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A maximin b certainty c maximax d decision aacsb

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Unformatted text preview: C. expected value of sampling information D. expected net gain of sampling AACSB: Reflective Thinking Bloom's: Knowledge Difficulty: Medium Learning Objective: 2 Topic: Posterior Analysis 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 AACSB: Reflective Thinking Bloom's: Knowledge Difficulty: Hard Learning Objective: 1 Topic: Decision Theory 1-1933 Chapter 01 - An Introduction to Business Statistics 63. The _________ curve of an individual decision maker is a plot of the decision-maker's utilities versus the profits. A. Utility B. Maximax C. Posterior D. Pre-posterior AACSB: Reflective Thinking Bloom's: Knowledge Difficulty: Medium Learning Objective: 3 Topic: Utility Theory 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 AACSB: Reflective Thinking Bloom's: Knowledge Difficulty: Hard Learning Objective: 3 Topic: Utility Theory 1-1934 Chapter 01 - An Introduction to Business Statistics 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. strategy 2 (Max. payoff for alternative 2 = 120) > (Max. payoff for alternative 1 = 110), thus choose strategy 2. AACSB: Analytic Skills Bloom's: Application Difficulty: Medium Learning Objective: 1 Topic: Decision Theory 1-1935 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. strategy 1 (Min. payoff for alternative 1 = 70) > (Min. payoff for alternative 1 = 50), thus choose strategy 1. AACSB: Reflective Thinking Bloom's: Knowledge Difficulty: Medium Learning Objective: 1 Topic: Decision Theory 1-1936 Chapter 01 - An Introduction to Business Statistics 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. strategy 2 (EMV)1 = (.3)(110) + (.6)(80) + (.1)(70) = 88 (EMV)2 = (.3)(60) + (.6)(120) + (.1)(50) = 95 95 > 88, therefore choose strategy 2. AACSB: Analytic Skills Bloom's: Application Difficulty: Medium Learning Objective: 1 Topic: Decision Theory 1-1937 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? EVPI = 6 (EMV)1 = (.3)(110) + (.6)(80) + (.1)(70) = 88 (EMV)2 = (.3)(60) + (.6)(120) + (.1)(50) = 95 Max EMV = 95 Expected payoff under certainty = (.3)(110) + (.6)(120) + (.1)(70) = 112 EVPI = 112 - 95 = 17 AACSB: Analytic Skills Bloom's: Application Difficulty: Medium Learning Objective: 1 Topic: Decision Theory 1-1938 Chapter 01 - An Introduction to Business Statistics 69. 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. The management believes that...
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