Question 1

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

Question 2

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 3

A poker player is considering three different options after his opponent bet 200 before him.If the player folds,he will lose instantly.If the player calls,he figures he will win half the time.If he raises he figures that the opposing player will not re-raise him,but rather will either call or fold.He figures the opposing player will call only 1/4 of the time,folding the other 3/4 of the time.If the opposing player calls his raise,he figures he will never win.The pot size is 1,000 (including the opposing player's bet).
a.Draw a decision tree for this scenario including the information provided in part b.
b.Suppose that the player is thinking of raising to $400 (he will put in 200 to match the opponent's bet and another 200 as a raise,his opponent would then have to put in 200 more to call the raise).Is this the best option or should he instead call or fold?
c.At what raise size is the player's EMV of a raise equivalent to simply calling?

Accepted Answer

The answer of A poker player is considering three different...

Question 4

The following decision tree has how many state of nature nodes?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
E) 4

Question 5

All of the following steps are taken to analyse problems with decision trees except

Accepted Answer

A) define the problem. 
B) structure or draw a decision tree. 
C) assign probabilities to the alternatives. 
D) estimate payoffs for each possible alternative/state of nature combination. 
E) solve the problem by computing expected monetary values for each state of nature node.

Question 6

An operations manager's staff has compiled the information below for four manufacturing alternatives (A,B,C,and D)that vary by production technology and the capacity of the machinery.All choices enable the same level of total production and have the same lifetime.The four states of nature represent four levels of consumer acceptance of the firm's products.Values in the table are net present value of future profits in millions of dollars.
  
a.Assuming a maximax strategy,which alternative would be chosen?
b.If maximin were used,which would be chosen?
c.If the states of nature were equally likely,which alternative should be chosen?

Accepted Answer

The answer of An operations manager's staff has compiled the...

Question 7

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.

Question 8

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 9

________ is the expected payout or value of a variable that has different possible states of nature,each with an associated probability.

Accepted Answer

The answer of ________ is the expected payout or value...

Question 10

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 and states B and C have equal probabilities,determine the likelihood of state of nature A.

Accepted Answer

The answer of The EMV of a decision with three...

Question 11

A branch of a decision tree that is less favorable than other available options may be ________.

Accepted Answer

The answer of A branch of a decision tree that...

Question 12

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

The answer of Suppose a manufacturing plant is considering three...

Question 13

A(n)________ is a graphical means of analyzing decision alternatives and states of nature.

Accepted Answer

The answer of A(n)________ is a graphical means of analyzing...

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

What is a conditional value?

Accepted Answer

The answer of What is a conditional value?...

Question 16

Explain the graphical shapes used in decision tree analysis.

Accepted Answer

The answer of Explain the graphical shapes used in decision...

Question 17

________ is the criterion for decision making under uncertainty that finds an alternative that maximizes the minimum outcome or consequences.

Accepted Answer

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

Question 18

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

Accepted Answer

A) 10,000 
B) 16,000 
C) 20,000 
D) 24,000 
E) 30,000

Question 19

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

Accepted Answer

A) 200 
B) 240 
C) 250 
D) 260 
E) 300

Question 20

Which technique results in an optimistic decision? Why?

Accepted Answer

The answer of Which technique results in an optimistic decision?...

Exam 21: Decision-Making Tools

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