opmgmt t2
A decision maker's worst option has an expected value of $1,000, and her best option has an expected value of $3,000. With perfect information, the expected value would be $5,000. The decision maker has discovered a firm that will, for a fee of $1,000, make her position-risk free. How much better off will her firm be if she takes this firm up on its offer?
$1000
Consider the following decision scenario: State of Nature High Low Buy $ 80* 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The maximax strategy would be:
Buy
True/False: The equation 3+xy=9
False
Ture/False: The expected value of perfect information is inversely related to losses predicted
False The expected value of perfect information is the difference between payoff with perfect information and the expected payoff under risk
True/False: A change in the value of an objective function coefficient does not change the optimal solution
False There are limits as to how much objective function coefficients can change without affecting the optimal
In a graphical linear programming to maximize profit, the objective function is: I. a family of parallel lines II. a family of isoprofit lines III. interpolated IV. Linear
I,II and IV only
Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:
Maximum
True/False: A linear programming problem can have multiple optimal solutions
True
In the graphical approach to linear programming, finding values for the decision variables at the intersection of corners requires the solving of:
simultaneous equations
Departmentalizing decisions increase the risk of ________ leading to a poor decision
suboptimization
Which of the following characterizes decision making under uncertainty?
the likelihood of possible future events is unknown
Which of the following would make decision trees an especially attractive decision making tool?
the need to thing through a possible sequence of decisions
The theoratical limit on the number of decision varaibles that can be handled by the simplec method in a single problem is:
unlimited
the theoratical limit on the number of constraints that can be handled by the simplex method in a single problem is:
unlimited
Dr. Chiang helped XYZ company optimize its production decision to maximize the firm's profit. His solver reports are provided below. Please use these reports to answer the following questions. Objective Cell (Max) Cell Name Original Value Final Value $B$5 Max Profit 0 760 Variable Cells Cell Name Original Value Final Value Integer $B$1 X1 Ham and cheese sandwiches (H&C) 0 1000 Contin $B$2 X2 Bologna sandwiches (B) 0 800 Contin $B$3 X3 Chicken Salad Sandwiches (CS) 0 200 Contin Constraints Cell Name Cell Value Formula Status Slack $B$11 C1 (storage size, units) 2000 $B$11<=$D$11 0 $B$12 C2 (Production mix, units) 0 $B$12=$D$12 0 $B$7 C3 (labor time, minutes) 878 $B$7<=$D$7 82 $B$8 C4 (H&C production, units) 1000 $B$8>=$D$8 800 $B$9 C5 (B production, units) 800 $B$9>=$D$9 600 $B$10 C6 (CS production, units) 200 $B$10>=$D$10 0 How many bologna sandwiches should company XYZ produce? What is company XYZ maximized profit? (No $ needed and no comma) How many constraints are the binding constraints? (Provide your answer as one of the following choice: 1, 2, 3, 4, 5, 6) How many labor minutes have been used for production to get the optimal solution?
800 760 3 878
True/False: A shadow price indicates how much a one-unit decrease/increase in the right-hand-side value of a constraint will decrease/increase the optimal value of the objective function
True
True/False: An objective function represents a family of parallel lines
True
True/False: Constraints limit the alternatives available to a decision maker
True
True/False: If a single optimal solution exists to a graphical LP problem, it will exist at a corner point
True
True/False: In the range of feasibility, the value of the shadow price remains constant
True
True/False: LP problems must have a single goal or objective specified
True
True/False: The equation 5x+7y=10 is linear
True
True/False: The feasible solution space only contains points that satisfy all constraints
True
True/False: The term feasibility refers to a constraint's right-hand-side quantity
True
True/False: The term isoprofit line means that all points on the line will yield the same profit
True
True/False: The simplex method is a general-purpose LP algorithm that can be used for solving only problems with more than six variables
False
True/False: The term range of feasibility refers to coefficients of the objective function
False
True/False: The value of an objective function always decreases as it is moved away from the origin
False
True/False: Using the enumeration approach, optimality is obtained by evaluating every coordinate
False
Ture/False: Decision trees, with their predetermined analysis of a situation, are really not useful in making health care decisions since every person is unique
False Decision tree analyses can be adjusted to reflect the uniqueness of patients
True/False: The maximax is a pessimistic strategy
False Maximax is optimistic and only considers the best possible payoff
Ture/False: The maximum approach involves choosing the alternative with the highest payoff
False Maximum involves choosing the option whose lowest payoff is highest
True/False: Among decision environments, uncertainty implies that states of nature have wide-ranging probabilities associated with them
False No probabilities are associated with states of nature in decision making under uncertainty
True/False: In reaching decision, the alternative with the lowest cost should be ranked number 1.
False the lowest-cost option might not be th emost profitable
In linear programming, sensitivity analysis is associated with: I. the objective function coefficient II. right-hand-side values of constraints III. the constraint coefficient
I,II,and III
Determining the average payoff for each alternative and choosing the alternative with the highest average is the approach called:
Laplace
True/False: When a change in the value of an objective function coefficient remains within the range optimality, the optimal solution also remains the same.
True
True/False: Bounded rationality refers to the limits imposed on decision-making because of costs, human abilities, time, technology, and/or availability of information.
True Bounded rationality can be a cause of poor decision making
True/False: The maximum approach involves choosing the alternative that has the "best worst" payoff
True Maximum chooses the most attractive worst-case scenario
Ture/False: In decision theory, states of nature refer to possible future conditions
True Possible future conditions are called states of nature
True/False: The expected monetary value approach is most appropriate when the decision maker is risk neutral
True Risk-averse or risk-seeking decision makers might ultimately not choose the option with the highest expected value
True/False: The laplace criterion treats states of nature as being equally likely
True The option with the highest average payoff is chosen under Laplace
Which of the following is not an approach for decision making under undertainty?
decision trees
In linear programming, a nonzero reduced cost is associated with a:
decision varable not in the solution
A redundant constraint is one that:
does not form a unique boundary of the feasible solution space
Which of the following is not a component of the structure of a linear programming model?
evironmental uncertainty
The region which satisfies all of the constraints in graphical linear programming is called the:
feasible solution space
A local bagel shop produces two products: bagels (B) and croissants (C). Each bagel requires 6 ounces of flour, 1 gram of yeast, and 2 tablespoons of sugar. A croissant requires 3 ounces of flour, 1 gram of yeast, and 4 tablespoons of sugar. The company has 6,600 ounces of flour, 1,400 grams of yeast, and 4,800 tablespoons of sugar available for today's production run. Bagel profits are 20 cents each, and croissant profits are 30 cents each.For the production combination of 600 bagels and 800 croissants, which resource is slack (not fully used)?
flour and sugar
The logical approach, from beginning to end, for assembling a linear programming moel begins with:
identifying the decision variables
Consider the following decision scenario: State of Nature High Low Buy $ 80* 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The maximin strategy would be:
lease
The expected monetary Value criterion is the decision-making approach used with the decision environment of:
risk
A decision tree is a:
schematic representation of alternatives
The range of probability for which an alternative has the best expected payoff can be determined by:
sensitivity analysis
_____ is a means of assesing the impact of changin parameters in a liner programming model
sensitivity analysis
Once we go beyond two decision variables, typically the _____ method of linear programming must be used
simplex
For a linear programming problem with the following constraints, which point is in the feasible solution space assuming this is a maximization problem? 14x+6y≤42x−y≤3
x=2,y=1
A local bagel shop produces two products: bagels (B) and croissants (C). Each bagel requires 6 ounces of flour, 1 gram of yeast, and 2 tablespoons of sugar. A croissant requires 3 ounces of flour, 1 gram of yeast, and 4 tablespoons of sugar. The company has 6,600 ounces of flour, 1,400 grams of yeast, and 4,800 tablespoons of sugar available for today's production run. Bagel profits are 20 cents each, and croissant profits are 30 cents each.What are optimal profits for today's production run?
$380
Which objective function has the same slope as this one: $4x+$2y=$20?
$4x+$2y=$10
Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2. Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2. Once the probability of environment 1 exceeds ________, option A becomes the better choice.
.60
A local bagel shop produces two products: bagels (B) and croissants (C). Each bagel requires 6 ounces of flour, 1 gram of yeast, and 2 tablespoons of sugar. A croissant requires 3 ounces of flour, 1 gram of yeast, and 4 tablespoons of sugar. The company has 6,600 ounces of flour, 1,400 grams of yeast, and 4,800 tablespoons of sugar available for today's production run. Bagel profits are 20 cents each, and croissant profits are 30 cents each. Which of the following is not a feasible production combination? a. 0 B and 1,400 C b. 0 B and 0 C c. 800 B and 600 C d. 1,100 B and 0 C
0B and 1400C
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent chance of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years.What would be the total payoff if the heart lab were funded in both the first and second years?
100,000
Which of the following could not be a linear programming problem constraint?
1A+2B
True/False: A maximization problem is limited by all greater than or equal to constraints
False
True/False: Every change in the value of an objective function coefficients will lead to changes in the optimal solution
False
True/False: Graphical Linear programming can handle problems that involve any number of decision variables
False
True/False: Linear programming will always produce an optimal solution to an LP problem
False
True/False: Nonbinding constraints are not associated with the feasible solution space, i.e.: they are redundant and can be eliminated from the matrix
False
True/False: Nonzero slack or surplus is associated with a binding constraint
False
True/False: Profit maximization could be an objective of al LP problem
False
True/False: The feasible solution space is the set of all feasible combinations of decision variables as defined by only binding constraints
False
True/False: Expected monetary value gives the long-run average payoff if a large number of identical decisions could be made
True Use of this approach is most appropriate for a risk neutral decision maker or organization which has several decisions to make as the expected total payoff for all decisions will approximate the sum of the expected payoffs for individual decisions
True/False: A weakness of the maximum approach is that it loses some information
True maximum ignores the best-case scenarios of each decision option
Ture/False: Among decision environments, risk implies that certain parameters have probabilistic outcomes
True Decision making under risk assumes that the likelihood of each possible state of nature is either known or can be estimates
For the products A,B, C, and D, which of the following could be a linear programming objective function?
Z=1A+2B+3C+4D
Which of the following choices constitutes a simultaneous solution to these equations? 3x+2y=6 6x+3y=12 a. x = 2, y = 0 b. x = 0, y = 0 c. x = .5, y = 2 d. x = 1, y = 1.5 e. x = 0, y = 3
a
When we use less of a resource than was available, in linear programming that resource would be called _____
binding
In a decision making setting, if the manager has to contend with limits on the amount of information he or she can consider, this can lead to a poor decision due to _______________.
bouned rationality
Which phrase is best describes the term "bounded rationality"?
limits imposed on decision making by costs, time and technology
The linear optimization technique for allocating resources among different products is:
linear programming
A shadow price reflects which of the following in aa maximization problem?
marginal gain in the objective that would be realized by adding one unit of a resource
The maximum approach to decision making refers to:
maximizing the minimum return
In a graphical linear programming, when the objective function is parallel to one of the binding constraints, then:
multiple optimal solutions exist
A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:
payoff table
In a linear programming problem, the objective function was specified as follows: z=2a+4B+3C The optimal solution calls for A to equal 4, B to equal 6, and C to equal 3. It has also been determined that the coefficient associated with A can range from 1.75 to 2.25 without the optimal solution changing. this rand is called A's:
range of optimality
A constraint that does not form a unique boundary of the feasible solution space is a:
redundant constraint
Consider the following decision scenario: State of Nature High Low Buy $ 80* 0 Rent 70 30 Lease 30 50 *PV for profits ($000) If P(high) is .60, the choice for maximum expected value would be:
rent
Consider the following decision scenario: State of Nature High Low Buy $ 80* 0 Rent 70 30 Lease 30 50 *PV for profits ($000) The minimax regret strategy would be:
rent