Chapter 3 Decision Analysis

61) How are decision tables organized?

A) alternatives down the left, states of nature on top, payoffs inside

B) states of nature down the left, alternatives on top, payoffs inside

C) alternatives down the left, payoffs on top, states of nature inside

D) payoffs down the left, alternatives on top, states of nature inside

E) states of nature down the left, payoffs on top, alternatives inside

62) 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.

63) In decision making under ________, there are several possible outcomes for each alternative, and the decision maker does not know the probabilities of the various outcomes.

A) risk

B) utility

C) certainty

D) probability

E) uncertainty

64) In decision making under ________, there are several possible outcomes for each alternative, and the decision maker knows the probability of occurrence of each outcome.

A) risk

B) utility

C) certainty

D) probability

E) uncertainty

65) The optimistic decision criterion is the criterion of

A) maximax.

B) maximin.

C) realism.

D) equally likely.

E) minimax regret.

66) The Hurwicz criterion is also called the criterion of

A) regret.

B) equality.

C) optimism.

D) realism.

E) pessimism.

67) The equally likely criterion is also called the ________ criterion.

A) Hurwicz

B) uncertainty

C) Laplace

D) LaFlore

E) Huchenmeizer

68) Decision trees are particularly useful when

A) perfect information is available.

B) formulating a conditional values table.

C) the opportunity loss table is available.

D) a sequence of decisions must be made.

E) all possible outcomes and alternatives are not known.

69) 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

70) A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative-state of nature combination:

Using the optimistic criterion, which alternative is best?

A) Machine 1

B) Machine 2

C) Machine 3

D) Machine 4

E) Machine 5