DECISION MAKING
1.
A tabular presentation that shows the outcome for each decision alternative under the various
states of nature is called:
a)
a payback period matrix.
b)
a decision matrix.
c)
a decision tree.
d)
a payoff table.
2.
The difference between expected payoff under certainty and expected value of the best act
without certainty is the:
TABLE 161
The following payoff table shows profits associated with a set of 3 alternatives under 2 possible
states of nature.
States
A
1
A
2
A
3
1
12
– 2
8
2
4
10
5
where:
S
1 is state of nature 1
A
1 is action alternative 1
S
2 is state of nature 2
A
2 is action alternative 2
A
3 is action alternative 3
3.
Referring to Table 161, if the probability of
S
1 is 0.2 and
S
2 is 0.8, then the expected monetary
value of
A
1 is
4.
Referring to Table 161, if the probability of
S
1 is 0.5, then the expected monetary value (
EMV
)
for
A
1 is
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Decision Making
5.
Referring to Table 161, if the probability of
S
1 is 0.5, then the expected monetary value (
EMV
)
for
A
2 is
a)
3.
b)
4.
c)
6.5.
d)
8.
6.
Referring to Table 161, if the probability of
S
1 is 0.5, what is the optimal alternative using
EMV?
7.
Referring to Table 161, if the probability of
S
1 is 0.5, then the
EVPI
for the payoff table is
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 Fall '08
 ravi
 Decision Making, Game Theory, Probability theory, Blaise Pascal

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