Question 1

The value of sample information is the difference between the expected monetary value with information to the expected monetary value without information.

Accepted Answer

A) True 
 B)False  True

Question 2

Consider the following decision table with rewards in $ millions.   If you are using Hurwicz and decide d2,then α is ______.

Accepted Answer

A)  undetermined; there is not enough information to find the answer 
B)  unfeasible; there is no value of α that would make you choose d2 
C)  larger than 0.4 
D)  less than 0.4 
E)  less than 0.67 
A)  undetermined; there is not enough information to find the answer 
B)  unfeasible; there is no value of α that would make you choose d2 
C)  larger than 0.4 
D)  less than 0.4 
E)  less than 0.67 D

Question 3

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.

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 B

Question 4

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.   If Melissa uses the EMV criterion,the appropriate choice would be: ________.

Accepted Answer

A)  Northeast Only 
B)  Southeast Only 
C)  National 
D)  None (don't introduce the new package) 
A)  Northeast Only 
B)  Southeast Only 
C)  National 
D)  None (don't introduce the new package)

Question 5

In a decision analysis problem,variables (such as benefits or rewards that result from investments in common stocks or corporate bonds and from a new product launch)which result from selecting a particular decision alternative are called posterior probabilities.

Accepted Answer

A) True 
 B)False

Question 6

Consider the following decision table with rewards in $ millions.   Using the Hurwicz criterion with alpha = 0.2,the appropriate choice would be ________.

Accepted Answer

A)  d1 
B)  d2 
C)  d3 
D)  d4 
E)  d5 
A)  d1 
B)  d2 
C)  d3 
D)  d4 
E)  d5

Question 7

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 8

In decision-making under risk,the expected monetary value without information is the largest of the expected monetary values for the various decision alternatives.

Accepted Answer

A) True 
 B)False

Question 9

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather. His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets.   The EMV of this investment opportunity with the advisor's prediction is ________.

Accepted Answer

A)  $167,379 
B)  $174,200 
C)  $153,900 
D)  $136,700 
E)  $140,011 
A)  $167,379 
B)  $174,200 
C)  $153,900 
D)  $136,700 
E)  $140,011

Question 10

In a decision-making under risk scenario,the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Consider the following decision table with rewards in $ millions.   If you are using Hurwicz criterion with α = 0.3 and decide d2,then y is ______.

Accepted Answer

A)  undetermined; there is not enough information to find the answer 
B)  unfeasible; there is no value of y that would make you choose d2 
C)  larger than 3.71 
D)  larger than 8 
E)  larger than 12.67 
A)  undetermined; there is not enough information to find the answer 
B)  unfeasible; there is no value of y that would make you choose d2 
C)  larger than 3.71 
D)  larger than 8 
E)  larger than 12.67

Question 13

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.

Accepted Answer

A)  $128,000 
B)  $137,000 
C)  $144,000 
D)  $151,000 
E)  $127,000 
A)  $128,000 
B)  $137,000 
C)  $144,000 
D)  $151,000 
E)  $127,000

Question 14

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.

Accepted Answer

A)  T-Bills 
B)  Stocks 
C)  Bonds 
D)  Mixture 
E)  Bank CD's 
A)  T-Bills 
B)  Stocks 
C)  Bonds 
D)  Mixture 
E)  Bank CD's

Question 15

The expected monetary value without information is $60,and the expected monetary payoff with perfect information is $120.The expected value of perfect information is __.

Accepted Answer

A)  $60 
B)  $2 
C)  $180 
D)  $0.50 
E)  $120 
A)  $60 
B)  $2 
C)  $180 
D)  $0.50 
E)  $120

Question 16

Which of the following choices is not true about decision theory?

Accepted Answer

A)  Decision alternatives for one person can be states of nature for another. 
B)  Payoffs are always positive or zero. 
C)  If you play a card game at a casino, the cards you are dealt are states of nature. 
D)  If you decide to take a MOOC (massive open online course), how much you learn is a payoff. 
E)  In a two-person interaction, it is possible that the sum of the two payoffs is positive. 
A)  Decision alternatives for one person can be states of nature for another. 
B)  Payoffs are always positive or zero. 
C)  If you play a card game at a casino, the cards you are dealt are states of nature. 
D)  If you decide to take a MOOC (massive open online course), how much you learn is a payoff. 
E)  In a two-person interaction, it is possible that the sum of the two payoffs is positive.

Question 17

In a decision-making under uncertainty scenario using the strategy of minmax regret,all the entries in the opportunity loss table must be zero or positive.

Accepted Answer

A) True 
 B)False

Question 18

A random person is selected from a large population in which 5% are users of a dangerous illegal drug.A drug test that correctly identifies users 99% of the times and nonusers 95% of the time is administered to this individual and gives a positive result.What is the probability that this individual is actually a user of this drug?

Accepted Answer

A)  0.99 
B)  0.94 
C)  0.61 
D)  0.53 
E)  0.51 
A)  0.99 
B)  0.94 
C)  0.61 
D)  0.53 
E)  0.51

Question 19

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 20

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 Hurwicz criterion with alpha = 0.4,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

The value of sample information is the difference between the expected monetary value with information to the expected monetary value without information.

Consider the following decision table with rewards in $ millions. If you are using Hurwicz and decide d₂,then α is ______.

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.

In a decision analysis problem,variables (such as benefits or rewards that result from investments in common stocks or corporate bonds and from a new product launch)which result from selecting a particular decision alternative are called posterior probabilities.

Consider the following decision table with rewards in $ millions. Using the Hurwicz criterion with alpha = 0.2,the appropriate choice would be ________.

In decision-making under risk,the expected monetary value without information is the largest of the expected monetary values for the various decision alternatives.

In a decision-making under risk scenario,the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.

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

Consider the following decision table with rewards in $ millions. If you are using Hurwicz criterion with α = 0.3 and decide d₂,then y is ______.

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.

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 expected monetary value without information is $60,and the expected monetary payoff with perfect information is $120.The expected value of perfect information is __.

Which of the following choices is not true about decision theory?

In a decision-making under uncertainty scenario using the strategy of minmax regret,all the entries in the opportunity loss table must be zero or positive.

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

A Nalysis 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

The value of sample information is the difference between the expected monetary value with information to the expected monetary value without information.

Consider the following decision table with rewards in $ millions. If you are using Hurwicz and decide d2,then α is ______.

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.

In a decision analysis problem,variables (such as benefits or rewards that result from investments in common stocks or corporate bonds and from a new product launch)which result from selecting a particular decision alternative are called posterior probabilities.

Consider the following decision table with rewards in $ millions. Using the Hurwicz criterion with alpha = 0.2,the appropriate choice would be ________.

In decision-making under risk,the expected monetary value without information is the largest of the expected monetary values for the various decision alternatives.

In a decision-making under risk scenario,the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.

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

Consider the following decision table with rewards in $ millions. If you are using Hurwicz criterion with α = 0.3 and decide d2,then y is ______.

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.

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 expected monetary value without information is $60,and the expected monetary payoff with perfect information is $120.The expected value of perfect information is __.

Which of the following choices is not true about decision theory?

In a decision-making under uncertainty scenario using the strategy of minmax regret,all the entries in the opportunity loss table must be zero or positive.

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

A Nalysis 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. If you are using Hurwicz and decide d₂,then α is ______.

Consider the following decision table with rewards in $ millions. If you are using Hurwicz criterion with α = 0.3 and decide d₂,then y is ______.