Question 1

The decision rule which selects the alternative associated with the smallest maximum opportunity loss is the

Accepted Answer

A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule. 
A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule.

Question 2

An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
  
-Refer to Exhibit 14.1. What formula should go in cell D5 to implement the maximax decision rule?

Accepted Answer

A) =MAX(MAX(B5:C5)) 
B) =MIN(B5:C5) 
C) =AVERAGE(B5:C5) 
D) =MAX(B5:C5) 
A) =MAX(MAX(B5:C5)) 
B) =MIN(B5:C5) 
C) =AVERAGE(B5:C5) 
D) =MAX(B5:C5)

Question 3

A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 63% chance that the customers will like the products and a 37% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products. If the survey is unfavorable there is only a 30% chance that the demand will be high. The following decision tree has been built for this problem. The company has computed that the expected monetary value of the best decision without sample information is 154.35 million. What is the EVSI for this problem (in $ million)?

Accepted Answer

A) 0.07 
B) 26.38 
C) 109.5 
D) 180.8 
A) 0.07 
B) 26.38 
C) 109.5 
D) 180.8

Question 4

An investor is considering 4 investments, W, X, Y, and Z. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem. The investor has estimated the probability of a declining economy at 80% and an expanding economy at 20%.
  
-Refer to Exhibit 14.10. Complete the table using the expected monetary value decision rule and indicate which decision should be made according to that rule.

Accepted Answer

The answer of  
An investor is considering 4 investments,...

Question 5

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem.
   What formula should be entered into cell C8-F8 to compute the weighted average scores?

Accepted Answer

The answer of A convenience store chain is considering opening...

Question 6

A student wants to buy a new car. She has three cars to choose from, A, B and C. The cars differ with respect to price, performance and looks. The student has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
    
-Refer to Exhibit 14.13. What formula should go in cell C7 and copied to cells D7:E7 of the Summary worksheet to compute the Weighted Average Score?

Accepted Answer

=SUMPRODUC

Question 7

A decision maker is faced with two alternatives.
   The decision maker has determined that she is indifferent between the two alternatives when p = 0.7.
-Refer to Exhibit 14.12. What is the expected value of Alternative 2 for this decision maker?

Accepted Answer

= 80,000 *

Question 8

A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
    
-Refer to Exhibit 14.8. What formula should go in cell F11 and get copied to F12:F13 of the Price worksheet to compute the Price Score?

Accepted Answer

A) =AVERAGE(C4:C6) 
B) =AVERAGE(C11:E11) 
C) =AVERAGE(G11:G13) 
D) =AVERAGE(C7:E7) 
A) =AVERAGE(C4:C6) 
B) =AVERAGE(C11:E11) 
C) =AVERAGE(G11:G13) 
D) =AVERAGE(C7:E7)

Question 9

Expected regret is also called

Accepted Answer

A) EMV. 
B) EOL. 
C) EPA. 
D) EOQ. 
A) EMV. 
B) EOL. 
C) EPA. 
D) EOQ.

Question 10

The ____ in a decision problem represent factors that are important to the decision maker.

Accepted Answer

A) payoffs 
B) states of nature 
C) criteria 
D) alternatives 
A) payoffs 
B) states of nature 
C) criteria 
D) alternatives

Question 11

A payoff matrix depicts ____ versus ____ with payoffs for each intersection cell.

Accepted Answer

A) decision criteria; states of nature. 
B) decision alternatives; potential outcomes. 
C) decision alternatives; states of nature. 
D) decision criteria; potential outcomes. 
A) decision criteria; states of nature. 
B) decision alternatives; potential outcomes. 
C) decision alternatives; states of nature. 
D) decision criteria; potential outcomes.

Question 12

A(n) ____ is a course of action intended to solve a problem.

Accepted Answer

A) decision 
B) criteria 
C) state of nature 
D) alternative 
A) decision 
B) criteria 
C) state of nature 
D) alternative

Question 13

An investor is considering 4 investments, A, B, C, D. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 25% and an expanding economy at 75%. What is the correct decision for this investor based on an expected monetary value criteria? Draw the decision tree for this problem.

Accepted Answer

The answer of An investor is considering 4 investments, A,...

Question 14

An investor is considering 2 investments, A, B, which can be purchased now for $10. There is a 40% chance that investment A will grow rapidly in value and a 60% chance that it will grow slowly. If A grows rapidly the investor can cash it in for $80 or trade it for investment C which has a 25% chance of growing to $100 and a 75% chance of reaching $80. If A grows slowly it is sold for $50. There is a 70% chance that investment B will grow rapidly in value and a 30% chance that it will grow slowly. If B grows rapidly the investor can cash it in for $100 or trade it for investment D which has a 20% chance of growing to $95 and an 80% chance of reaching $80. If B grows slowly it is sold for $45. Draw the decision tree for this problem.

Accepted Answer

The answer of An investor is considering 2 investments, A,...

Question 15

An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
  
-Refer to Exhibit 14.1. What formula should go in cell D5 to implement the maximin decision rule?

Accepted Answer

A) =MAX(MIN(B5:C5)) 
B) =MIN(B5:C5) 
C) =AVERAGE(B5:C5) 
D) =MAX(B5:C5) 
A) =MAX(MIN(B5:C5)) 
B) =MIN(B5:C5) 
C) =AVERAGE(B5:C5) 
D) =MAX(B5:C5)

Question 16

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. Complete the follow table to prepare the spreadsheet for use in generating a Weighted Score radar chart?

Accepted Answer

The answer of A convenience store chain is considering opening...

Question 17

An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem.
  
-Refer to Exhibit 14.2. What formula should go in cell H5 and copied to H6:H8 of the Regret Table above to implement the minimax regret decision rule?

Accepted Answer

A) =MAX(MAX(F5:G5)) 
B) =MIN(F5:G5) 
C) =AVERAGE(F5:G5) 
D) =MAX(F5:G5) 
A) =MAX(MAX(F5:G5)) 
B) =MIN(F5:G5) 
C) =AVERAGE(F5:G5) 
D) =MAX(F5:G5)

Question 18

A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
    
-Refer to Exhibit 14.8. What formula should go in cell G11 and get copied to G12:G13 of the Price worksheet to compute the Consistency Measure?

Accepted Answer

A) =MMULT(C4:E4,$F$11:$F$13) 
B) =SUMPRODUCT(C4:E4,$F$11:$F$13)/F11 
C) =MMULT(C4:E4,$F$11:$F$13)/F11 
D) =MMULT(C7:E7,$F$11:$F$13)/F11 
A) =MMULT(C4:E4,$F$11:$F$13) 
B) =SUMPRODUCT(C4:E4,$F$11:$F$13)/F11 
C) =MMULT(C4:E4,$F$11:$F$13)/F11 
D) =MMULT(C7:E7,$F$11:$F$13)/F11

Question 19

Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis?

Accepted Answer

A) Incorporating uncertainty via probabilities. 
B) Incorporating risk via utility theory functions. 
C) Incorporating uncertainty via exponential distributions. 
D) Structuring decision strategies via decision trees. 
A) Incorporating uncertainty via probabilities. 
B) Incorporating risk via utility theory functions. 
C) Incorporating uncertainty via exponential distributions. 
D) Structuring decision strategies via decision trees.

Question 20

Which decision rule optimistically assumes that nature will always be "on our side" regardless of what decision we make?

Accepted Answer

A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule. 
A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule.

The decision rule which selects the alternative associated with the smallest maximum opportunity loss is the

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. What formula should be entered into cell C8-F8 to compute the weighted average scores?

A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.7. -Refer to Exhibit 14.12. What is the expected value of Alternative 2 for this decision maker?

Expected regret is also called

The ____ in a decision problem represent factors that are important to the decision maker.

A payoff matrix depicts versus with payoffs for each intersection cell.

A(n) ____ is a course of action intended to solve a problem.

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. Complete the follow table to prepare the spreadsheet for use in generating a Weighted Score radar chart?

Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis?

Which decision rule optimistically assumes that nature will always be "on our side" regardless of what decision we make?

Introduction to Modeling and Decision Analysis

Introduction to Optimization and Linear Programming

Modeling and Solving Lp Problems in a Spreadsheet

Sensitivity Analysis and the Simplex Method

Network Modeling

Integer Linear Programming

Goal Programming and Multiple Objective Optimization

Nonlinear Programming and Evolutionary Optimization

Regression Analysis

Discriminant Analysis

Time Series Forecasting

Introduction to Simulation Using Risk Solver Platform

Queuing Theory

Project Management Online

Filters

Exam 14: Decision Analysis

The decision rule which selects the alternative associated with the smallest maximum opportunity loss is the

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. What formula should be entered into cell C8-F8 to compute the weighted average scores?

A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.7. -Refer to Exhibit 14.12. What is the expected value of Alternative 2 for this decision maker?

Expected regret is also called

The ____ in a decision problem represent factors that are important to the decision maker.

A payoff matrix depicts ____ versus ____ with payoffs for each intersection cell.

A(n) ____ is a course of action intended to solve a problem.

A convenience store chain is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. Complete the follow table to prepare the spreadsheet for use in generating a Weighted Score radar chart?

Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis?

Which decision rule optimistically assumes that nature will always be "on our side" regardless of what decision we make?

Introduction to Modeling and Decision Analysis

Introduction to Optimization and Linear Programming

Modeling and Solving Lp Problems in a Spreadsheet

Sensitivity Analysis and the Simplex Method

Network Modeling

Integer Linear Programming

Goal Programming and Multiple Objective Optimization

Nonlinear Programming and Evolutionary Optimization

Regression Analysis

Discriminant Analysis

Time Series Forecasting

Introduction to Simulation Using Risk Solver Platform

Queuing Theory

Project Management Online

Filters

A payoff matrix depicts versus with payoffs for each intersection cell.