Question 1

If she feels the chances of low, medium, and high compliance are 20%, 30%, and 50% respectively, what is her expected value of perfect information?

Accepted Answer

A) $16,000 
B) $26,000 
C) $46,000 
D) $48,000 
E) $50,000 
A) $16,000 
B) $26,000 
C) $46,000 
D) $48,000 
E) $50,000

Question 2

If the minimum expected regret is computed, it indicates to a decision-maker the expected:

Accepted Answer

A) value of perfect information 
B) payoff under certainty 
C) monetary value 
D) payoff under risk 
E) none of the above 
A) value of perfect information 
B) payoff under certainty 
C) monetary value 
D) payoff under risk 
E) none of the above

Question 3

What is the probability that the statistics book would wind up being placed with a smaller publisher?

Accepted Answer

A) .6 
B) .5 
C) .4 
D) .3 
E) 0 
A) .6 
B) .5 
C) .4 
D) .3 
E) 0

Question 4

The minimax regret strategy would be:

Accepted Answer

A) buy 
B) lease 
C) rent 
D) high 
E) low 
A) buy 
B) lease 
C) rent 
D) high 
E) low

Question 5

What is the expected value for the decision alternative to write the economics book?

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

If she feels there is a 30% chance that demand will be high, what is her expected payoff under certainty?

Accepted Answer

A) $1,600 
B) $1,100 
C) $1,000 
D) $900 
E) $500 
A) $1,600 
B) $1,100 
C) $1,000 
D) $900 
E) $500

Question 7

When a decision-making scenario involves two or more departments, if the individual departments pursue what is optimal for them, sometimes the overall organization suffers.This is an example of _____________.

Accepted Answer

A) subminimization 
B) suboptimization 
C) rational boundaries 
D) decision making under risk 
E) decision making under uncertainty 
A) subminimization 
B) suboptimization 
C) rational boundaries 
D) decision making under risk 
E) decision making under uncertainty

Question 8

What is the probability that the heart lab will be funded in both the first and second years?

Accepted Answer

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

Question 9

What is the expected value for the decision alternative to select the heart lab?

Accepted Answer

A) $100,000 
B) $60,000 
C) $50,000 
D) $40,000 
E) $20,000 
A) $100,000 
B) $60,000 
C) $50,000 
D) $40,000 
E) $20,000

Question 10

If she uses the maximax criterion, how many beauticians will she decide to hire?

Accepted Answer

A) one 
B) two 
C) three 
D) either one or two 
E) either two or three 
A) one 
B) two 
C) three 
D) either one or two 
E) either two or three

Question 11

The minimax regret strategy would be:

Accepted Answer

A) small 
B) Medium 
C) med.-large 
D) large 
E) ex-large 
A) small 
B) Medium 
C) med.-large 
D) large 
E) ex-large

Question 12

A manager has learned that annual profits from four alternatives being considered for solving a capacity problem are projected to be $15,000 for A, $30,000 for B, $45,000 for C, and $60,000 for D if state of nature 1 occurs; and $60,000 for A, $80,000 for B, $90,000 for C, and $35,000 for D if state of nature 2 occurs.
(A) Assuming maximax is used, what alternative would be chosen?
(B) Assuming maximin is used, what alternative would be chosen?
(C) If P(State of Nature 1) is .40, what alternative has the highest expected monetary value?
(D) Determine the range of P(S2) for which each alternative would be optimal.

Accepted Answer

(A) Maximax is C ($90)
(B) Max

Question 13

The expected monetary value criterion (EMV) is the decision-making approach used with the decision environment of:

Accepted Answer

A) certainty 
B) risk 
C) uncertainty 
D) all of the above 
E) none of the above 
A) certainty 
B) risk 
C) uncertainty 
D) all of the above 
E) none of the above

Question 14

In decision theory, states of nature refer to possible future conditions.

Accepted Answer

A) True 
 B)False

Question 15

If P(high) is .60, the choice for maximum expected value would be:

Accepted Answer

A) buy 
B) lease 
C) rent 
D) high 
E) low 
A) buy 
B) lease 
C) rent 
D) high 
E) low

Question 16

Among decision environments, uncertainty implies that states of nature have wide ranging probabilities associated with them.

Accepted Answer

A) True 
 B)False

Question 17

If he feels the chances of low, normal, and high precipitation are 30%, 20%, and 50% respectively, what is his expected value of perfect information?

Accepted Answer

A) $140,000 
B) $170,000 
C) $285,000 
D) $305,000 
E) $475,000 
A) $140,000 
B) $170,000 
C) $285,000 
D) $305,000 
E) $475,000

Question 18

In reaching a decision, the alternative with the lowest cost should be ranked #1.

Accepted Answer

A) True 
 B)False

Question 19

For what range of probability that demand will be high, will she decide to lease the medium 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 20

If he uses the maximin criterion, which kind of dwellings will he decide to build?

Accepted Answer

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

Exam 21: Extension 5: Decision Theory

If she feels the chances of low, medium, and high compliance are 20%, 30%, and 50% respectively, what is her expected value of perfect information?

If the minimum expected regret is computed, it indicates to a decision-maker the expected:

What is the probability that the statistics book would wind up being placed with a smaller publisher?

The minimax regret strategy would be:

What is the expected value for the decision alternative to write the economics book?

If she feels there is a 30% chance that demand will be high, what is her expected payoff under certainty?

When a decision-making scenario involves two or more departments, if the individual departments pursue what is optimal for them, sometimes the overall organization suffers.This is an example of _____________.

What is the probability that the heart lab will be funded in both the first and second years?

What is the expected value for the decision alternative to select the heart lab?

If she uses the maximax criterion, how many beauticians will she decide to hire?

The minimax regret strategy would be:

The expected monetary value criterion (EMV) is the decision-making approach used with the decision environment of:

In decision theory, states of nature refer to possible future conditions.

If P(high) is .60, the choice for maximum expected value would be:

Among decision environments, uncertainty implies that states of nature have wide ranging probabilities associated with them.

If he feels the chances of low, normal, and high precipitation are 30%, 20%, and 50% respectively, what is his expected value of perfect information?

In reaching a decision, the alternative with the lowest cost should be ranked #1.

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

If he uses the maximin criterion, which kind of dwellings will he decide to build?

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