strategy?

A) 0-.4 B) 0-.55 C) .4-.7 D) .55-1 E) .7-1 A) 0-.4 B) 0-.55 C) .4-.7 D) .55-1 E) .7-1

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: $\begin{array}{|l|l|l|l|} \hline\text {SIZE}\\ \text {OF}&\text {DEMAND}\\ \hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\ \hline \text { Small } & \$ 1,000 && 1,000 \\ \hline \text { Medium } & 500 && 2,500 \\ \hline \text { Large } & 0 && 3,000 \\ \hline \end{array}$ If she feels there is a 30 percent chance that demand will be high, what is her expected payoff under certainty?

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

Consider the following decision scenario: \[\begin{array} { c } { \text { State of Nature } } \\ \begin{array} { | l | l | l | } \hline & \text { High } & \text { Low } \\ \hline \text { Buy } & \$ 80 ^ { * } & 0 \\ \hline \text { Rent } & 70 & 30 \\ \hline \text { Lease } & 30 & 50 \\ \hline \end{array}\end{array}\] *PV for profits ($000) The maximax strategy would be:

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

The operations manager for a well-drilling company must recommend whether to build a new facility, expand his existing one, or do nothing. He estimates that long-run profits (in $000) will vary with the amount of precipitation (rainfall) as follows: \[\begin{array} { | l | l | l | l | } \hline { \text { ALTERNATIVE } } & { \text { PRECIPITATION } } \\ \hline& \text { LOW } & \text { NORMAL } & \text { HIGH } \\ \hline \text { Do Nothing } & - 100 & 100 & 300 \\ \hline \text { Expand } & 350 & 500 & 200 \\ \hline \text { Build New } & 750 & 300 & 0 \\ \hline \end{array}\] If he uses the minimax regret criterion, which alternative will he decide to select?

A) do nothing B) expand C) build new D) either do nothing or expand E) either expand or build new A) do nothing B) expand C) build new D) either do nothing or expand E) either expand or build new

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: $\begin{array}{|l|l|l|l|} \hline\text {SIZE}\\ \text {OF}&\text {DEMAND}\\ \hline \text { OUTLET } & \text { LOW } && \text { HIGH } \\ \hline \text { Small } & \$ 1,000 && 1,000 \\ \hline \text { Medium } & 500 && 2,500 \\ \hline \text { Large } & 0 && 3,000 \\ \hline \end{array}$ If she uses the Laplace criterion, what size outlet will she decide to lease?

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

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: \[\begin{array} { | l | l | l | l|} \hline { \text { Strategy } } & { \text { Cable Network } } \\ \hline & \text { Successful } & &\text { Failure } \\ \hline \text { Print } & \$ 10 && 10 \\ \hline \text { Mixed } & 4 & &14 \\ \hline \text { Television } & 1 && 21 \\ \hline \end{array}\] For what range of probability that the new cable network will be successful will she select the print media strategy?

A) 0-.4 B) 0-.55 C) .4-.7 D) .55-1 E) .7-1 A) 0-.4 B) 0-.55 C) .4-.7 D) .55-1 E) .7-1

Exam 5: Extension: Decision Theory

Consider the following decision scenario: Alternative State of Nature \#1 \#2 \#3 \#4 A 1 0 1 6 B 1 5 4 2 C 3 2 2 3 If you are uncertain which state of nature will occur, and use the Laplace criterion, which alternative will you select?

(Short Answer)

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Question 81

Consider the following decision scenario: State of Nature High Low Buy \ 8 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The minimax regret strategy would be:

(Multiple Choice)

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Question 82

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 If she uses the maximin criterion, what size outlet will she decide to lease?

(Multiple Choice)

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Question 83

Consider the following decision scenario: State of Nature High Med. Low A \ 2 20 5 B 25 30 11 C 30 12 13 D 10 12 12 E 50 40 -28 *PV for profits ($000) The minimax regret strategy would be:

(Multiple Choice)

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Question 84

Consider the following decision scenario: State of Nature High Med. Low A \ 2 20 5 B 25 30 11 C 30 12 13 D 10 12 12 E 50 40 -28 *PV for profits ($000) With equally likely states of nature, the alternative that has the largest expected monetary value is:

(Multiple Choice)

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Question 85

The construction manager for Acme Construction, Inc., must decide whether to build single-family homes, apartments, or condominiums. He estimates annual profits (in $000) will vary with the population trend as follows: Type POPULATION TREND Declining Stable Growing Single Family 200 90 70 Apartments 70 170 90 Condos -20 100 220 If he feels the chances of declining, stable, and growing population trends are 40 percent, 50 percent, and 10 percent, respectively, which kind of houses will he decide to build?

(Multiple Choice)

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Question 86

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 large facility?

(Multiple Choice)

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Question 87

Consider the following decision scenario: Alternative State of Nature \#1 \#2 \#3 \#4 A 1 0 1 6 B 1 5 4 2 C 3 2 2 3 If you are uncertain which state of nature will occur, and use the minimax regret criterion, which alternative will you select?

(Short Answer)

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Question 88

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 For what range of probability that the new cable network will be successful will she select the television media strategy?

(Multiple Choice)

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Question 89

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 If she feels there is a 30 percent chance that demand will be high, what is her expected payoff under certainty?

(Multiple Choice)

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Question 90

Consider the following decision scenario: State of Nature High Low Buy \ 8 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The maximax strategy would be:

(Multiple Choice)

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Question 91

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 would be the total payoff if the heart lab were funded in both the first and second years?

(Multiple Choice)

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Question 92

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 Laplace criterion, which advertising strategy will she use?

(Multiple Choice)

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Question 93

The operations manager for a well-drilling company must recommend whether to build a new facility, expand his existing one, or do nothing. He estimates that long-run profits (in $000) will vary with the amount of precipitation (rainfall) as follows: ALTERNATIVE PRECIPITATION LOW NORMAL HIGH Do Nothing -100 100 300 Expand 350 500 200 Build New 750 300 0 If he uses the minimax regret criterion, which alternative will he decide to select?

(Multiple Choice)

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Question 94

Which of the following characterizes decision making under uncertainty?

(Multiple Choice)

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Question 95

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 If she uses the Laplace criterion, what size outlet will she decide to lease?

(Multiple Choice)

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Question 96

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 For what range of probability that the new cable network will be successful will she select the print media strategy?

(Multiple Choice)

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Question 97

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 probability that script 1 will be a success, but its sequel will not?

(Multiple Choice)

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Question 98

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

(Multiple Choice)

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Question 99

The value of perfect information is inversely related to losses predicted.

(True/False)

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Question 100

Consider the following decision scenario: Alternative State of Nature \#1 \#2 \#3 \#4 A 1 0 1 6 B 1 5 4 2 C 3 2 2 3 If you are uncertain which state of nature will occur, and use the Laplace criterion, which alternative will you select?

Consider the following decision scenario: State of Nature High Low Buy \ 8 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The minimax regret strategy would be:

Consider the following decision scenario: State of Nature High Med. Low A \ 2 20 5 B 25 30 11 C 30 12 13 D 10 12 12 E 50 40 -28 *PV for profits ($000) The minimax regret strategy would be:

Consider the following decision scenario: State of Nature High Med. Low A \ 2 20 5 B 25 30 11 C 30 12 13 D 10 12 12 E 50 40 -28 *PV for profits ($000) With equally likely states of nature, the alternative that has the largest expected monetary value is:

Consider the following decision scenario: Alternative State of Nature \#1 \#2 \#3 \#4 A 1 0 1 6 B 1 5 4 2 C 3 2 2 3 If you are uncertain which state of nature will occur, and use the minimax regret criterion, which alternative will you select?

Consider the following decision scenario: State of Nature High Low Buy \ 8 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The maximax strategy would be:

Which of the following characterizes decision making under uncertainty?

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

The value of perfect information is inversely related to losses predicted.

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