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Unformatted text preview: File: chS1, Supplement 1: Operational DecisionMaking Tools: Decision Analysis True/False 1. In a decision making situation the events that may occur in the future are known as states of nature. Ans: True Difficulty: Easy Feedback: Decision Analysis 2. When probabilities are assigned to states of nature the situation is referred to as decision making under uncertainty. Ans: False Difficulty: Easy Feedback: Decision Analysis 3. The outcome of a decision in referred to as a payoff. Ans: True Difficulty: Easy Feedback: Decision Analysis 4. The most widely used decisionmaking criterion for situations with risk is expected value. Ans: True Difficulty: Easy Feedback: Decision Analysis 5. A decision criterion in which the decision payoffs are weighted by a coefficient of optimism is known as the Hurwicz criterion. Ans: True Difficulty: Moderate Feedback: Decision Analysis 6. The LaPlace criterion is a decision criterion in which each state of nature is weighted equally. Ans: True Difficulty: Moderate Feedback: Decision Analysis 7. A sequential decision tree is a graphical method for analyzing decision situations that require a sequence of decisions over time. Ans: True Difficulty: Easy Feedback: Decision Analysis 8. A decision criterion that results in the maximum of the minimum payoffs is called a maximin criterion. Ans: True Difficulty: Moderate Feedback: Decision Analysis 9. Quantitative methods are tools available to operations managers to help make a decision or recommendation. Ans: True Difficulty: Moderate Feedback: Decision Analysis 10. Quantitative methods are tools available to operations managers to help make a decision but not a recommendation. Ans: False Difficulty: Moderate Feedback: Decision Analysis 11. Decision analysis is a quantitative technique supporting decision making with uncertainty. Ans: True Difficulty: Moderate Feedback: Decision Analysis 12. A payoff table is a quantitative technique supporting decision making under uncertainty. Ans: True Difficulty: Moderate Feedback: Decision Analysis Multiple Choice 13. When probabilities can be assigned to the occurrence of states of nature in the future, the situation is referred to as a. decision making under risk b. decision making under certainty c. decision making under uncertainty d. none of the above Ans: a Difficulty: Easy Feedback: Decision Analysis 14. Which of the following techniques is the most widely used decisionmaking criterion under risk? a. maximax criterion b. minimax regret criterion c. expected value criterion d. Hurwicz criterion Ans: c Difficulty: Moderate Feedback: Decision Analysis 15. The maximum value of perfect information to the decision maker is known as a. the expected value of perfect information b. the expected value of imperfect information c. the minimum of the minimax regret d. none of the above Ans: a Difficulty: Easy Feedback: Decision Analysis 17. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a...
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 Spring '11
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