Question 1

The expected value of sample information

Accepted Answer

A)  is never more than EVPI. 
B)  can be greater or less than EVPI. 
C)  can be positive or negative. 
D)  is equivalent to the EVPI. 
A)  is never more than EVPI. 
B)  can be greater or less than EVPI. 
C)  can be positive or negative. 
D)  is equivalent to the EVPI.

Question 2

The maximax criterion results in the

Accepted Answer

A)  maximum of the minimum payoffs. 
B)  maximum of the maximum payoffs. 
C)  minimum of the maximum payoffs. 
D)  minimum of the minimum payoffs. 
A)  maximum of the minimum payoffs. 
B)  maximum of the maximum payoffs. 
C)  minimum of the maximum payoffs. 
D)  minimum of the minimum payoffs.

Question 3

The minimax regret criterion maximizes the minimum regret.

Accepted Answer

A) True 
 B)False

Question 4

________ is the difference between the payoff from the best decision and all other decision payoffs.

Accepted Answer

The answer of ________ is the difference between the payoff...

Question 5

A manufacturer must decide whether to build a small or a large plant at a new location. Demand at the location can be either low or high, with probabilities estimated to be 0.4 and 0.6, respectively. If a small plant is built, and demand is high, the production manager may choose to maintain the current size or to expand. The net present value of profits is $223,000 if the firm chooses not to expand. However, if the firm chooses to expand, there is a 50% chance that the net present value of the returns will be 330,000 and a 50% chance the estimated net present value of profits will be $210,000. If a small facility is built and demand is low, there is no reason to expand and the net present value of the profits is $200,000. However, if a large facility is built and the demand turns out to be low, the choice is to do nothing with a net present value of $40,000 or to stimulate demand through local advertising. The response to advertising can be either modest with a probability of .3 or favorable with a probability of .7. If the response to advertising is modest, the net present value of the profits is $20,000. However, if the response to advertising is favorable, then the net present value of the profits is $220,000. Finally, if the large plant is built and the demand happens to be high, the net present value of the profits $800,000.
-Draw a decision tree and determine the payoff for each decision and event node. Which alternative should the manufacturer choose?

Accepted Answer

@#IMG-DLM& EV1 = (.3)(20,000) + (.7)((220,000) = $

Question 6

A ________ probability is the altered marginal probability of an event based on additional information.

Accepted Answer

A)  marginal 
B)  conditional 
C)  posterior 
D)  none of the above 
A)  marginal 
B)  conditional 
C)  posterior 
D)  none of the above

Question 7

The Hurwicz criterion

Accepted Answer

A)  multiplies the worst payoff by one minus the coefficient of optimism. 
B)  multiplies the best payoff by one minus the coefficient of optimism. 
C)  is a compromise between the minimax and maximin criteria. 
D)  all of the above 
A)  multiplies the worst payoff by one minus the coefficient of optimism. 
B)  multiplies the best payoff by one minus the coefficient of optimism. 
C)  is a compromise between the minimax and maximin criteria. 
D)  all of the above

Question 8

A group of friends are planning a recreational outing and have constructed the following payoff table to help them decide which activity to engage in. Assume that the payoffs represent their level of enjoyment for each activity under the various weather conditions.
 $\begin{array}{lcccc}
&&&\text { Weather }\
&&Cold &Warm& Rainy\
&&\mathrm{S} & \mathrm{S}_{2} & \mathrm{~S}_{3}\
\text { Bike: } & \text { Al } & 10 & 8 & 6 \
\text { Hike: } & \text { A2 } & 14 & 15 & 2 \
\text { Fish: } & \text { A3 } & 7 & 8 & 9
\end{array}$
-If the group is conservative, what decision will they make?

Accepted Answer

The answer of A group of friends are planning a...

Question 9

Events are mutually exclusive if one, and only one, can occur at a time.

Accepted Answer

A) True 
 B)False

Question 10

A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. $$\begin{array} { l | c r } 
\text { Alternative } & \text { Brisk } & \text { Slow } \
\hline \text { Buy } & 90 & - 10 \
\text { Rent } & 70 & 40 \
\text { Lease } & 60 & 55
\end{array}$$ The equal likelihood criterion strategy is

Accepted Answer

A)  Buy. 
B)  Rent. 
C)  Lease. 
D)  Brisk. 
A)  Buy. 
B)  Rent. 
C)  Lease. 
D)  Brisk.

Question 11

The Hurwicz criterion is a compromise between the minimax and minimin criteria.

Accepted Answer

A) True 
 B)False

Question 12

Consider the following decision tree.   
What is the expected value at node 4?

Accepted Answer

The answer of Consider the following decision tree.  ...

Question 13

The maximin criterion maximizes the minimum regret.

Accepted Answer

A) True 
 B)False

Question 14

The Hurwicz criterion multiplies the best payoff by the coefficient of optimism.

Accepted Answer

A) True 
 B)False

Question 15

A manager has developed a payoff table that indicates the profits associated with a set of alternatives under two possible states of nature.
 $$\begin{array} { c c c } 
\text { Alt } & \mathbf { S } _ { \mathbf { 1 } } & \mathbf { S } _ { \mathbf { 2 } } \
\mathbf { 1 } & 10 & 2 \
\mathbf { 2 } & - 2 & 8 \
\mathbf { 3 } & 8 & 5
\end{array}$$
-If the manager uses maximin as the decision criterion, which of the alternatives should she choose?

Accepted Answer

The answer of A manager has developed a payoff table...

Question 16

A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature.

Accepted Answer

A) True 
 B)False

Question 17

If the decision maker receives additional information such that the marginal probabilities of certain events should be modified, these revised probabilites are called ________.

Accepted Answer

posterior

Question 18

The maximin criterion results in the

Accepted Answer

A)  minimum of the maximum payoffs. 
B)  maximum of the maximum payoffs. 
C)  maximum of the minimum payoffs. 
D)  minimum of the minimum payoffs. 
A)  minimum of the maximum payoffs. 
B)  maximum of the maximum payoffs. 
C)  maximum of the minimum payoffs. 
D)  minimum of the minimum payoffs.

Question 19

The quality control manager for ENTA Inc. must decide whether to accept (A1), further analyze (A2), or reject (A3) a lot of incoming material. Assume the following payoff table is available. Historical data indicates that there is 30% chance that the lot is poor quality (S1), 50 % chance that the lot is fair quality (S2), and 20% chance that the lot is good quality (S3).
 $$\begin{array} { l r r r } 
& \mathbf { S } _ { \mathbf { 1 } } & \mathbf { S } _ { \mathbf { 2 } } & \mathbf { S } _ { \mathbf { 3 } } \
\mathbf { A } _ { \mathbf { 1 } } & 20 & 30 & 90 \
\mathbf { A } _ { \mathbf { 2 } } & 60 & 70 & 10 \
\mathbf { A } _ { \mathbf { 3 } } & 80 & 50 & 40
\end{array}$$
-What action would you choose according to expected value criterion?

Accepted Answer

EV1 = (.3)(20) + (.5)(30) + (.

Question 20

The maximin approach to decision making refers to

Accepted Answer

A)  minimizing the maximum return. 
B)  maximizing the minimum return. 
C)  maximizing the maximum return. 
D)  minimizing the minimum return. 
A)  minimizing the maximum return. 
B)  maximizing the minimum return. 
C)  maximizing the maximum return. 
D)  minimizing the minimum return.

The expected value of sample information

The maximax criterion results in the

The minimax regret criterion maximizes the minimum regret.

________ is the difference between the payoff from the best decision and all other decision payoffs.

A ________ probability is the altered marginal probability of an event based on additional information.

The Hurwicz criterion

Events are mutually exclusive if one, and only one, can occur at a time.

A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. Alternative Brisk Slow Buy 90 -10 Rent 70 40 Lease 60 55 The equal likelihood criterion strategy is

The Hurwicz criterion is a compromise between the minimax and minimin criteria.

Consider the following decision tree. What is the expected value at node 4?

The maximin criterion maximizes the minimum regret.

The Hurwicz criterion multiplies the best payoff by the coefficient of optimism.

A manager has developed a payoff table that indicates the profits associated with a set of alternatives under two possible states of nature. Alt 10 2 -2 8 8 5 -If the manager uses maximin as the decision criterion, which of the alternatives should she choose?

A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature.

If the decision maker receives additional information such that the marginal probabilities of certain events should be modified, these revised probabilites are called ________.

The maximin criterion results in the

The maximin approach to decision making refers to

Management Science

Linear Programming: Model Formulation and Graphical Solution

Linear Programming: Computer Solution and Sensitivity Analysis

Linear Programming: Modeling Examples

Integer Programming

Transportation, Transshipment, and Assignment Problems

Network Flow Models

Project Management

Multicriteria Decision Making

Nonlinear Programming

Probability and Statistics

Queuing Analysis

Simulation

Forecasting

Inventory Management

the Simplex Solution Method

Transportation and Assignment Solution Methods

Integer Programming: the Branch and Bound Method

Nonlinear Programming: Solution Techniques

Game Theory

Markov Analysis

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Exam 12: Decision Analysis

The expected value of sample information

The maximax criterion results in the

The minimax regret criterion maximizes the minimum regret.

________ is the difference between the payoff from the best decision and all other decision payoffs.

A ________ probability is the altered marginal probability of an event based on additional information.

The Hurwicz criterion

Events are mutually exclusive if one, and only one, can occur at a time.

A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. Alternative Brisk Slow Buy 90 -10 Rent 70 40 Lease 60 55 The equal likelihood criterion strategy is

The Hurwicz criterion is a compromise between the minimax and minimin criteria.

Consider the following decision tree. What is the expected value at node 4?

The maximin criterion maximizes the minimum regret.

The Hurwicz criterion multiplies the best payoff by the coefficient of optimism.

A manager has developed a payoff table that indicates the profits associated with a set of alternatives under two possible states of nature. Alt 10 2 -2 8 8 5 -If the manager uses maximin as the decision criterion, which of the alternatives should she choose?

A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature.

If the decision maker receives additional information such that the marginal probabilities of certain events should be modified, these revised probabilites are called ________.

The maximin criterion results in the

The maximin approach to decision making refers to

Management Science

Linear Programming: Model Formulation and Graphical Solution

Linear Programming: Computer Solution and Sensitivity Analysis

Linear Programming: Modeling Examples

Integer Programming

Transportation, Transshipment, and Assignment Problems

Network Flow Models

Project Management

Multicriteria Decision Making

Nonlinear Programming

Probability and Statistics

Queuing Analysis

Simulation

Forecasting

Inventory Management

the Simplex Solution Method

Transportation and Assignment Solution Methods

Integer Programming: the Branch and Bound Method

Nonlinear Programming: Solution Techniques

Game Theory

Markov Analysis

Filters