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Managment Science - Chapter 03 - Post Test

The document discusses key concepts in decision making including decision alternatives, states of nature, payoffs, decision trees, and methods for decision making without probabilities. It also covers sensitivity analysis, expected value of sample information, probabilities in decision trees, and the optimistic, conservative, minimax and maximin approaches.

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14 views

Managment Science - Chapter 03 - Post Test

The document discusses key concepts in decision making including decision alternatives, states of nature, payoffs, decision trees, and methods for decision making without probabilities. It also covers sensitivity analysis, expected value of sample information, probabilities in decision trees, and the optimistic, conservative, minimax and maximin approaches.

Uploaded by

Aurora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The options from which a decision maker chooses a course of action are

a. called the decision alternatives.

b. under the control of the decision maker.

c. not the same as the states of nature.

d. All of the alternatives are true.

d (All of the alternatives are true.)

States of nature

a. can describe uncontrollable natural events such as floods or freezing temperatures.

b. can be selected by the decision maker.

c. cannot be enumerated by the decision maker.

d. All of the alternatives are true.

a (can describe uncontrollable natural events such as floods or freezing temperatures.)

3. A payoff

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.

c (exists for each pair of decision alternative and state of nature.)

4. Making a good decision

a. requires probabilities for all states of nature.


b. requires a clear understanding of decision alternatives, states of nature, and payoffs.

c. implies that a desirable outcome will occur.

d. All of the alternatives are true.

b (requires a clear understanding of decision alternatives, states of nature, and payoffs.)

5. A decision tree

a. presents all decision alternatives first and follows them with all states of nature.

b. presents all states of nature first and follows them with all decision alternatives.

c. alternates the decision alternatives and states of nature.

d. arranges decision alternatives and states of nature in their natural chronological order.

d (arranges decision alternatives and states of nature in their natural chronological order.)

6. Which of the methods for decision making without probabilities best protects the decision maker
from undesirable results?

a. the optimistic approach

b. the conservative approach

c. minimum regret

d. minimax regret

b (the conservative approach)

7. Sensitivity analysis considers

a. how sensitive the decision maker is to risk.

b. changes in the number of states of nature.

c. changes in the values of the payoffs.

d. changes in the available alternatives.


c (changes in the values of the payoffs.)

8. To find the EVSI,

a. use the EVPI to calculate sample information probabilities.

b. use indicator probabilities to calculate prior probabilities.

c. use prior and sample information probabilities to calculate revised probabilities.

d. use sample information to revise the sample information probabilities.

c (use prior and sample information probabilities to calculate revised probabilities.)

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

a. .10

b. .27

c. .30

d. .55

d (.55)

10. The efficiency of sample information is

a. EVSI*(100%)

b. EVSI/EVPI*(100%)

c. EVwoSI/EVwoPI*(100%)

d. EVwSI/EVwoSI*(100%)

b (EVSI/EVPI*(100%))

11. Decision tree probabilities refer to


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

d (the probability of an uncertain event occurring)

12. For a maximization problem, the conservative approach is often referred to as the

a. minimax approach

b. maximin approach

c. maximax approach

d. minimin approach

b (maximin approach)

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

a. minimax approach

b. maximin approach

c. maximax approach

d. minimin approach

d (minimin approach)

14. For a maximization problem, the optimistic approach is often referred to as the

a. minimax approach

b. maximin approach

c. maximax approach

d. minimin approach
c (maximax approach)

15. For a minimization problem, the conservative approach is often referred to as the

a. minimax approach

b. maximin approach

c. maximax approach

d. minimin approach

a (minimax approach)

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