Exam 14: Decision Analysis

A convenience store chain is considering opening a new store at one of four locations.They have developed the following multi-criteria scoring model for this problem.Complete the table for this problem.What location should they choose based on this information?

The category of decision rules that contains the maximax decision rule is the

The decision rule which determines the minimum payoff for each alternative and then selects the alternative associated with the largest minimum payoff is the

Exhibit 14.8 The following questions use the information below. A company needs to buy a new insurance policy.They have three policies to choose from,A,B and C.The policies differ with respect to price,coverage and ease of billing.The company has developed the following AHP tables for price and summary.The other tables are not shown due to space limitations. A B C D E F G 1 2 3 Criterion A B C 4 Price 0.648 0.230 0.122 0.123 5 Coverage 0.213 0.701 0.085 0.320 7 Billing 0.120 0.272 0.608 0.557 7 Weighted Avg Score: 0.215 0.404 0.381 1.000 Summary -Refer to Exhibit 14.8.What formula should go in cell G11 and get copied to G12:G13 of the Price worksheet to compute the Consistency Measure?

Suppose that the payoffs for an alternative with three states of nature are: 10,20,and 30.The probabilities of these states of nature are 0.2,0.3,and 0.5,respectively.The expected payoff for the alternative is equal to

Exhibit 14.14 The following questions use the Decision Tree model and strategy table information below. -Refer to Exhibit 14.14.What formula is placed in cell B3 of the strategy table to complete the table as provided?

Suppose that the regrets for an alternative with three states of nature are: 20,10,and 0.The probabilities of these states of nature are 0.2,0.3,and 0.5,respectively.The expected regret for the alternative is equal to

Exhibit 14.2 The following questions are based on the information below. An investor is considering 4 investments,A,B,C and leaving his money in the bank.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the decision problem. -Refer to Exhibit 14.2.What formula should go in cell H5 and copied to H6:H8 of the Regret Table above to implement the minimax regret decision rule?

An)is a course of action intended to solve a problem.

Exhibit 14.9 The following questions are based on the information below. An investor is considering 4 investments,W,X,Y,and Z.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the investment decision problem. E 1 Payoff Matrix 2 3 Economy 4 Investment Decline Expand Choice 5 0 80 6 3 0 70 7 5 0 35 8 z 2 0 20 Payoffs -Refer to Exhibit 14.9.The original payoff data is in the worksheet called "Payoffs".What formula should go in cell B5 of this Regret Matrix to compute the regret value? A B C D 1 Regret Matrix 2 3 Economy 4 Investment Decline Expand 5 W 6 7 8 Z Regret

The in a decision problem represent factors that are important to the decision maker.

Exhibit 14.2 The following questions are based on the information below. An investor is considering 4 investments,A,B,C and leaving his money in the bank.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the decision problem. -Refer to Exhibit 14.2.What formula should go in cell F5 of the Regret Matrix above to compute the regret value?

A square node in a decision tree is called an)node.

The decision rule which selects the alternative associated with the smallest maximum opportunity loss is the

Exhibit 14.14 The following questions use the Decision Tree model and strategy table information below. -Refer to Exhibit 14.14.You want to conduct a risk analysis on PG|A)and PG|B).What Decision Tree model changes must you make to be able to use a strategy table?

Exhibit 14.5 The following questions are based on the information below. An investor is considering 4 investments,A,B,C,D.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following decision tree has been developed for the problem.The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%. -Refer to Exhibit 14.5.How high can PE)go before the investor's decision,based on expected monetary value criteria,changes?

A convenience store chain is considering opening a new store at one of four locations.They have developed the following multi-criteria scoring model for this problem.Complete the follow table to prepare the spreadsheet for use in generating a Weighted Score radar chart?

In decision analysis,good decisions

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

A company is planning a plant expansion.They can build a large or small plant.The payoffs for the plant depend on the level of consumer demand for the company's products.The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low.The company can pay a market research firm to survey consumer attitudes towards the company's products.There is a 63% chance that the customers will like the products and a 37% chance that they won't.The payoff matrix and costs of the two plants are listed below.The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products.If the survey is unfavorable there is only a 30% chance that the demand will be high.The following decision tree has been built for this problem.The company has computed that the expected monetary value of the best decision without sample information is 154.35 million.What is the EVSI for this problem in $ million)? Demand Factory Size High Low Plant Cost \million ) Large 200 8 10 5 Small 100 9 2 5