OPS301 - Chp A - Decision Making Tools
If a decision maker can assign probabilities of occurrences to the states of nature, then the decision-making environment is Decision Making under Uncertainty.
False.
What is a tabular presentation that shows the outcome for each decision alternative under the various possible states of nature called?
Payoff Table.
In terms of decision theory, an occurrence or situation over which the decision maker has no control is called a(n):
State of Nature.
In a decision tree, the expected monetary values are computed by working from right to left.
True.
The expected monetary value of a decision alternative is the sum of all possible payoffs from the alternative, each weighted by the probability of that payoff occurring.
True.
Expected monetary value is most appropriate for problem solving that takes place:
Under conditions of risk.
Analytic decision making is based on logic and considers all available data and possible alternatives.
True.
A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is:
A pessimist.
A problem that involves a sequence of decisions:
Can be better analyzed with a decision tree than by a decision table.
The first step, and a key element, in the decision-making process is to:
Clearly define the problem.
What is the difference between the expected payoff under perfect information and the maximum expected payoff under risk?
Expected value of perfect information.
A decision tree is a(n):
Graphical representation of alternatives and states of nature.
The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is:
Low (near 0%).
What decision criterion would be used by an optimistic decision maker solving a problem under conditions of uncertainty?
Maximax.
Which of the following is NOT considered a step in the decision-making process?
Minimize costs whenever possible.
A state of nature is an occurrence or a situation over which the decision maker has little or no control.
True.