OPS301 - Chp A - Decision Making Tools

If a decision maker can assign probabilities of occurrences to the states of​ nature, then the​ decision-making environment is Decision Making under Uncertainty.

False.

What is a tabular presentation that shows the outcome for each decision alternative under the various possible states of nature​ called?

Payoff Table.

In terms of decision​ theory, an occurrence or situation over which the decision maker has no control is called​ a(n):

State of Nature.

In a decision​ tree, the expected monetary values are computed by working from right to left.

True.

The expected monetary value of a decision alternative is the sum of all possible payoffs from the​ alternative, each weighted by the probability of that payoff occurring.

True.

Expected monetary value is most appropriate for problem solving that takes​ place:

Under conditions of risk.

Analytic decision making is based on logic and considers all available data and possible alternatives.

True.

A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty​ is:

A pessimist.

A problem that involves a sequence of​ decisions:

Can be better analyzed with a decision tree than by a decision table.

The first​ step, and a key​ element, in the​ decision-making process is​ to:

Clearly define the problem.

What is the difference between the expected payoff under perfect information and the maximum expected payoff under​ risk?

Expected value of perfect information.

A decision tree is​ a(n):

Graphical representation of alternatives and states of nature.

The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision​ is:

Low​ (near 0%).

What decision criterion would be used by an optimistic decision maker solving a problem under conditions of​ uncertainty?

Maximax.

Which of the following is NOT considered a step in the​ decision-making process?

Minimize costs whenever possible.

A state of nature is an occurrence or a situation over which the decision maker has little or no control.

True.