Deck 2: Supplement Operational Decision-Making Tools: Decision Analysis

Question 1

In a decision-making situation,events that may occur in the future are known as

A)risks
B)payoffs
C)states of nature
D)uncertainties

Answer 1

C

Question 2

A decision-making criterion that can be used for decision-making situations under conditions of risk is

A)maximax
B)maximin
C)minimax regret
D)expected value

Answer 2

D

Question 3

A decision tree is used instead of a payoff table when

A)there are more than 3 states of nature
B)there are more than 3 decision payoffs
C)the decisions situation encompasses and extended time period
D)a sequence of decisions is required

Answer 3

D

Question 4

In the Hurwicz criterion if the coefficient of optimism is 0.7 then the decision maker is

A)completely optimistic
B)completely pessimistic
C)somewhat optimistic
D)somewhat pessimistic

Question 5

The maximum amount that a decision maker would pay for perfect information is

A)the expected value of the best decision
B)the expected value given perfect information
C)the expected value of perfect information
D)the sum of the expected values for all decision alternative