Exam 21: Decision-Making Tools

The EMV of a decision with three states of nature is $50.If the profit/value of A is 1/3 of B and B is 1/3 of C,determine the profit from A if B and C have an equal chance of occurring that combined is twice the chance of A occurring.

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Question 1

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The probabilities of all three states are equal from the question (1 + 1)/2 = 1.Thus the total payoff is simply the average of the three payoffs or 1/9 + 1/3 + 1 = 13/27 if the value of C is 1.Solving for 13/27 ∗ C = 50 gives C = $103.85.Thus A = $11.54.This problem could also be solved by setting the value of A to X and solving 50 = (X + 3X + 3 ∗ 3X)/3 to give X = $11.54 = A.

Identify,in order,the six steps of analytical decision making.

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1.Clearly define the problem and factors that influence it.
2.Develop specific and measurable objectives.
3.Develop a model-that is,a relationship between objectives and variables (which are
measurable quantities).
4.Evaluate each alternative solution based on its merits and drawbacks.
5.Select the best alternative.
6.Implement the decision and set a timetable for completion.

An example of expected monetary value would be the payoff from selecting a particular alternative when a particular state of nature occurs.

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A retailer is deciding how many of a certain product to stock.The historical probability distribution of sales for this product is 0 units,0.2;1 unit,0.3;2 units,0.4,and 3 units,0.1.The product costs $8 per unit and sells for $25 per unit.The conditional value for the decision alternative "Stock 3" and state of nature "Sell 1" is

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Question 4

The expected value with perfect information is

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Question 5

Expected monetary value is most appropriate for problem solving that takes place

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Question 6

The first step,and a key element,in the decision-making process is to

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Question 7

The expected value with perfect information

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Question 8

What are decision tables?

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Question 9

Describe the meaning of EVPI.Provide an example in which EVPI can help a manager.

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Question 10

What limitation(s)do decision trees overcome compared to decision tables?

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Question 11

Earl Shell owns his own Sno-Cone business and lives 30 miles from a beach resort.The sale of Sno-Cones is highly dependent upon his location and upon the weather.At the resort,he will profit $120 per day in fair weather,$10 per day in bad weather.At home,he will profit $70 in fair weather,$55 in bad weather.Assume that on any particular day,the weather service suggests a 40% chance of foul weather. a.Construct Earl's decision tree. b.What decision is recommended by the expected value criterion?

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Question 12

Which of the following is not considered a step in the decision-making process?

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Question 13

The highest value for the equally likely criterion is ;this occurs with alternative .

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Question 14

The last step of the decision-making process is to

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Question 15

If a decision maker knows for sure which state of nature will occur,he/she is making a decision under certainty.

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Question 16

A decision-maker using the maximax criterion on the problem below would choose Alternative because the maximum of the row maximums is .

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Question 17

There are three equally likely states of nature (High,Medium,and Low demand).If the large factory will post profits of $50,000,$25,000,and - $10,000 under these states of nature,respectively,what is the EMV of the factory?

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Question 18

In a decision tree,a square symbol represents a state of nature node.

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Question 19

In the context of decision-making,define state of nature.

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Question 20

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Exam 21: Decision-Making Tools

The EMV of a decision with three states of nature is $50.If the profit/value of A is 1/3 of B and B is 1/3 of C,determine the profit from A if B and C have an equal chance of occurring that combined is twice the chance of A occurring.

Identify,in order,the six steps of analytical decision making.

An example of expected monetary value would be the payoff from selecting a particular alternative when a particular state of nature occurs.

The expected value with perfect information is

Expected monetary value is most appropriate for problem solving that takes place

The first step,and a key element,in the decision-making process is to

The expected value with perfect information

What are decision tables?

Describe the meaning of EVPI.Provide an example in which EVPI can help a manager.

What limitation(s)do decision trees overcome compared to decision tables?

Which of the following is not considered a step in the decision-making process?

The highest value for the equally likely criterion is ________;this occurs with alternative ________.

The last step of the decision-making process is to

If a decision maker knows for sure which state of nature will occur,he/she is making a decision under certainty.

A decision-maker using the maximax criterion on the problem below would choose Alternative ________ because the maximum of the row maximums is ________.

There are three equally likely states of nature (High,Medium,and Low demand).If the large factory will post profits of $50,000,$25,000,and - $10,000 under these states of nature,respectively,what is the EMV of the factory?

In a decision tree,a square symbol represents a state of nature node.

In the context of decision-making,define state of nature.

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Statistical Process Control

Process Strategy and Sustainability

Capacity and Constraint Management

Location Strategies

Layout Strategies

Human Resources,job Design,and Work Measurement

Supply-Chain Management

Outsourcing As a Supply-Chain Strategy

Inventory Management

Aggregate Planning

Material Requirements Planning Mrpand Erp

Short-Term Scheduling

Jit and Lean Operations

Maintenance and Reliability

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters

The highest value for the equally likely criterion is ;this occurs with alternative .

A decision-maker using the maximax criterion on the problem below would choose Alternative because the maximum of the row maximums is .