Question 1

Exhibit 14.4
The following questions are based on the information below.
  
-Refer to Exhibit 14.4.What is the expected value with perfect information for the investor?

Accepted Answer

A) 13.5 
B) 45.5 
C) 59 
D) 80 
A) 13.5 
B) 45.5 
C) 59 
D) 80

Question 2

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.What formulas must be placed in cells C13:F16 to compute the weighted scores for use in generating a Weighted Score radar chart?

Accepted Answer

Cell Formula Copied

Question 3

In a graphical representation of decision trees the decision nodes are represented by

Accepted Answer

A) squares 
B) circles 
C) solid dots 
D) ovals 
A) squares 
B) circles 
C) solid dots 
D) ovals

Question 4

Exhibit 14.3
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.The investor has estimated the probability of a declining economy at 70% and an expanding economy at 30%.
  
-Refer to Exhibit 14.3.What is the expected monetary value of Investment A?

Accepted Answer

A) 34. 
B) 30. 
C) 20. 
D) 15. 
A) 34. 
B) 30. 
C) 20. 
D) 15.

Question 5

Which of the following is a goal of decision analysis?

Accepted Answer

A) Help individuals make good decisions. 
B) Ensure decisions lead to good outcomes. 
C) Avoiding decisions leading to bad outcomes. 
D) Reduce the role of luck in a decision. 
A) Help individuals make good decisions. 
B) Ensure decisions lead to good outcomes. 
C) Avoiding decisions leading to bad outcomes. 
D) Reduce the role of luck in a decision.

Question 6

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

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 7

Exhibit 14.10
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 decision problem.The investor has estimated the probability of a declining economy at 80% and an expanding economy at 20%.
  
-Refer to Exhibit 14.10.What formulas should go in cell D5:D14 and B12:C12 of the spreadsheet to compute the EVPI?

Accepted Answer

Cell Formula Copied to
 
 D5 =

Question 8

The amount of opportunity lost in making a decision is called

Accepted Answer

A) loss. 
B) frustration. 
C) negative profit. 
D) regret. 
A) loss. 
B) frustration. 
C) negative profit. 
D) regret.

Question 9

The scores in a scoring model can be thought of as subjective assessments of

Accepted Answer

A) usefulness. 
B) worthiness. 
C) utility. 
D) payoff. 
A) usefulness. 
B) worthiness. 
C) utility. 
D) payoff.

Question 10

Exhibit 14.11
The following questions use the information below.
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 72% chance that demand for their products will be high and a 28% 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 76% chance that the customers will like the products and a 24% 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 an 87% chance that demand will be high for the products.If the survey is unfavorable there is only a 25% chance that the demand will be high.
 $$\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\text { Demand }\
\begin{array} { l c c c } 
 \text { Factory Size } & \text { High } & \text { Low } & \text { Plant Cost \$millian) } \
\hline \text { Large } & 90 & 40 & 5 \
\text { Small } & 55 & 20 & 1
\end{array}
\end{array}$$ The company has developed the following conditional probability table for their decision problem.
  
-Refer to Exhibit 14.11.What is PF?H),where F = favorable response and H = high demand?

Accepted Answer

The answer of Exhibit 14.11
The following questions use the information...

Question 11

A course of action intended to solve a problem is called an)

Accepted Answer

A) alternative. 
B) option. 
C) decision. 
D) criteria. 
A) alternative. 
B) option. 
C) decision. 
D) criteria.

Question 12

Exhibit 14.7
The following questions use the information below.
A decision maker is faced with two alternatives.The decision maker has determined that she is indifferent between the two alternatives when p = 0.45.
Alternative 1: Receive $82,000 with certainty
Alternative 2: Receive $143,000 with probability p and lose $15,000 with probability 1 − p).
-Refer to Exhibit 14.7.What is the decision maker's certainty equivalent for this problem?

Accepted Answer

A) −$15,000 
B) $82,000 
C) $56,100 
D) $82,000. 
A) −$15,000 
B) $82,000 
C) $56,100 
D) $82,000.

Question 13

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.
   $\begin{array}{|c|c|c|c|c|c|c|c}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } & \text { G } \
\hline 1 & & & & & & & \
\hline 2 & & & & & & & \
\hline 3 & & \text { Criterion } & \text { A } & \text { B } & \text { C } & & \
\hline 4 & & \text { Price } & 0.648 & 0.230 & 0.122 & & 0.123 \
\hline 5 & & \text { Coverage } & 0.213 & 0.701 & 0.085 & & 0.320 \
\hline 7 & & \text { Billing } & 0.120 & 0.272 & 0.608 & & 0.557 \
\hline 7 & & \text { Weighted Avg Score: } & 0.215 & 0.404 & 0.381 & & 1.000 \
\hline & & \text { Summary } & & & & & \
\hline
\end{array}$

-Refer to Exhibit 14.8.What formula should go in cell G15 of the Price worksheet to compute the Consistency Ratio?

Accepted Answer

A) =AVERAGEG11:G13)-3)/2*0.58) 
B) =AVERAGEG11:G13)-3) 
C) =AVERAGEG11:G13))/2*0.58) 
D) =AVERAGEG11:G13)-3)/0.58 
A) =AVERAGEG11:G13)-3)/2*0.58) 
B) =AVERAGEG11:G13)-3) 
C) =AVERAGEG11:G13))/2*0.58) 
D) =AVERAGEG11:G13)-3)/0.58

Question 14

Decision analysis supports all but one of the following goals.Which goal is not supported?

Accepted Answer

A) Help make good decisions. 
B) Help ensure selection of good outcomes. 
C) Analyze decision problems logically. 
D) Incorporate problem uncertainty. 
A) Help make good decisions. 
B) Help ensure selection of good outcomes. 
C) Analyze decision problems logically. 
D) Incorporate problem uncertainty.

Question 15

Exhibit 14.1
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 14.1.What decision should be made according to the minimax regret decision rule?

Accepted Answer

A) A 
B) B 
C) C 
D) Bank 
A) A 
B) B 
C) C 
D) Bank

Question 16

Exhibit 14.10
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 decision problem.The investor has estimated the probability of a declining economy at 80% and an expanding economy at 20%.
  
-Refer to Exhibit 14.10.The original payoff data is in the worksheet above called "Payoffs".What formula should go in cell B5 of the spreadsheet if the expected regret decision rule is to be used?

Accepted Answer

=MAXPayoff

Exhibit 14.4 The following questions are based on the information below. -Refer to Exhibit 14.4.What is the expected value with perfect information for the investor?

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.What formulas must be placed in cells C13:F16 to compute the weighted scores for use in generating a Weighted Score radar chart?

In a graphical representation of decision trees the decision nodes are represented by

Which of the following is a goal of decision analysis?

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

The amount of opportunity lost in making a decision is called

The scores in a scoring model can be thought of as subjective assessments of

A course of action intended to solve a problem is called an)

Decision analysis supports all but one of the following goals.Which goal is not supported?

Introduction to Modeling and Decision Analysis

Introduction to Optimization and Linear Programming

Modeling and Solving Lp Problems in a Spreadsheet

Sensitivity Analysis and the Simplex Method

Network Modeling

Integer Linear Programming

Goal Programming and Multiple Objective Optimization

Nonlinear Programming and Evolutionary Optimization

Regression Analysis

Data Mining

Time Series Forecasting

Introduction to Simulation Using Analytic Solver Platform

Queuing Theory

Project Management Online

Filters

Exam 14: Decision Analysis

Exhibit 14.4 The following questions are based on the information below. -Refer to Exhibit 14.4.What is the expected value with perfect information for the investor?

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.What formulas must be placed in cells C13:F16 to compute the weighted scores for use in generating a Weighted Score radar chart?

In a graphical representation of decision trees the decision nodes are represented by

Which of the following is a goal of decision analysis?

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

The amount of opportunity lost in making a decision is called

The scores in a scoring model can be thought of as subjective assessments of

A course of action intended to solve a problem is called an)

Decision analysis supports all but one of the following goals.Which goal is not supported?

Introduction to Modeling and Decision Analysis

Introduction to Optimization and Linear Programming

Modeling and Solving Lp Problems in a Spreadsheet

Sensitivity Analysis and the Simplex Method

Network Modeling

Integer Linear Programming

Goal Programming and Multiple Objective Optimization

Nonlinear Programming and Evolutionary Optimization

Regression Analysis

Data Mining

Time Series Forecasting

Introduction to Simulation Using Analytic Solver Platform

Queuing Theory

Project Management Online

Filters