TOPIC 4. TRUE/FALSE
One limitation of a scoring model is that it uses arbitrary weights that do not necessarily reflect the preferences of the individual decision maker.
FALSE
Quantitative forecasting methods can be used when past information about the variable being forecast is unavailable.
FALSE
Target values will never be met precisely in a goal programming problem.
FALSE
The decision alternative with the best expected monetary value will always be the most desirable decision.
FALSE
The expected utility is the utility of the expected monetary value.
FALSE
The expected value approach is more appropriate for a one-time decision than a repetitive decision.
FALSE
The expected value of an alternative can never be negative.
FALSE
The expected value of sample information can never be less than the expected value of perfect information.
FALSE
Trend in a time series must always be linear.
FALSE
With fewer periods in a moving average, it will take longer to adjust to a new level of data values.
FALSE
Square nodes in a decision tree indicate that a decision must be made.
TRUE
States of nature should be defined so that one and only one will actually occur.
TRUE
The exponential smoothing forecast for any period is a weighted average of all the previous actual values for the time series.
TRUE
The goal programming approach can be used when an analyst is confronted with an infeasible solution to an ordinary linear program.
TRUE
The mean squared error is obtained by computing the average of the squared forecast errors.
TRUE
The primary value of decision trees is that they provide a useful way to organize how operations managers think about complex multiphase decisions.
TRUE
The priority matrix shows the priority for each item on each criterion.
TRUE
The utility function for a risk avoider typically shows a diminishing marginal return for money.
TRUE
Time series data can exhibit seasonal patterns of less than one month in duration.
TRUE
To solve a goal programming problem with preemptive priorities, successive linear programming programs, with an adjustment to the objective function and an additional constraint, must be solved.
TRUE
Under the minimax regret approach to decision making, EVPI equals the expected regret that is associated with the minimax decision.
TRUE
Utility is the term for a measure of the total worth or relative desirability of a particular outcome.
TRUE
When forecasting, if a greater number of past values are considered relevant, then we generally opt for a larger value of k.
TRUE
When monetary value is not the sole measure of the true worth of the outcome to the decision maker, monetary value should be replaced by utility.
TRUE
When the expected utility approach and the expected value approach applied to monetary payoffs result in the same action, these are characteristics generally associated with a risk-neutral decision maker.
TRUE
When the expected value approach is used to select a decision alternative, the payoff that actually occurs will usually have a value different from the expected value.
TRUE
When using a moving average of order k to forecast, a small value for k is preferred if only the most recent values of the time series are considered relevant.
TRUE
In situations where you need to compare forecasting methods for different time periods, relative measures such as mean absolute error (MAE) are preferred.
FALSE
Objectives in multicriteria problems seldom conflict.
FALSE
A four-period moving average forecast for period 10 would be found by averaging the values from periods 10, 9, 8, and 7.
FALSE
A problem involving only one priority level is not considered a goal programming problem.
FALSE
All quarterly time series contain seasonality.
FALSE
Any recurring sequence of points above and below the trend line lasting less than one year can be attributed to the cyclical component of the time series.
FALSE
Decision alternatives are structured so that several could occur simultaneously.
FALSE
In a goal programming model, there can only be one goal at each priority level.
FALSE
A consistency ratio greater than 0.10 indicates inconsistency in the pairwise comparisons.
TRUE
A decision strategy is a sequence of decisions and chance outcomes where the decisions chosen depend on the yet-to-be-determined outcomes of chance events.
TRUE
A high efficiency rating indicates that the sample information is almost as good as perfect information.
TRUE
A risk avoider is a decision maker who would choose a guaranteed payoff over a lottery with a superior expected payoff.
TRUE
A sequence of observations on a variable measured at successive points in time or over successive periods of time is known as a time series.
TRUE
AHP allows a decision maker to express personal preferences about the various aspects of a multicriteria problem.
TRUE
After all probabilities and payoffs are placed on a decision tree, the decision maker calculates expected values at state-of-nature nodes and makes selections at decision nodes.
TRUE
An item's priority reveals how it compares to its competitors on a specific criterion.
TRUE
As long as the monetary value of payoffs stays within a range that the decision maker considers reasonable, selecting the decision alternative with the best expected value usually leads to selection of the most preferred decision.
TRUE
Circular nodes in a decision tree are considered chance nodes.
TRUE
EVPI is always greater than or equal to EVSI.
TRUE
For a chance node, the expected value is the weighted average of the payoffs, where the weights are the state-of-nature probabilities.
TRUE
For a scoring model, the decision maker evaluates each decision alternative by considering the weight or importance of each criterion.
TRUE
For a time series with relatively little random variability, we should use larger values of the smoothing constant to provide the advantage of allowing the forecasts to react more quickly to changing conditions.
TRUE
Given two decision makers, one a risk taker and the other a risk avoider, the risk avoider will show a diminishing marginal return for money.
TRUE
Goal equations consist of a function that defines goal achievement and deviation variables that measure the distance from the target.
TRUE
Goal priorities are referred to as preemptive priorities because the satisfaction of a higher level goal cannot be traded for the satisfaction of a lower level goal.
TRUE
If a problem has multiple goals at different priority levels, then it is rare that all the goals will be achieved with existing resources
TRUE
If a time series has a significant trend pattern, then one should not use a moving average to forecast.
TRUE
If the random variability in a time series is great, a small value of the smoothing constant is preferred so that we do not overreact and adjust our forecasts too quickly.
TRUE
If we focus upon the historical data, or past values of the variable to be forecast, we refer to this as a time series method of forecasting.
TRUE
In goal programming, deviation variables allow for the possibility of not meeting the target value exactly.
TRUE
In order to use moving averages to forecast a time series, the first step is to select the order k, the number of time series values to be included in the moving average.
TRUE
Maximizing the expected payoff and minimizing the expected opportunity loss result in the same recommended decision.
TRUE
Qualitative forecasting methods are appropriate when historical data on the variable being forecast are either unavailable or not applicable.
TRUE
Regret is the difference between the payoff associated with a particular decision alternative and the payoff associated with the decision that would yield the most desirable payoff for a given state of nature.
TRUE
Requiring a decision maker to provide judgments about the relative importance of each criterion and then specifying a preference for each decision alternative using each criterion is the purpose of the analytic hierarchy process.
TRUE
Risk analysis helps the decision maker recognize the difference between the expected value of a decision alternative and the payoff that may actually occur.
TRUE
Sample information with an efficiency rating of 100% is perfect information.
TRUE
Smoothing methods are more appropriate for a stable time series than when significant trend or seasonal patterns are present.
TRUE
