Question 1

What is the expected value for the optimum decision alternative?

Accepted Answer

A)  $15,000,000
B)  $9,060,000
C)  $8,400,000
D)  $7,200,000
E)  $6,000,000F) A) and D)
G) A) and E) B

Question 2

The maximin approach involves choosing the alternative that has the "best worst" payoff.

Accepted Answer

A) True 
 B)False

Question 3

The maximax strategy would be:

Accepted Answer

A)  buy
B)  lease
C)  rent
D)  high
E)  lowF) C) and D)
G) A) and B)

Question 4

Which one of these is not used in decision-making under risk?

Accepted Answer

A)  EVPI
B)  EMV
C)  decision trees
D)  minimax regret
E)  All are used for risk situations.F) A) and B)
G) A) and C) D

Question 5

If he uses the minimax regret 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) B) and C)
G) All of the above

Question 6

If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what is her expected value of perfect information?

Accepted Answer

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

Question 7

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

Accepted Answer

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

Question 8

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

Accepted Answer

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

Question 9

What would be the total payoff if the heart lab were funded in both the first and second years?

Accepted Answer

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

Question 10

-If you feel that P(#1) = .4, P(#2) = .3, P(#3) = .2, and P(#4) = .1, what is your expected payoff under certainty?

Accepted Answer

The answer of 
-If you feel that P(#1) = .4,...

Question 11

Among decision environments, risk implies that certain parameters have probabilistic outcomes.

Accepted Answer

A) True 
 B)False

Question 12

Testing how a problem solution reacts to changes in one or more of the model parameters is called:

Accepted Answer

A)  simulation
B)  sensitivity analysis
C)  priority recognition
D)  analysis of variance
E)  decision analysisF) A) and B)
G) C) and E)

Question 13

If he uses the maximin 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) A) and D)
G) All of the above

Question 14

What is the expected value of selecting script #1?

Accepted Answer

A)  $15,000,000
B)  $9,060,000
C)  $8,400,000
D)  $7,200,000
E)  $6,000,000F) B) and E)
G) C) and E)

Question 15

If she feels that there is a 60% chance that the new cable network will be successful, what is her expected value (per thousand "hits")  of perfect information?

Accepted Answer

A)  $3.40
B)  $4.60
C)  $8.00
D)  $9.00
E)  $10.00F) All of the above
G) C) and D) A

Question 16

If she uses the minimax regret 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) C) and D)

Question 17

If she uses the minimax regret criterion, what size outlet will she decide to lease?

Accepted Answer

A)  small
B)  Medium
C)  large
D)  either small or Medium
E)  either medium or largeF) All of the above
G) D) and E)

Question 18

If he uses the minimax regret 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) All of the above
G) None of the above

Question 19

If yes and no are equally likely, which alternative has the largest expected monetary value?

Accepted Answer

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

Question 20

Which of the following is not a stage in the decision making process?

Accepted Answer

A)  select the best alternative
B)  develop suitable alternatives
C)  analyze and compare alternatives
D)  monitor the competition
E)  specify objectivesF) A) and D)
G) A) and E)

Exam 21: Extension 5: Decision Theory

What is the expected value for the optimum decision alternative?

Correct AnswerverifiedB

The maximin approach involves choosing the alternative that has the "best worst" payoff.

Correct AnswerverifiedShow Answer

The maximax strategy would be:

Correct AnswerverifiedShow Answer

Which one of these is not used in decision-making under risk?

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

If she feels the chances of low, medium, and high demand are 50%, 20%, and 30% respectively, what is her expected value of perfect information?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What would be the total payoff if the heart lab were funded in both the first and second years?

Correct AnswerverifiedShow Answer

-If you feel that P(#1) = .4, P(#2) = .3, P(#3) = .2, and P(#4) = .1, what is your expected payoff under certainty?

Correct AnswerverifiedShow Answer

Among decision environments, risk implies that certain parameters have probabilistic outcomes.

Correct AnswerverifiedShow Answer

Testing how a problem solution reacts to changes in one or more of the model parameters is called:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the expected value of selecting script #1?

Correct AnswerverifiedShow Answer

If she feels that there is a 60% chance that the new cable network will be successful, what is her expected value (per thousand "hits") of perfect information?

Correct AnswerverifiedA

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

Correct AnswerverifiedShow Answer

If she uses the minimax regret criterion, what size outlet will she decide to lease?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If yes and no are equally likely, which alternative has the largest expected monetary value?

Correct AnswerverifiedShow Answer

Which of the following is not a stage in the decision making process?

Correct AnswerverifiedShow Answer

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