Exam Chapter 1 and 2

An input (such as variable cost per unit or fixed cost)

a parameter

Decision variables are

controllable

Operations Research is known as A) the science of numerical analysis. B) the science of sensitivity analysis. C) the science of better. D) the science of modeling. E) None of the above

the science of better.

In assessing utility values

the worst outcome is given a utility of 0

The three decision-making environments are decision making under A) utility, risk, and certainty. B) utility, risk, and uncertainty. C) utility, certainty, and uncertainty. D) utility, equity, and certainty. E) risk, certainty, and uncertainty

utility, certainty, and uncertainty.

On a decisiontree, once the tree has been drawn and the payoffs and probabilities have been place tree, the analysis (computing EMVs and selecting the best alternative)

working backward (starting on the right and moving to the left).

Who is credited with pioneering the principles of the scientific approach to management? A) Adam Smith B) Henri Fayol C) John R. Locke D) Frederick W. Taylor E) Charles Babbage

Frederick W. Taylor

The point at which the total revenue equals total cost (meaning zero profit) is called the

break-even point

The EVSI

equals the EMV with sample information assuming no cost for the information minus the EMV without sample information.

The expected value of sample information (EVSI) can be used to A) establish a maximum amount to spend on additional information. B) calculate conditional probabilities. C) establish risk avoidance. D) provide points on a utility curve. E) None of the above

establish a maximum amount to spend on additional information.

Which of the following is a decision-making criterion that is used for decision making under risk?

expected monetary value criterion

The condition of improper data yielding misleading results is referred to as A) garbage in, garbage out. B) break-even point. C) uncontrollable variable. D) postoptimality. E) None of the above

garbage in, garbage out.

Which of the following statement(s) are true regarding the advantages of mathematical modeling? A) Models accurately represent reality. B) Models can help decision makers formulate problems. C) Models can save time. D) Models may be the only way to solve some large and complex problems in a timely manner. E) All of the above

All of the above

The equally likely criterion is also called the ________ criterion. A) Hurwicz B) uncertainty C) Laplace D) LaFlore E) Huchenmeizer

Laplace

Which of the following is the fourth step of the "Six Steps in Decision Making"? A) Select one of the mathematical decision theory models. B) List the possible alternatives. C) Apply the model and make your decision. D) List the payoff or profit of each combination of alternatives and outcomes. E) Identify the possible outcomes or states of nature.

List the payoff or profit of each combination of alternatives and outcomes.

Quantitative analysis is

a logical approach to decision making, a rational approach to decision making, and a scientific approach to decision making

A decision tree is preferable to a decision table when

a number of sequential decisions are to be made

A set of logical and mathematical operations performed in a specific sequence is called a(n) A) complete enumeration. B) diagnostic analysis. C) algorithm. D) objective. E) None of the above

algorithm.

A deterministic model is one in which

all parameters used in the model are known with complete certainty

On a decision tree, at each state-of-nature mode,

an EMV is calculated

In decision theory terminology, a course of action or a strategy that may be chosen by a decision maker is called

an alternative

Sensitivity analysis is most often associated with which step of the quantitative analysis approach?

analyzing the results

In decision theory, we call the payoffs resulting from each possible combination of alternatives and outcomes A) marginal values. B) conditional values. C) conditional probabilities. D) Bayesian values. E) joint values.

conditional values.

An analytic and systematic approach to the study of decision making is referred to as A) decision making under risk. B) decision making under uncertainty. C) decision theory. D) decision analysis. E) decision making under certainty.

decision theory.

In using the criterion of realism(Hurwicz criterion), the coefficient of realism (a)

describes the degree of optimism of the decision maker

Which of the following is not a characteristic of a good decision? A) based on logic B) considers all available data C) considers all possible alternatives D) employs appropriate quantitative techniques E) always results in a favorable outcome

employs appropriate quantitative techniques

The minimum expected opportunity loss is

equal to the excepted value of perfect information

the term algorithum

is named after Algorismus, is named after a ninth-century Arabic mathematician, describes a series of steps or procedures to be repeated.

Quantitative analysis is typically associated with the use of

mathematical models

The optimistic decision criterion is the criterion of A) maximax. B) maximin. C) realism. D) equally likely. E) minimax regret.

maximax.

A pessimistic decision making criterion is A) maximax. B) equally likely. C) maximin. D) decision making under certainty. E) minimax regret

maximin.

IF a rational person selects an alternative that does not maximize the EMV, we would expect that this alternative

maximizes the expected utility.

A(n) ________ is a representation of reality or a real-life situation. A) objective B) model C) analysis D) algorithm E) None of the above

model

A measurable quantity that is inherent in the problem is called a(n) A) decision variable. B) uncontrollable variable. C) algorithm. D) parameter. E) enumeration variable

parameter.

Frederick Winslow Taylor

pioneered the principles of scientific management.

Bayes' theorem is used to revise probabilities. The new (revised) probabilities are called

posterior probabilities

In Bayesian analysis, conditional probabilities are also known as which of the following? A) anterior probabilities B) posterior probabilities C) prior probabilities D) marginal probabilities E) joint probabilities

posterior probabilities

Which of the following categories of business analytics involves the use of optimization models?

prescriptive

Which of the following techniques involves the use of optimization methods to provide new and better ways to operate based on specific business objectives? A) descriptive analytics B) prescriptive analytics C) predictive analytics D) quantitative analysis E) qualitative analysis

prescriptive analytics

The break-even point is an example of a A) postoptimality model. B) quantitative analysis model. C) schematic model. D) sensitivity analysis model. E) None of the above

quantitative analysis model.

If probabilities are available to the decision maker, then the decision-making environment is called

risk

The ability to examine the variability of a solution due to changes in the formulation of a problem is an important part of the analysis of the results. This type of analysis is called ________ analysis. A) sensitivity B) implicit C) normal D) scale E) objective

sensitivity

An analysis to determine how much a solution would change if there were changes in the model or the input data is called

sensitivity or postoptimality analysis

In decision theory, probabilities are associated with

states of nature

The most that a person should pay for perfect information is

the EVPI

The minimum EOL criterion will always result in the same decision as

the maximum EMV criterion

In analyzing a problem, you should normally study

the qualitative aspects and the quantitative aspects