Question 1

If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is his expected value of perfect information?

Accepted Answer

A)  $15,000
B)  $61,000
C)  $69,000
D)  $72,000
E)  $87,000F) A) and E)
G) B) and D)

Question 2

If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what are the expected annual profits for the number of beauticians she will decide to hire?

Accepted Answer

A)  $54,000
B)  $55,000
C)  $70,000
D)  $80,000
E)  $135,000F) A) and E)
G) B) and C)

Question 3

Sensitivity analysis is required because _______.

Accepted Answer

A)  payoffs and probabilities are estimates
B)  most decision will affect employees
C)  expected payoffs are sensitive to the time value of money
D)  it's the second step in the decision model
E)  with the passage of time, small decisions get biggerF) A) and B)
G) None of the above

Question 4

If he uses the minimax regret criterion, which size bus will he decide to purchase?

Accepted Answer

A)  small
B)  Medium
C)  large
D)  either small or Medium
E)  either medium or largeF) B) and C)
G) A) and D)

Question 5

The maximax strategy would be:

Accepted Answer

A)  small
B)  Medium
C)  med.-large
D)  large
E)  ex-largeF) A) and B)
G) A) and C)

Question 6

If she uses the maximin criterion, which advertising strategy will she use?

Accepted Answer

A)  print
B)  mixed
C)  television
D)  either print or mixed
E)  either mixed or televisionF) B) and C)
G) A) and B)

Question 7

For what range of probability that the new cable network will be successful will she select the mixed media strategy?

Accepted Answer

A)  0 - .4
B)  0 - .55
C)  .4 - .7
D)  .55 - 1
E)  .7 - 1F) C) and D)
G) B) and E)

Question 8

If she uses the minimax regret criterion, how many beauticians will she decide to hire?

Accepted Answer

A)  one
B)  two
C)  three
D)  either one or two
E)  either two or threeF) A) and D)
G) A) and E)

Question 9

What is the probability that script #1 will be a success, but its sequel will not?

Accepted Answer

A)  .8
B)  .7
C)  .56
D)  .2
E)  .14F) A) and E)
G) A) and D)

Question 10

What would be the total payoff if script #1 were a success, but its sequel were not?

Accepted Answer

A)  $15,000,000
B)  $10,000,000
C)  $9,000,000
D)  $5,000,000
E)  $-1,000,000F) C) and D)
G) B) and C)

Question 11

If he uses the Laplace criterion, which kind of dwellings will he decide to build?

Accepted Answer

A)  single family
B)  apartments
C)  condos
D)  either single family or apartments
E)  either apartments or condosF) A) and C)
G) None of the above

Question 12

Graphical sensitivity analysis is limited to cases with no more than two alternatives.

Accepted Answer

A) True 
 B)False

Question 13

What is the expected value for the optimum decision alternative?

Accepted Answer

A)  $100,000
B)  $60,000
C)  $50,000
D)  $40,000
E)  $20,000F) A) and D)
G) D) and E)

Question 14

The value of perfect information is inversely related to losses predicted.

Accepted Answer

A) True 
 B)False

Question 15

A manager's staff has compiled the information below which pertains to four capacity alternatives under four states of nature.Values in the matrix are present value in thousands of dollars.
A.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> (A) Assuming a maximax strategy, which ...

Question 16

The maximin strategy would be:

Accepted Answer

A)  A
B)  B
C)  C
D)  D
E)  EF) A) and B)
G) A) and C)

Question 17

What is the expected value for the decision alternative to select the cancer lab?

Accepted Answer

A)  $100,000
B)  $60,000
C)  $50,000
D)  $40,000
E)  $20,000F) B) and D)
G) None of the above

Question 18

If he uses the Laplace criterion, which alternative will he decide to select?

Accepted Answer

A)  do nothing
B)  expand
C)  build new
D)  either do nothing or expand
E)  either expand or build newF) A) and E)
G) D) and E)

Question 19

If she uses the minimax regret criterion, how many new examiners will she decide to hire?

Accepted Answer

A)  one
B)  two
C)  three
D)  either one or two
E)  either two or threeF) A) and D)
G) C) and D)

Question 20

-If you are uncertain which state of nature will occur, and use the maximin criterion, which alternative will you select?

Accepted Answer

The answer of 
-If you are uncertain which state of...

Exam 21: Extension 5: Decision Theory

If she uses the maximin criterion, which advertising strategy will she use?

Correct AnswerverifiedShow Answer

Sensitivity analysis is required because _______.

Correct AnswerverifiedShow Answer

The maximin strategy would be:

Correct AnswerverifiedShow Answer

What is the expected value for the decision alternative to select the cancer lab?

Correct AnswerverifiedShow Answer

If he uses the Laplace criterion, which kind of dwellings will he decide to build?

Correct AnswerverifiedShow Answer

If she uses the minimax regret criterion, how many beauticians will she decide to hire?

Correct AnswerverifiedShow Answer

The maximax strategy would be:

Correct AnswerverifiedShow Answer

What would be the total payoff if script #1 were a success, but its sequel were not?

Correct AnswerverifiedShow Answer

If he uses the minimax regret criterion, which size bus will he decide to purchase?

Correct AnswerverifiedShow Answer

A manager's staff has compiled the information below which pertains to four capacity alternatives under four states of nature.Values in the matrix are present value in thousands of dollars. A.

Correct Answerverified (A) Assuming a maximax strategy, which ...View AnswerShow Answer

What is the expected value for the optimum decision alternative?

Correct AnswerverifiedShow Answer

If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is his expected value of perfect information?

Correct AnswerverifiedShow Answer

The value of perfect information is inversely related to losses predicted.

Correct AnswerverifiedShow Answer

For what range of probability that the new cable network will be successful will she select the mixed media strategy?

Correct AnswerverifiedShow Answer

Graphical sensitivity analysis is limited to cases with no more than two alternatives.

Correct AnswerverifiedShow Answer

If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what are the expected annual profits for the number of beauticians she will decide to hire?

Correct AnswerverifiedShow Answer

If he uses the Laplace criterion, which alternative will he decide to select?

Correct AnswerverifiedShow Answer

-If you are uncertain which state of nature will occur, and use the maximin criterion, which alternative will you select?

Correct AnswerverifiedShow Answer

What is the probability that script #1 will be a success, but its sequel will not?

Correct AnswerverifiedShow Answer

If she uses the minimax regret criterion, how many new examiners will she decide to hire?

Correct AnswerverifiedShow Answer

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(A) Assuming a maximax strategy, which ...
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