Question 1

If she uses the maximax criterion, which advertising strategy will she use?

Accepted Answer

A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television 
A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television

Question 2

The difference between expected payoff under certainty and expected payoff under risk is the expected:

Accepted Answer

A) monetary value 
B) value of perfect information 
C) net present value 
D) rate of return 
E) profit 
A) monetary value 
B) value of perfect information 
C) net present value 
D) rate of return 
E) profit

Question 3

Which of the following would make decision trees an especially attractive decision making tool?

Accepted Answer

A) The need to think through a possible sequence of decisions 
B) The need to maximize the expected value of perfect information 
C) The need to minimize expected regret 
D) The need to avoid suboptimization 
E) The need to minimize costs 
A) The need to think through a possible sequence of decisions 
B) The need to maximize the expected value of perfect information 
C) The need to minimize expected regret 
D) The need to avoid suboptimization 
E) The need to minimize costs

Question 4

If she feels the chances of low, medium, and high compliance are 20%, 30%, and 50% respectively, what are the expected net revenues for the number of assistants she will decide to hire?

Accepted Answer

A) $26,000 
B) $46,000 
C) $48,000 
D) $50,000 
E) $76,000 
A) $26,000 
B) $46,000 
C) $48,000 
D) $50,000 
E) $76,000

Question 5

What is the expected value for the optimum decision alternative?

Accepted Answer

A) 50,000 copies 
B) 40,000 copies 
C) 32,000 copies 
D) 30,500 copies 
E) 10,500 copies 
A) 50,000 copies 
B) 40,000 copies 
C) 32,000 copies 
D) 30,500 copies 
E) 10,500 copies

Question 6

A manager is quite concerned about the recent deterioration of a section of the roof on a building that houses her firm's computer operations.According to her assistant there are three options which merit consideration: A, B, and C.Moreover, there are three possible future conditions that must be included in the analysis: I, which has a probability of occurrence of .5; II, which has a probability of .3; and III, which has a probability of .2.
If condition I materializes, A will cost $12,000, B will cost $20,000, and C will cost $16,000.If condition II materializes, the costs will be $15,000 for A, $18,000 for B, and $14,000 for C.If condition III materializes, the costs will be $10,000 for A, $15,000 for B, and $19,000 for C.
(A) Draw a decision tree for this problem.
(B) Using expected monetary value, which alternative should be chosen?

Accepted Answer

@#IMG-DLM& Alternati

Question 7

If he feels the chances of declining, stable, and growing population trends are 40%, 50%, and 10%, respectively, which kind of houses will he decide to build?

Accepted Answer

A) single family 
B) apartments 
C) condos 
D) either single family or apartments 
E) either apartments or condos 
A) single family 
B) apartments 
C) condos 
D) either single family or apartments 
E) either apartments or condos

Question 8

-If you feel that P(#1) = .4, P(#2) = .3, P(#3) = .2, and P(#4) = .1, what is your expected value of perfect information?

Accepted Answer

The answer of  
-If you feel that P(#1) =...

Question 9

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2.Option B has a payoff of $12,500 in environment 1 and $17,500 in environment 2.Once the probability of environment 2 exceeds ______, option A becomes the better choice.

Accepted Answer

A) .33 
B) .67 
C) .45 
D) .50 
E) .55 
A) .33 
B) .67 
C) .45 
D) .50 
E) .55

Question 10

-If you are uncertain which state of nature will occur, and use the minimax regret criterion, which alternative will you select?

Accepted Answer

The answer of  
-If you are uncertain which state...

Question 11

If he uses the maximax criterion, which alternative will he decide to select?

Accepted Answer

A) do nothing 
B) expand 
C) build new 
D) either do nothing or expand 
E) either expand or build new 
A) do nothing 
B) expand 
C) build new 
D) either do nothing or expand 
E) either expand or build new

Question 12

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2.Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2.Once the probability of environment 1 exceeds ______, option A becomes the better choice.

Accepted Answer

A) .40 
B) .45 
C) .50 
D) .57 
E) .60 
A) .40 
B) .45 
C) .50 
D) .57 
E) .60

Question 13

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:

Accepted Answer

A) minimin 
B) maximin 
C) maximax 
D) minimax regret 
E) Laplace 
A) minimin 
B) maximin 
C) maximax 
D) minimax regret 
E) Laplace

Question 14

The maximax approach is a pessimistic strategy.

Accepted Answer

A) True 
 B)False

Question 15

For what range of probability that demand will be high, will she decide to lease the large facility?

Accepted Answer

A) 0 - .25 
B) 0 - .33 
C) .25 - .5 
D) .33 - 1 
E) .5 - 1 
A) 0 - .25 
B) 0 - .33 
C) .25 - .5 
D) .33 - 1 
E) .5 - 1

Question 16

Bounded rationality refers to the limits imposed on decision-making because of costs, human abilities, time, technology, and/or availability of information.

Accepted Answer

A) True 
 B)False

Question 17

The Laplace criterion treats states of nature as being equally likely.

Accepted Answer

A) True 
 B)False

Question 18

The minimax regret strategy would be:

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) E 
A) A 
B) B 
C) C 
D) D 
E) E

Question 19

If she uses the Laplace criterion, which advertising strategy will she use?

Accepted Answer

A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television 
A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television

Question 20

A decision tree is:

Accepted Answer

A) an algebraic representation of alternatives 
B) a behavioral representation of alternatives 
C) a matrix representation of alternatives 
D) a schematic representation of alternatives 
E) limited to a maximum of 12 branches 
A) an algebraic representation of alternatives 
B) a behavioral representation of alternatives 
C) a matrix representation of alternatives 
D) a schematic representation of alternatives 
E) limited to a maximum of 12 branches

Exam 21: Extension 5: Decision Theory

If she uses the maximax criterion, which advertising strategy will she use?

The difference between expected payoff under certainty and expected payoff under risk is the expected:

Which of the following would make decision trees an especially attractive decision making tool?

If she feels the chances of low, medium, and high compliance are 20%, 30%, and 50% respectively, what are the expected net revenues for the number of assistants she will decide to hire?

What is the expected value for the optimum decision alternative?

If he feels the chances of declining, stable, and growing population trends are 40%, 50%, and 10%, respectively, which kind of houses will he decide to build?

-If you feel that P(#1) = .4, P(#2) = .3, P(#3) = .2, and P(#4) = .1, what is your expected value of perfect information?

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2.Option B has a payoff of $12,500 in environment 1 and $17,500 in environment 2.Once the probability of environment 2 exceeds ______, option A becomes the better choice.

-If you are uncertain which state of nature will occur, and use the minimax regret criterion, which alternative will you select?

If he uses the maximax criterion, which alternative will he decide to select?

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2.Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2.Once the probability of environment 1 exceeds ______, option A becomes the better choice.

Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:

The maximax approach is a pessimistic strategy.

For what range of probability that demand will be high, will she decide to lease the large facility?

Bounded rationality refers to the limits imposed on decision-making because of costs, human abilities, time, technology, and/or availability of information.

The Laplace criterion treats states of nature as being equally likely.

The minimax regret strategy would be:

If she uses the Laplace criterion, which advertising strategy will she use?

A decision tree is:

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Strategic Capacity Planning for Products and Services

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Extension 4: Reliability

Extension 7: Learning Curves

Extension 8: The Transportation Model

Extension 10: Acceptance Sampling

Extension 14: Maintenance

Filters