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Introduction to Management Science, 10e (Taylor) Chapter 12 Decision Analysis 1) A state of nature is an actual event that may occur in the future. Answer: TRUE Diff: 1 Page Ref: 527 Main Heading: Components of Decision Making Key words: state of nature 2) A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature. Answer: TRUE Diff: 1 Page Ref: 527 Main Heading: Components of Decision Making Key words: payoff table 3) The maximax criterion results in the maximum of the maximum payoffs. Answer: TRUE Diff: 2 Page Ref: 529 Main Heading: Decision Making without Probabilities Key words: maximax criterion 4) The maximin approach involves choosing the alternative with the highest payoff. Answer: FALSE Diff: 2 Page Ref: 530 Main Heading: Decision Making without Probabilities Key words: maximin criterion 5) Regret is the difference between the payoff from the best decision and all other decision payoffs. Answer: TRUE Diff: 2 Page Ref: 531 Main Heading: Decision Making without Probabilities Key words: minimax regret criterion 6) The minimax regret criterion minimizes the maximum regret. Answer: TRUE Diff: 2 Page Ref: 529 Main Heading: Decision Making without Probabilities Key words: minimax regret criterion 1 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 7) The minimax regret criterion maximizes the maximum regret. Answer: FALSE Diff: 2 Page Ref: 531 Main Heading: Decision Making without Probabilities Key words: minimax regret criterion 8) The Hurwicz criterion is a compromise between the maximax and maximin criteria. Answer: TRUE Diff: 2 Page Ref: 532 Main Heading: Decision Making without Probabilities Key words: Hurwicz criterion 9) The Hurwicz criterion is a compromise between the minimax and minimin criteria. ... View Full Document

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