Question 1

A decision criterion in which the decision payoffs are weighted by a coefficient of optimism is known as the Hurwicz criterion.

Accepted Answer

A) True 
 B)False  True

Question 2

When probabilities are assigned to states of nature the situation is referred to as decision making under uncertainty.

Accepted Answer

A) True 
 B)False  False

Question 3

The maximum value of perfect information to the decision maker is known as

Accepted Answer

A) the expected value of perfect information 
B) the expected value of imperfect information 
C) the minimum of the minimax regret 
D) none of the above 
A) the expected value of perfect information 
B) the expected value of imperfect information 
C) the minimum of the minimax regret 
D) none of the above A

Question 4

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1)a large investment; (2)a medium investment;and (3)a small investment.The business believes that there are three possible future outcomes for its product: (1)increasing demand; (2)stable demand;and (3)decreasing demand.The following payoff table describes the decision situation.
 
The best decision for the business using the maximax criterion would be to

Accepted Answer

A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose increasing demand 
A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose increasing demand

Question 5

A small parts manufacturer has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand.The following payoff table describes the company's decision situation.
 
The regret that is associated with the decision to acquire competitor when demand is low is

Accepted Answer

A) $0 
B) $525,000 
C) $1,250,000 
D) $1,275,000 
A) $0 
B) $525,000 
C) $1,250,000 
D) $1,275,000

Question 6

A small parts manufacturer has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand.The following payoff table describes the company's decision situation.
 
The best decision for the manufacturer using the minimax regret decision criterion is to

Accepted Answer

A) expand facilities 
B) acquire competitor 
C) subcontract production 
D) select high demand 
A) expand facilities 
B) acquire competitor 
C) subcontract production 
D) select high demand

Question 7

A decision criterion that results in the maximum of the minimum payoffs is called a maximin criterion.

Accepted Answer

A) True 
 B)False

Question 8

What is decision analysis?

Accepted Answer

Decision analysis is a set of quantitati

Question 9

In a decision making situation the events that may occur in the future are known as states of nature.

Accepted Answer

A) True 
 B)False

Question 10

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1)a large investment; (2)a medium investment;and (3)a small investment.The business believes that there are three possible future outcomes for its product: (1)increasing demand; (2)stable demand;and (3)decreasing demand.The following payoff table describes the decision situation.
 
The best decision for the business using the equal likelihood criterion would be to

Accepted Answer

A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose increasing demand 
A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose increasing demand

Question 11

A small parts manufacturer has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation.
 
The expected value for the expand facilities decision is

Accepted Answer

A) $250,000 
B) $160,000 
C) $700,000 
D) $1,200,000 
A) $250,000 
B) $160,000 
C) $700,000 
D) $1,200,000

Question 12

Decision analysis is a quantitative technique supporting decision making with uncertainty.

Accepted Answer

A) True 
 B)False

Question 13

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1)a large investment; (2)a medium investment;and (3)a small investment.The business believes that there are three possible future outcomes for its product: (1)increasing demand; (2)stable demand;and (3)decreasing demand.The business believes that the probability for increasing,stable and decreasing product demand are 0.4,0.5,and 0.1,respectively.The following payoff table describes the decision situation.
 
The expected value for the medium investment decision is

Accepted Answer

A) $600,000 
B) $540,000 
C) $330,000 
D) $165,000 
A) $600,000 
B) $540,000 
C) $330,000 
D) $165,000

Question 14

The LaPlace criterion is a decision criterion in which each state of nature is weighted equally.

Accepted Answer

A) True 
 B)False

Question 15

A payoff table is a quantitative technique supporting decision making under uncertainty.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following techniques is the most widely used decision-making criterion under risk?

Accepted Answer

A) maximax criterion 
B) minimax regret criterion 
C) expected value criterion 
D) Hurwicz criterion 
A) maximax criterion 
B) minimax regret criterion 
C) expected value criterion 
D) Hurwicz criterion

Question 17

A small parts manufacturer has just engineered a new product for the automotive industry.In order to produce the part the company can expand existing facilities,acquire a competitor,or subcontract production.The company believes the product will either experience high market demand or low market demand,with probabilities of 0.6 and 0.4,respectively.The following payoff table describes the company's decision situation.
 
The best decision according to the expected value criterion is:

Accepted Answer

A) Acquire Competitor 
B) Expand Facilities 
C) Subcontract Production 
D) High Demand 
A) Acquire Competitor 
B) Expand Facilities 
C) Subcontract Production 
D) High Demand

Question 18

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1)a large investment; (2)a medium investment;and (3)a small investment.The business believes that there are three possible future outcomes for its product: (1)increasing demand; (2)stable demand;and (3)decreasing demand.The following payoff table describes the decision situation.
 
The best decision for the business using the maximin criterion would be to

Accepted Answer

A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose stable demand 
A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose stable demand

Question 19

Quantitative methods are tools available to operations managers to help make a decision but not a recommendation.

Accepted Answer

A) True 
 B)False

Question 20

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1)a large investment; (2)a medium investment;and (3)a small investment.The business believes that there are three possible future outcomes for its product: (1)increasing demand; (2)stable demand;and (3)decreasing demand.The following payoff table describes the decision situation.
 
The best decision for the business using the Hurwicz criterion with a coefficient of optimism equal to 0.80 would be to

Accepted Answer

A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose stable demand 
A) make the large investment 
B) make the medium investment 
C) make the small investment 
D) choose stable demand

A decision criterion in which the decision payoffs are weighted by a coefficient of optimism is known as the Hurwicz criterion.

When probabilities are assigned to states of nature the situation is referred to as decision making under uncertainty.

The maximum value of perfect information to the decision maker is known as

A decision criterion that results in the maximum of the minimum payoffs is called a maximin criterion.

What is decision analysis?

In a decision making situation the events that may occur in the future are known as states of nature.

Decision analysis is a quantitative technique supporting decision making with uncertainty.

The LaPlace criterion is a decision criterion in which each state of nature is weighted equally.

A payoff table is a quantitative technique supporting decision making under uncertainty.

Which of the following techniques is the most widely used decision-making criterion under risk?

Quantitative methods are tools available to operations managers to help make a decision but not a recommendation.

Operations Management

Quality Management

Statistical Quality Control

Product Design

Service Design

Processes and Technology

Scheduling

Capacity and Facilities

Human Resources

Project Management

Supply Chain Management: Strategy and Design

Global Supply Chain Procurement and Distribution

Forecasting

Inventory Management

Operational Decision-Making Tools: Simulation

Operational Decision-Making Tools: Linear Programming

The Sales and Operations Planning Process

Resource Planning

Lean Systems

Operational Decision-Making Tools: Acceptance Sampling

Decision-Making Tools: Facility Location Models

Operational Decision-Making Tools: Work Measurement

Filters

Exam 18: Operational Decision-Making Tools: Decision Analysis

A decision criterion in which the decision payoffs are weighted by a coefficient of optimism is known as the Hurwicz criterion.

When probabilities are assigned to states of nature the situation is referred to as decision making under uncertainty.

The maximum value of perfect information to the decision maker is known as

A decision criterion that results in the maximum of the minimum payoffs is called a maximin criterion.

What is decision analysis?

In a decision making situation the events that may occur in the future are known as states of nature.

Decision analysis is a quantitative technique supporting decision making with uncertainty.

The LaPlace criterion is a decision criterion in which each state of nature is weighted equally.

A payoff table is a quantitative technique supporting decision making under uncertainty.

Which of the following techniques is the most widely used decision-making criterion under risk?

Quantitative methods are tools available to operations managers to help make a decision but not a recommendation.

Operations Management

Quality Management

Statistical Quality Control

Product Design

Service Design

Processes and Technology

Scheduling

Capacity and Facilities

Human Resources

Project Management

Supply Chain Management: Strategy and Design

Global Supply Chain Procurement and Distribution

Forecasting

Inventory Management

Operational Decision-Making Tools: Simulation

Operational Decision-Making Tools: Linear Programming

The Sales and Operations Planning Process

Resource Planning

Lean Systems

Operational Decision-Making Tools: Acceptance Sampling

Decision-Making Tools: Facility Location Models

Operational Decision-Making Tools: Work Measurement

Filters