Question 1

Big data refers to huge amounts of data that are often hard to process efficiently or easily.

Accepted Answer

A) True 
 B)False

Question 2

Daily sales of bread by Salvador Monella's Baking Company follow the historical pattern shown in the table below.It costs the bakery 50 cents to produce a loaf of bread,which sells for 95 cents.Any bread unsold at the end of the day is sold to the parish jail for 25 cents per loaf.Construct the decision table of conditional payoffs.How many loaves should Sal bake each day in order to maximize contribution?

Accepted Answer

The Excel OM decision table an

Question 3

Which decision rule under uncertainty results in an optimistic decision? Why?

Accepted Answer

Maximax,because it locates the

Question 4

Define expected monetary value (EMV).

Accepted Answer

EMV is the expected value or m

Question 5

Massive amounts of data:

Accepted Answer

A) are often collected in production processes. 
B) can be automatically collected from web sites and credit cards. 
C) require sophisticated tools to store,process,and analyze. 
D) are sometimes called "big data." 
E) all of the above 
A) are often collected in production processes. 
B) can be automatically collected from web sites and credit cards. 
C) require sophisticated tools to store,process,and analyze. 
D) are sometimes called "big data." 
E) all of the above

Question 6

A retailer is deciding how many units 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.What is the conditional value for the decision alternative "Stock 3" and state of nature "Sell 1"?

Accepted Answer

A) 1.4 units 
B) $1 profit 
C) $25 profit 
D) $-8 profit 
E) $23.80 profit 
A) 1.4 units 
B) $1 profit 
C) $25 profit 
D) $-8 profit 
E) $23.80 profit

Question 7

A toy manufacturer has three different mechanisms that can be installed in a doll that it sells.The different mechanisms have three different setup costs (overheads)and variable costs and,therefore,the profit from the dolls is dependent on the volume of sales.The anticipated payoffs are as follows.
   a.What is the EMV of each decision alternative?
b.Which action should be selected?
c.What is the expected value with perfect information?
d.What is the expected value of perfect information?

Accepted Answer

(a)Wind-up = .25($325,000)+ .45($190,000

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The maximax criterion of decision making requires that all decision alternatives have an equal probability of occurrence.

Accepted Answer

A) True 
 B)False

Question 10

What is the expected value with perfect information of the following decision table?

Accepted Answer

A) 5,000 
B) 10,000 
C) 40,000 
D) 60,000 
E) 70,000 
A) 5,000 
B) 10,000 
C) 40,000 
D) 60,000 
E) 70,000

Question 11

Miles is considering buying a new pickup truck for his lawn service firm.The economy in town seems to be growing,and he is wondering whether he should opt for a subcompact,compact,or full-size pickup truck.The smaller truck would have better fuel economy,but would sacrifice capacity and some durability.A friend at the Bureau of Economic Research told him that there is a 30% chance of lower gas prices in his area this year,a 20% chance of higher gas prices,and a 50% chance that gas prices will stay roughly unchanged.Based on this information,Miles has developed a decision table that indicates the profit amount he would end up with after a year for each combination of truck and gas prices.
   Calculate the expected monetary value for each decision alternative.Which decision yields the highest EMV?

Accepted Answer

The expected values are: subco

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) Clearly define the problem and the factors that influence it. 
B) Select the best alternative. 
C) Develop specific and measurable objectives. 
D) Evaluate each alternative solution based on its merits and drawbacks. 
E) Minimize costs whenever possible. 
A) Clearly define the problem and the factors that influence it. 
B) Select the best alternative. 
C) Develop specific and measurable objectives. 
D) Evaluate each alternative solution based on its merits and drawbacks. 
E) Minimize costs whenever possible.

Question 14

How is the expected value of perfect information (EVPI)found?

Accepted Answer

It is found by taking the expe

Question 15

What is the expected value with perfect information in the following decision table?

Accepted Answer

A) 50 
B) 200 
C) 260 
D) 300 
E) 350 
A) 50 
B) 200 
C) 260 
D) 300 
E) 350

Question 16

What is the EMV for Option 2 in the following decision table?

Accepted Answer

A) 5,000 
B) 21,000 
C) 25,000 
D) 29,000 
E) 45,000 
A) 5,000 
B) 21,000 
C) 25,000 
D) 29,000 
E) 45,000

Question 17

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

Accepted Answer

A) when conditions are average. 
B) when all states of nature are equally likely. 
C) when all alternatives are equally likely. 
D) under conditions of uncertainty. 
E) under conditions of risk. 
A) when conditions are average. 
B) when all states of nature are equally likely. 
C) when all alternatives are equally likely. 
D) under conditions of uncertainty. 
E) under conditions of risk.

Question 18

A(n)________ is an occurrence or situation over which the decision maker has little or no control.

Accepted Answer

The answer of A(n)________ is an occurrence or situation over...

Question 19

What is the EMV for Option 1 in the following decision table?

Accepted Answer

A) 10,000 
B) 18,000 
C) 20,000 
D) 22,000 
E) 30,000 
A) 10,000 
B) 18,000 
C) 20,000 
D) 22,000 
E) 30,000

Question 20

When solving decision trees,what phrase represents the act of dropping an alternative from consideration because it is less favorable than another available option?

Accepted Answer

A) cut the leaf 
B) open the hatch 
C) shake the tree 
D) punt the ball 
E) prune the branch 
A) cut the leaf 
B) open the hatch 
C) shake the tree 
D) punt the ball 
E) prune the branch

Exam 22: Decision-Making Tools

Big data refers to huge amounts of data that are often hard to process efficiently or easily.

Which decision rule under uncertainty results in an optimistic decision? Why?

Define expected monetary value (EMV).

Massive amounts of data:

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

The maximax criterion of decision making requires that all decision alternatives have an equal probability of occurrence.

What is the expected value with perfect information of the following decision table?

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

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

How is the expected value of perfect information (EVPI)found?

What is the expected value with perfect information in the following decision table?

What is the EMV for Option 2 in the following decision table?

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

A(n)________ is an occurrence or situation over which the decision maker has little or no control.

What is the EMV for Option 1 in the following decision table?

When solving decision trees,what phrase represents the act of dropping an alternative from consideration because it is less favorable than another available option?

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