Decision Analysis Essay

5136 Words Oct 4th, 2013 21 Pages
Introduction to Management Science, 10e (Taylor)
Chapter 12 Decision Analysis

1) A state of nature is an actual event that may occur in the future.
Answer: TRUE
Diff: 1 Page Ref: 527
Main Heading: Components of Decision Making
Key words: state of nature

2) A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature.
Answer: TRUE
Diff: 1 Page Ref: 527
Main Heading: Components of Decision Making
Key words: payoff table

3) The maximax criterion results in the maximum of the maximum payoffs.
Answer: TRUE
Diff: 2 Page Ref: 529
Main Heading: Decision Making without Probabilities
Key words: maximax criterion

4) The maximin
…show more content…
Answer: TRUE
Diff: 2 Page Ref: 537
Main Heading: Decision Making without Probabilities
Key words: expected value of perfect information

19) The equal likelihood criterion assigns a probability of 0.5 to each state of nature.
Answer: FALSE
Diff: 1 Page Ref: 533
Main Heading: Decision Making without Probabilities
Key words: equal likelihood criterion

20) Expected opportunity loss is the expected value of the regret for each decision.
Answer: TRUE
Diff: 2 Page Ref: 536
Main Heading: Decision Making with Probabilities
Key words: expected opportunity loss, minimax regret criterion

21) When using decision trees, branches with the greatest expected value are selected.
Answer: TRUE
Diff: 1 Page Ref: 541
Main Heading: Decision Making with Probabilities
Key words: decision trees

22) A decision tree is a diagram consisting of circles decision nodes, square probability nodes, and branches.
Answer: FALSE
Diff: 1 Page Ref: 541
Main Heading: Decision Making with Probabilities
Key words: decision trees

23) When the __________ criterion is used, the maximum of the maximum payoffs is observed.
Answer: maximax
Diff: 1 Page Ref: 529
Main Heading: Decision Making without Probabilities
Key words: decision making without probabilities maximax criterion

24) When the __________ criterion is used, the maximum of the minimum payoffs is observed
Answer: minimax
Diff:

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