Question 1

Decision trees:

Accepted Answer

A) give more accurate solutions than decision tables. 
B) give less accurate solutions than decision tables. 
C) are especially powerful when a sequence of decisions must be made. 
D) are rarely used because one needs specialized software to graph them. 
E) are too complex to be used by decision makers. 
A) give more accurate solutions than decision tables. 
B) give less accurate solutions than decision tables. 
C) are especially powerful when a sequence of decisions must be made. 
D) are rarely used because one needs specialized software to graph them. 
E) are too complex to be used by decision makers. C

Question 2

Explain the symbols used in decision tree analysis.

Accepted Answer

A decision node from which one or several alternatives may be selected is represented by a square;a state of nature node out of which states of nature will occur is represented by a circle.

Question 3

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

Accepted Answer

A) 0 
B) 20 
C) 50 
D) 150 
E) 200 
A) 0 
B) 20 
C) 50 
D) 150 
E) 200 B

Question 4

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 5

A decision maker using the maximin criterion on the problem below would choose Alternative ________ because the maximum of the row minimums is ________.

Accepted Answer

A) A;55 
B) B;30 
C) C;70 
D) D;140 
E) D;10 
A) A;55 
B) B;30 
C) C;70 
D) D;140 
E) D;10

Question 6

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

Accepted Answer

It is found by taking the expe

Question 7

The EMV of a decision with three states of nature is $33,000.If the profit/value under the states of nature A,B,and C is $10,000,$20,000,and $50,000,respectively,and states B and C have equal probabilities,determine the likelihood of state of nature A.

Accepted Answer

Let Y = the probability of state of natu

Question 8

________ is the criterion for decision making under uncertainty that assigns equal probability to each state of nature.

Accepted Answer

The answer of ________ is the criterion for decision making...

Question 9

What is a conditional value?

Accepted Answer

It is an outcome of

Question 10

In terms of decision theory,an occurrence or situation over which the decision maker has no control is called a(n):

Accepted Answer

A) decision under uncertainty. 
B) decision tree. 
C) state of nature. 
D) alternative. 
E) EMV. 
A) decision under uncertainty. 
B) decision tree. 
C) state of nature. 
D) alternative. 
E) EMV.

Question 11

The expected value with perfect information is:

Accepted Answer

A) the maximum EMV for a set of alternatives. 
B) the same as the expected value of perfect information. 
C) the difference between the payoff under perfect information and the payoff under risk. 
D) the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made. 
E) obtained using conditional probabilities. 
A) the maximum EMV for a set of alternatives. 
B) the same as the expected value of perfect information. 
C) the difference between the payoff under perfect information and the payoff under risk. 
D) the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made. 
E) obtained using conditional probabilities.

Question 12

The expected value of perfect information (EVPI)is the:

Accepted Answer

A) payoff for a decision made under perfect information. 
B) payoff under minimum risk. 
C) average expected payoff. 
D) difference between the payoff under perfect information and the payoff under risk. 
E) greater of EVwPI and Maximum EMV. 
A) payoff for a decision made under perfect information. 
B) payoff under minimum risk. 
C) average expected payoff. 
D) difference between the payoff under perfect information and the payoff under risk. 
E) greater of EVwPI and Maximum EMV.

Question 13

Suppose a manufacturing plant is considering three options for expansion.The first one is to expand into a new plant (large),the second to add on third-shift to the daily schedule (medium),and the third to do nothing (small).There are three possibilities for demand.These are high,medium,and low with each having an equal likelihood of occurring.Suppose that the profits for the expansion plans are as follows (respective to high,medium,low demand).The large expansion profits are $100000,$10000,-$10000,the medium expansion choice $40000,$40000,$5000 and the small expansion choice $15000,$15000,$15000.Calculate the EMV of each choice.Which of the expansion plans should the manager choose?

Accepted Answer

EMV large expansion is .33(100000)+ .33(

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is:

Accepted Answer

A) low (near 0%). 
B) high (near 100%). 
C) dependent upon the number of alternatives. 
D) dependent upon the number of states of nature. 
E) none of the above 
A) low (near 0%). 
B) high (near 100%). 
C) dependent upon the number of alternatives. 
D) dependent upon the number of states of nature. 
E) none of the above

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

1.Clearly define the problem and factors

Question 18

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.Develop a decision tree for this situation and indicate which type of truck he should select.

Accepted Answer

The tree appears in the drawin

Question 19

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

Accepted Answer

A) A;60 
B) B;80 
C) C;70 
D) D;-100 
E) D;140 
A) A;60 
B) B;80 
C) C;70 
D) D;-100 
E) D;140

Question 20

Analytic decision making is based on logic and considers all available data and possible alternatives.

Accepted Answer

A) True 
 B)False

Exam 22: Decision Modeling

Decision trees:

Explain the symbols used in decision tree analysis.

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

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

A decision maker using the maximin criterion on the problem below would choose Alternative ________ because the maximum of the row minimums is ________.

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

The EMV of a decision with three states of nature is $33,000.If the profit/value under the states of nature A,B,and C is $10,000,$20,000,and $50,000,respectively,and states B and C have equal probabilities,determine the likelihood of state of nature A.

________ is the criterion for decision making under uncertainty that assigns equal probability to each state of nature.

What is a conditional value?

In terms of decision theory,an occurrence or situation over which the decision maker has no control is called a(n):

The expected value with perfect information is:

The expected value of perfect information (EVPI)is the:

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

The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is:

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

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

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

Analytic decision making is based on logic and considers all available data and possible alternatives.

Operations and Productivity

The Global Environment and Operations Strategy

Managing Projects

Forecasting Demand

Product Design

Quality Management and International Standards

Process Design

Location Decisions

Layout Decisions

Job Design and Work Measurement

Supply Chain Management

Managing Inventory

Aggregate Scheduling

Material Requirements Planning Mrpand Erp

Scheduling for the Short-Term

Jit,lean Operations,and the Toyota Production System

Maintenance and Reliability Decisions

Sustainability

Statistical Process Control

Capacity Planning

Supply Chain Modeling

Linear Programming Models

Transportation Modeling

Queuing Models

Learning Curves

Modeling with Simulation

Filters

A decision maker using the maximin criterion on the problem below would choose Alternative because the maximum of the row minimums is .

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