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A. Utility
B. Maximax
C. Posterior
D. Preposterior 53. The expected value criterion is used for decisionmaking under _______________.
A. Risk
B. Utility
C. Certainty
D. Uncertainty 11884 Chapter 01  An Introduction to Business Statistics 54. The _______________________ is the difference between the expected payoff that would
have been realized had the best alternative action been selected if we know which state of
nature has occurred and the expected payoff under risk.
A. expected monetary value
B. expected value of perfect information
C. expected value of sample information
D. expected net gain of sampling 55. The _____________________ is the difference between the expected value of sampling
and the cost of sampling.
A. expected monetary value
B. expected value of perfect information
C. expected value of sample information
D. expected net gain of sampling 56. The __________________ criterion is preferred by optimistic decisionmakers.
A. Maximax
B. Maximin
C. Utility theory
D. Risk theory 57. The __________________ criterion is preferred by pessimistic decision makers.
A. Maximax
B. Maximin
C. Utility theory
D. Risk theory 58. A decisionmaker's expected _____________ is based upon his/her attitude towards risk.
A. Maximax
B. Maximin
C. Utility
D. Risk theory 11885 Chapter 01  An Introduction to Business Statistics 59. In a decisionmaking situation, the maximum amount of money that should be spent to
obtain perfect information is called the ______________________________.
A. expected monetary value
B. expected value of perfect information
C. expected value of sample information
D. expected net gain of sampling 60. When we assess the worth of sample information in a decisionmaking problem, we are
performing a(n) _____________ analysis.
A. Utility
B. Maximax
C. Posterior
D. Preposterior 61. The expected net gain of sampling equals the ____________________ minus the cost of
sampling.
A. expected monetary value
B. expected value of perfect information
C. expected value of sampling information
D. expected net gain of sampling 62. The _____________ criterion is best used when a large number of similar decisions will
be made.
A. expected monetary value
B. expected value of perfect information
C. expected value of sample information
D. expected net gain of sampling 63. The _________ curve of an individual decision maker is a plot of the decisionmaker's
utilities versus the profits.
A. Utility
B. Maximax
C. Posterior
D. Preposterior 11886 Chapter 01  An Introduction to Business Statistics 64. In utility theory, a(n) __________________ decision maker is an individual who will
choose the decision alternative having the highest expected profit.
A. high risk
B. low risk
C. risk neutral
D. posterior Essay Questions 65. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (SI) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium and low demand
respectively. The payoff values are in thousands of dollars. Determine the best alternative (course of action) for the EKA manufacturing company using
the maximax criterion. 11887 Chapter 01  An Introduction to Business Statistics 66. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (SI) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium and low demand
respectively. The payoff values are in thousands of dollars. Determine the best alternative (course of action) for the EKA manufacturing company using
the maximin criterion. 67. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (SI) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium and low demand
respectively. The payoff values are in thousands of dollars. Find the expected monetary value for each of the alternatives and determine the best
alternative (course of action) for the EKA manufacturing company using the expected
monetary value criterion. 11888 Chapter 01  An Introduction to Business Statistics 68. The alternatives 1 and 2 in the following payoff table represent the two possible
manufacturing strategies that the EKA manufacturing company can adopt. The level of
demand affects the success of both strategies. The states of nature (SI) represent the levels of
demand for the company products. S1, S2 and S3 characterize high, medium and low demand
respectively. The payoff values are in thousands of dollars. What is the maximum amount that the company would be willing to pay for perfect
information? 11889 Chapter 01  An Introducti...
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 Winter '14

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