Midterm Review Questions

# Midterm Review Questions - BADM 275 Midterm Review...

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BADM 275 Midterm Review Questions 1 Decision Analysis: 1. Which of the following is true about the expected value of perfect information? a) it is the amount you would pay for any sample study b) it is calculated as EMV minus EOL c) it is calculated as expected value with perfect information minus maximum EMV d) it is the amount charged for marketing research e) none of the above ANSWER: c The following is a payoff table giving profits for various situations: States of Nature Alternatives A B C Alternative 1 120 140 120 Alternative 2 200 100 50 Alternative 3 100 120 180 Do Nothing 0 0 0 2. What decision would an optimist make? a) Alternative 1 b) Alternative 2 c) Alternative 3 d) Do Nothing e) State of Nature A ANSWER: b 3. What decision would a pessimist make? a) Alternative 1 b) Alternative 2 c) Alternative 3 d) Do Nothing e) State of Nature A ANSWER: a

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BADM 275 Midterm Review Questions 2 The following is an opportunity loss table: States of Nature Alternatives A B C Alternative 1 0 90 85 Alternative 2 50 0 110 Alternative 3 75 80 0 4. What decision should be made based on the minimax regret criterion? The following is an opportunity-loss table: State of Nature Alternatives A B C Alternative 1 20 100 0 Alternative 2 100 0 25 Alternative 3 0 40 90 5. The probabilities for the states of nature A, B, and C are 0.3, 0.5, and 0.2, respectively. If a person were to use the expected opportunity loss criterion, what decision would be made? a) Alternative 1 b) Alternative 2 c) Alternative 3 d) State of Nature C e) State of Nature B ANSWER: b
BADM 275 Midterm Review Questions 3 The following is a payoff table giving profits for various situations: States of Nature Alternatives A B C Alternative 1 100 120 180 Alternative 2 120 140 120 Alternative 3 200 100 50 Do Nothing 0 0 0

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