Question 1

Decision tree probabilities refer to

Accepted Answer

A) the probability of finding the optimal strategy 
B) the probability of the decision being made 
C) the probability of overlooked choices 
D) the probability of an uncertain event occurring 
A) the probability of finding the optimal strategy 
B) the probability of the decision being made 
C) the probability of overlooked choices 
D) the probability of an uncertain event occurring

Question 2

If P(high)= .3,P(low)= .7,P(favorable | high)= .9,and P(unfavorable | low)= .6,then P(favorable)=

Accepted Answer

A) .10 
B) .27 
C) .30 
D) .55 
A) .10 
B) .27 
C) .30 
D) .55

Question 3

A payoff table is given as $$\begin{array} { c | c c r } 
&& { \text { State of Nature } } \
\text { Decision } & s_{1} & s_{2} & s_{3} \
\hline d_{1} & 250 & 750 & 500 \
d_{2} & 300 & -250 & 1200 \
d_{3} & 500 & 500 & 600
\end{array}$$
A)What choice should be made by the optimistic decision maker?
B)What choice should be made by the conservative decision maker?
C)What decision should be made under minimax regret?
D)If the probabilities of d1, d2, and d3 are .2, .5, and .3, respectively, then what choice should be made under expected value?
E)What is the EVPI?

Accepted Answer

A.D₂ b.d₃ c.d₁ d.EV(d₁)=

Question 4

East West Distributing is in the process of trying to determine where they should schedule next year's production of a popular line of kitchen utensils that they distribute.Manufacturers in four different countries have submitted bids to East West.However,a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs,favorable trading status,etc.
After careful analysis,East West has determined the following cost breakdown for the four manufacturers (in $1,000's)based on whether or not the trade bill passes: $\begin{array}{c|cc}
&\text{Bill Passes}&\text{Bill Fails}\
\hline
\text { Country A } & 260 & 210 \
\text { Country B } & 320 & 160 \
\text { Country C } & 240 & 240 \
\text { Country D } & 275 & 210
\end{array}$ 
a.If East West estimates that there is a 40% chance of the bill passing, which country should they choose for manufacturing?
b.Over what range of values for the "bill passing" will the solution in part (a) remain optimal?

Accepted Answer

a.Using EV approach: EV(A)= 23

Question 5

The table shows both prospective profits and losses for a company,depending on what decision is made and what state of nature occurs.Use the information to determine what the company should do. $$\begin{array} { c | ccc } 
&& { \text { State of Nature } } \
\text { Decision } & s _ { 1 } & s _ { 2 } & s _ { 3 } \
\hline d _ { 1 } & 30 & 80 & - 30 \
d _ { 2 } & 100 & 30 & - 40 \
d _ { 3 } & - 80 & - 10 & 120 \
d _ { 4 } & 20 & 20 & 20
\end{array}$$ 
a.if an optimistic strategy is used.
b.if a conservative strategy is used.
c.if minimax regret is the strategy.

Accepted Answer

The answer of The table shows both prospective profits and...

Question 6

States of nature should be defined so that one and only one will actually occur.

Accepted Answer

A) True 
 B)False

Question 7

Decision alternatives are structured so that several could occur simultaneously.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT an advantage of using decision tree analysis?

Accepted Answer

A) the ability to see clearly what decisions must be made 
B) the ability to see clearly in what sequence the decisions must occur 
C) the ability to see clearly the interdependence of decisions 
D) the ability to see clearly the future outcome of a decision 
A) the ability to see clearly what decisions must be made 
B) the ability to see clearly in what sequence the decisions must occur 
C) the ability to see clearly the interdependence of decisions 
D) the ability to see clearly the future outcome of a decision

Question 9

The expected value approach is more appropriate for a one-time decision than a repetitive decision.

Accepted Answer

A) True 
 B)False

Question 10

EVPI equals the expected regret associated with the minimax decision.

Accepted Answer

A) True 
 B)False

Question 11

A payoff

Accepted Answer

A) is always measured in profit. 
B) is always measured in cost. 
C) exists for each pair of decision alternative and state of nature. 
D) exists for each state of nature. 
A) is always measured in profit. 
B) is always measured in cost. 
C) exists for each pair of decision alternative and state of nature. 
D) exists for each state of nature.

Question 12

A high efficiency rating indicates that the sample information is almost as good as perfect information.

Accepted Answer

A) True 
 B)False

Question 13

Lakewood Fashions must decide how many lots of assorted ski wear to order for its three stores.Information on pricing,sales,and inventory costs has led to the following payoff table,in thousands. $\begin{array}{c|ccc}
&&\underline{Demand}\
\text { Order Size } & \text { Low } & {\text { Medium }} & \text { High } \
\hline 1 \text { lot } & 12 & 15 & 15 \
2 \text { lots } & 9 & 25 & 35 \
3 \text { lots } & 6 & 35 & 60
\end{array}$ 
a.What decision should be made by the optimist?
b.What decision should be made by the conservative?
c.What decision should be made using minimax regret?

Accepted Answer

a.3 lots
b

Question 14

A decision strategy is a sequence of decisions and chance outcomes,where the decisions chosen depend on the yet to be determined outcomes of chance events.

Accepted Answer

A) True 
 B)False

Question 15

If p is the probability of Event 1 and (1 F1F1F1S1F1F1F10 p)is the probability of Event 2,for what values of p would you choose A? B? C? Values in the table are payoffs. $$\begin{array} { c c c } 
\text { Choice/Event } & \text { Event 1 } & \text { Event 2 } \
\hline \text { A } & 0 & 20 \
\text { B } & 4 & 16 \
\text { C } & 8 & 0
\end{array}$$

Accepted Answer

Choose A if p F1F1F1S1F1F1F10

Question 16

If sample information is obtained,the result of the sample information will be either positive or negative.No matter which result occurs,the choice to select option A or option B exists.And no matter which option is chosen,the eventual outcome will be good or poor.Complete the table. $\begin{array}{cccccc}
\begin{array}{ccccc}
\text { Sample } \
\text { Result }
\end{array} & \begin{array}{c}
\text { States of } \
\text { Nature }
\end{array} & \begin{array}{c}
\text { Prior } \
\text { Probabilities }
\end{array} & \begin{array}{c}
\text { Conditional } \
\text { Probabilities }
\end{array} & \begin{array}{c}
\text { Joint } \
\text { Probabilities }
\end{array} & \begin{array}{c}
\text { Posterior } \
\text { Probabilities }
\end{array} \
\hline \text { Positive } & \text { good } & .7 & P(\text { positive } \mid g o o d)=.8 & & \
& \text { poor } & .3 & P(\text { positive } \mid \text { poor })=.1 & & \
\hline \text { Negative } & \text { good } & .7 & P(\text { negative } \mid g o o d)= & & \
& \text { poor } & .3 & P(\text { negative } \mid \text { poor })= &
\end{array}$

Accepted Answer

The answer of If sample information is obtained,the result of...

Question 17

Transrail is bidding on a project that it figures will cost $400,000 to perform.Using a 25% markup,it will charge $500,000,netting a profit of $100,000.However,it has been learned that another company,Rail Freight,is also considering bidding on the project.If Rail Freight does submit a bid,it figures to be a bid of about $470,000.Transrail really wants this project and is considering a bid with only a 15% markup to $460,000 to ensure winning regardless of whether or not Rail Freight submits a bid.
a.Prepare a profit payoff table from Transrail's point of view.
b.What decision would be made if Transrail were conservative?
c.If Rail Freight is known to submit bids on only 25% of the projects it considers, what decision should Transrail make?
d.Given the information in (c), how much would a corporate spy be worth to Transrail to find out if Rail Freight will bid?

Accepted Answer

a. @#IMG-DLM& b.Bid

Question 18

The primary value of decision trees is as a useful way of organizing how operations managers think about complex multiphase decisions.

Accepted Answer

A) True 
 B)False

Question 19

For a minimization problem,the optimistic approach is often referred to as the

Accepted Answer

A) minimax approach 
B) maximin approach 
C) maximax approach 
D) minimin approach 
A) minimax approach 
B) maximin approach 
C) maximax approach 
D) minimin approach

Question 20

Characterize each of the non-probabilistic approaches to decision making (i.e.- minimin,minimax,maximin,and maximax)in terms of it relating to a minimization or maximization problem and whether it is a pessimistic or optimistic approach.

Accepted Answer

The answer of Characterize each of the non-probabilistic approaches to...

Decision tree probabilities refer to

If P(high)= .3,P(low)= .7,P(favorable | high)= .9,and P(unfavorable | low)= .6,then P(favorable)=

States of nature should be defined so that one and only one will actually occur.

Decision alternatives are structured so that several could occur simultaneously.

Which of the following is NOT an advantage of using decision tree analysis?

The expected value approach is more appropriate for a one-time decision than a repetitive decision.

EVPI equals the expected regret associated with the minimax decision.

A payoff

A high efficiency rating indicates that the sample information is almost as good as perfect information.

A decision strategy is a sequence of decisions and chance outcomes,where the decisions chosen depend on the yet to be determined outcomes of chance events.

If p is the probability of Event 1 and (1  p)is the probability of Event 2,for what values of p would you choose A? B? C? Values in the table are payoffs. Choice/Event Event 1 Event 2 A 0 20 B 4 16 C 8 0

The primary value of decision trees is as a useful way of organizing how operations managers think about complex multiphase decisions.

For a minimization problem,the optimistic approach is often referred to as the

Characterize each of the non-probabilistic approaches to decision making (i.e.- minimin,minimax,maximin,and maximax)in terms of it relating to a minimization or maximization problem and whether it is a pessimistic or optimistic approach.

Introduction

Introduction to Probability

Probability Distributions

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Advanced Optimization Applications

Project Scheduling: Pertcpm

Inventory Models

Waiting Line Models

Simulation

Markov Processes

Filters

Exam 4: Decision Analysis

Decision tree probabilities refer to

If P(high)= .3,P(low)= .7,P(favorable | high)= .9,and P(unfavorable | low)= .6,then P(favorable)=

States of nature should be defined so that one and only one will actually occur.

Decision alternatives are structured so that several could occur simultaneously.

Which of the following is NOT an advantage of using decision tree analysis?

The expected value approach is more appropriate for a one-time decision than a repetitive decision.

EVPI equals the expected regret associated with the minimax decision.

A payoff

A high efficiency rating indicates that the sample information is almost as good as perfect information.

A decision strategy is a sequence of decisions and chance outcomes,where the decisions chosen depend on the yet to be determined outcomes of chance events.

If p is the probability of Event 1 and (1  p)is the probability of Event 2,for what values of p would you choose A? B? C? Values in the table are payoffs. Choice/Event Event 1 Event 2 A 0 20 B 4 16 C 8 0

The primary value of decision trees is as a useful way of organizing how operations managers think about complex multiphase decisions.

For a minimization problem,the optimistic approach is often referred to as the

Characterize each of the non-probabilistic approaches to decision making (i.e.- minimin,minimax,maximin,and maximax)in terms of it relating to a minimization or maximization problem and whether it is a pessimistic or optimistic approach.

Introduction

Introduction to Probability

Probability Distributions

Utility and Game Theory

Times Series Analysis and Forecasting

Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Distribution and Network Models

Integer Linear Programming

Advanced Optimization Applications

Project Scheduling: Pertcpm

Inventory Models

Waiting Line Models

Simulation

Markov Processes

Filters