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