QBA April Quiz 3

Which of the following summarizes the final outcome for each decision alternative? Payoff matrix Outcome matrix Yield matrix Performance matrix

Payoff matrix

The maximin approach to decision making: a. maximizes the minimum return. b. maximizes the maximum return. c. maximizes the minimum regret. d. minimizes the minimum regret.

a. maximizes the minimum return.

Expected regret is also called: a. EMV. b. EOL. c. EPA. d. EOQ.

b. EOL.

Decision analysis supports all but which of the following goals? a. Help make good decisions. b. Ensure selection of good outcomes. c. Analyze decision problems logically. d. Incorporate problem uncertainty

b. Ensure selection of good outcomes.

The decision with the smallest expected opportunity loss (EOL) will also have the: a. smallest EMV. b. largest EMV. c. smallest regret. d. largest regret.

b. largest EMV.

Business decision models can be categorized as:

decision making under risk

Which of the following is a goal of decision analysis? Help individuals make good decisions. Ensure decisions lead to good outcomes. Avoid decisions that lead to bad outcomes. Reduce the role of luck in a decision.

Help individuals make good decisions.

Which decision rule pessimistically assumes that nature will always be "against us" regardless of what decision we make? Maximax decision rule Maximin decision rule Minimax regret decision rule Minimin decision rule

Maximin decision rule

Although modeling provides valuable insight to decision makers, decision making remains a difficult task. Which of the following is not a primary cause for this difficulty? Uncertainty regarding the future Models providing decisions for the decision maker Conflicting values Conflicting objectives

Models providing decisions for the decision maker

Which of these is a characteristic of decision making under uncertainty? The probability of possible future events is unknown. Decision makers must rely on probabilities in evaluating outcomes. All process parameters have known values. Some process parameters have known values.

The probability of possible future events is unknown.

Probabilistic decision rules can be used if the states of nature in a decision problem can be assigned probabilities that represent their likelihood of occurrence. Which of the following statements is not true regarding the probabilities employed? a. The probabilities are always obtained from historical data. b. The probabilities must always be unbiased. c. The probabilities can be assigned subjectively. d. Subjective probabilities obtained can be accurate and unbiased.

a. The probabilities are always obtained from historical data.

The expected monetary value criterion (EMV) is the decision-making approach used in: a. decision-making under risk. b. decision-making under uncertainty. c. decision-making under certainty. d. exploratory data analysis.

a. decision-making under risk.

A state of nature is: a. observed. b. under control of a decision maker. c. known with certainty. d. estimated using a decision model of choice.

a. observed.

Under the maximin rule, a decision maker hedges against the: a. worst possible outcome of a decision. b. best possible outcome of a decision. c. safest possible decision. d. riskiest possible decision.

a. worst possible outcome of a decision.

A(n) ____ is a course of action intended to solve a problem. decision criteria state of nature alternative

alternative

A course of action intended to solve a problem is called a(n) alternative. option. decision. criteria.

alternative.

Decision models are applicable when there are multiple alternatives. are multiple states of nature. is only one alternative. is only one state of nature.

are multiple alternatives.

The decision rule that determines the minimum payoff for each alternative and then selects the alternative associated with the largest minimum payoff is the: a. maximax decision rule. b. maximin decision rule. c. minimax regret decision rule. d. minimin decision rule.

b. maximin decision rule.

The category of decision rules that contains the maximax decision rule is the: a. optimistic category. b. non-probabilistic category. c. probabilistic category. d. optimality category

b. non-probabilistic category.

The _______ correspond to future events that are not under the control of the decision maker. a. payoffs b. states of nature c. criteria d. alternatives

b. states of nature

A payoff matrix depicts ____ versus ____ with payoffs for each intersection cell. a. decision criteria; states of nature b. decision alternatives; potential outcomes c. decision alternatives; states of nature. d. decision criteria; potential outcomes

c. decision alternatives; states of nature.

The decision rule that selects the alternative associated with the smallest maximum opportunity loss is the: a. maximax decision rule. b. maximin decision rule. c. minimax regret decision rule. d. minimin decision rule.

c. minimax regret decision rule.

States of nature are assigned probabilities through the use of: a. predicted data. b. random number generation. c. previous mathematical models. d. historical data.

d. historical data.

The EMV decision rule selects the decision alternative with the largest expected monetary value. smallest expected regret. smallest expected mean variance. largest expected risk avoidance.

largest expected monetary value.

The decision rule that determines the maximum payoff for each alternative and then selects the alternative associated with the largest payoff is the maximax decision rule. maximin decision rule. minimax regret decision rule. minimin decision rule.

maximax decision rule.

In decision analysis, good decisions always result in good outcomes. always result in bad outcomes. guarantee good outcomes. may be reached when the model accounts for unforeseeable circumstances.

may be reached when the model accounts for unforeseeable circumstances.

In decision making, luck often plays a role in determining whether good or bad outcomes occur. can be quantified. cannot be quantified. can be ignored.

often plays a role in determining whether good or bad outcomes occur.

The amount of opportunity lost in making a decision is called loss. frustration. negative profit. regret.

regret.

A payoff matrix is a table that summarizes the final outcome (or regret) for each decision alternative under each possible:

state of nature