Question 1

In decision-making under uncertainty,a pessimistic approach is the ___.

Accepted Answer

A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy 
A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy

Question 2

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI),is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's)for the three possible levels of market demand:   The opportunity loss for the combination "Purchase New Equipment" and "High" is ___.

Accepted Answer

A) 0.0 
B) 0.5 
C) 2.5 
D) 3.0 
E) 3.5 
A) 0.0 
B) 0.5 
C) 2.5 
D) 3.0 
E) 3.5

Question 3

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI),is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's)for the three possible levels of market demand:   If Trey uses the maximax criterion,the appropriate alternative would be: ___.

Accepted Answer

A) lease new equipment 
B) purchase new equipment 
C) add third shift 
D) do nothing 
E) do everything 
A) lease new equipment 
B) purchase new equipment 
C) add third shift 
D) do nothing 
E) do everything

Question 4

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $50,000,but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill,his loss is the cost of the mineral and drilling rights,which amount to $1000.The probability of the state of nature "oil in the tract" is unknown.If Dan is a pessimist,he would choose the ___.

Accepted Answer

A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy 
A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy

Question 5

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $50,000,but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill,his loss is the cost of the mineral and drilling rights,which amount to $1000.For Dan's decision problem,the variable "oil in the tract" is one of the ___.

Accepted Answer

A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities 
A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities

Question 6

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $50,000,but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill,his loss is the cost of the mineral and drilling rights,which amount to $1000.The probability of the state of nature "oil in the tract" is unknown.If Dan is an optimist,he would choose the ___.

Accepted Answer

A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy 
A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy

Question 7

Ray Crofford is evaluating investment alternatives to invest $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions:   If Ray uses the maximin criterion,the appropriate choice would be ___.

Accepted Answer

A) T-Bills 
B) Stocks 
C) Bonds 
D) Mixture 
E) none 
A) T-Bills 
B) Stocks 
C) Bonds 
D) Mixture 
E) none

Question 8

In decision-making under uncertainty,an optimistic approach is the ___.

Accepted Answer

A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy 
A) maximin criterion 
B) maximax criterion 
C) Hurwicz criterion 
D) minimax regret strategy 
E) maximin regret strategy

Question 9

Melissa Rossi,Product Manager at National Consumers,Inc.(NCI),is evaluating alternatives for introducing a new package for toothpaste.She has identified four alternative markets,and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities:   The expected monetary payoff with perfect information is ___.

Accepted Answer

A) $570,000 
B) $680,000 
C) $760,000 
D) $830,000 
E) $980,000 
A) $570,000 
B) $680,000 
C) $760,000 
D) $830,000 
E) $980,000

Question 10

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI),is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's)for the three possible levels of market demand:   If Trey uses the maximin criterion,the appropriate alternative would be: ___.

Accepted Answer

A) lease new equipment 
B) purchase new equipment 
C) add third shift 
D) do nothing 
E) do everything 
A) lease new equipment 
B) purchase new equipment 
C) add third shift 
D) do nothing 
E) do everything

Question 11

In a decision-making scenario,if it is 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.

Accepted Answer

A) True 
 B)False

Question 12

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 decision alternatives.

Accepted Answer

A) True 
 B)False

Question 13

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 ___.

Accepted Answer

A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities 
A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities

Question 14

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $50,000,but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill,his loss is the cost of the mineral and drilling rights,which amount to $1000.For Dan's decision problem,the variable "net loss of $50,000" is one of the ___.

Accepted Answer

A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities 
A) payoffs 
B) decision alternatives 
C) states of nature 
D) revised probabilities 
E) prior probabilities

Question 15

Make decisions under risk by constructing decision trees,calculating expected monetary value and expected value of perfect information,and analyzing utility.

Accepted Answer

In decision making with risk,the decisio

Question 16

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following table which shows expected profits (in $10,000's)for various market conditions and their probabilities:   The EMV of investing in Bonds is ___.

Accepted Answer

A) $30,000 
B) $63,000 
C) $78,000 
D) $81,000 
E) $100,000 
A) $30,000 
B) $63,000 
C) $78,000 
D) $81,000 
E) $100,000

Question 17

Revise probabilities in light of sample information by using Bayesian analysis and calculating the expected value of sample information.

Accepted Answer

By using Bayes' theorem,the probabilitie

Question 18

Ray Crofford is evaluating investment alternatives to invest $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions:   If Ray uses the Hurwicz criterion with alpha = 0.9,the appropriate choice is ___.

Accepted Answer

A) T-Bills 
B) Stocks 
C) Bonds 
D) Mixture 
E) none 
A) T-Bills 
B) Stocks 
C) Bonds 
D) Mixture 
E) none

Question 19

The value of perfect information is the difference between the monetary payoff with perfect information and the expected monetary payoff with no information.

Accepted Answer

A) True 
 B)False

Question 20

Consider the following decision table with rewards in $ millions.   The opportunity loss for the combination "S3" and "d1" is ___.

Accepted Answer

A) 9 
B) 5 
C) 3 
D) 0 
E) -1 
A) 9 
B) 5 
C) 3 
D) 0 
E) -1

In decision-making under uncertainty,a pessimistic approach is the ___.

In decision-making under uncertainty,an optimistic approach is the ___.

In a decision-making scenario,if it is 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 a decision analysis problem,variables (such as investing in common stocks or corporate bonds)which are under the decision maker's control are called decision alternatives.

Make decisions under risk by constructing decision trees,calculating expected monetary value and expected value of perfect information,and analyzing utility.

Revise probabilities in light of sample information by using Bayesian analysis and calculating the expected value of sample information.

The value of perfect information is the difference between the monetary payoff with perfect information and the expected monetary payoff with no information.

Consider the following decision table with rewards in $ millions. The opportunity loss for the combination "S₃" and "d₁" is ___.

Introduction to Statistics

Charts and Graphs

Descriptive Statistics

Probability

Discrete Distributions

Continuous Distributions

Sampling and Sampling Distributions

Statistical Inference: Estimation for Single Populations

Statistical Inference: Hypothesis Testing for Single Populations

Statistical Inferences About Two Populations

Analysis of Variance and Design of Experiments

Simple Regression Analysis and Correlation

Multiple Regression Analysis

Building Multiple Regression Models

Time-Series Forecasting and Index Numbers

Analysis of Categorical Data

Nonparametric Statistics

Statistical Quality Control

Filters

Exam 19: Decision Analysis

In decision-making under uncertainty,a pessimistic approach is the ___.

In decision-making under uncertainty,an optimistic approach is the ___.

In a decision-making scenario,if it is 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 a decision analysis problem,variables (such as investing in common stocks or corporate bonds)which are under the decision maker's control are called decision alternatives.

Make decisions under risk by constructing decision trees,calculating expected monetary value and expected value of perfect information,and analyzing utility.

Revise probabilities in light of sample information by using Bayesian analysis and calculating the expected value of sample information.

The value of perfect information is the difference between the monetary payoff with perfect information and the expected monetary payoff with no information.

Consider the following decision table with rewards in $ millions. The opportunity loss for the combination "S3" and "d1" is ___.

Introduction to Statistics

Charts and Graphs

Descriptive Statistics

Probability

Discrete Distributions

Continuous Distributions

Sampling and Sampling Distributions

Statistical Inference: Estimation for Single Populations

Statistical Inference: Hypothesis Testing for Single Populations

Statistical Inferences About Two Populations

Analysis of Variance and Design of Experiments

Simple Regression Analysis and Correlation

Multiple Regression Analysis

Building Multiple Regression Models

Time-Series Forecasting and Index Numbers

Analysis of Categorical Data

Nonparametric Statistics

Statistical Quality Control

Filters

Consider the following decision table with rewards in $ millions. The opportunity loss for the combination "S₃" and "d₁" is ___.