FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 20: Decision Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

A posterior probability associated with sample information is of the form

A) P(a state of nature | a sample outcome)
B) P(a sample outcome | a state of nature)
C) P(a decision alternative | a sample outcome)
D) P(a sample outcome | a decision alternative)

E) B) and C)
F) C) and D)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

The uncontrollable future events that can affect the outcome of a decision are known as

A) alternatives
B) decision outcome
C) payoff
D) states of nature

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

The approach to determine the optimal decision strategy involves

Future events which cannot be controlled by the decision maker are called

Consider the following profit payoff table. What should the probabilities of S₁ and S₂ be so that the expected values of the two decision alternatives equal one another?

In computing an expected value (EV) , the weights are

Exhibit 20-4 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.3. -Refer to Exhibit 20-4. The expected value of perfect information is

Exhibit 20-5 Below you are given a payoff table involving three states of nature and three decision alternatives. The probability of occurrence of S₁ is 0.2 and the probability of occurrence of S₂ is 0.3. -Refer to Exhibit 20-5. The expected value of alternative C is

For a decision alternative, the weighted average of the payoffs is known as

Exhibit 20-1 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.2. -Refer to Exhibit 20-1. The expected value of perfect information is

Exhibit 20-1 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.2. -Refer to Exhibit 20-1. The expected value of alternative A is

A decision criterion which weights the payoff for each decision by its probability of occurrence is known as the

Exhibit 20-4 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.3. -Refer to Exhibit 20-4. The expected value of the best alternative is

A fashion designer wants to produce a new line of clothes. In the production of the clothes, expensive, medium-priced, or inexpensive materials can be used. The profit associated with each type of material depends upon economic conditions next year. Below you are given the payoff table. An economist believes that the probability that the economy will improve is 20%, the probability that the economy will stay the same is 70%, and the probability that the economy will get worse is 10%. a.Compute the expected value for each investment. Which investment is the best? b.Compute the expected value of perfect information.

Exhibit 20-4 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.3. -Refer to Exhibit 20-4. The recommended decision alternative based on the expected value is

Michael, Nancy, & Associates (MNA) produce color printers. The demand for their printers could be light, medium, or high with the following probabilities. The company has three production alternatives for the coming period. The payoffs (in millions of dollars) associated with the three alternatives are shown below. a.Compute the expected value of the three alternatives. Which alternative would you select, based on the expected values? b.Compute the expected value with perfect information (i.e., expected value under certainty). c.Compute the expected value of perfect information (EVPI).

Exhibit 20-5 Below you are given a payoff table involving three states of nature and three decision alternatives. The probability of occurrence of S₁ is 0.2 and the probability of occurrence of S₂ is 0.3. -Refer to Exhibit 20-5. The expected value of the best alternative is

Exhibit 20-1 Below you are given a payoff table involving two states of nature and three decision alternatives. The probability of occurrence of S₁ = 0.2. -Refer to Exhibit 20-1. The expected value of the best alternative is

Cashman Co. will be leasing a new copier and is considering four plans. The company has determined it will make 12,600, 14,400, 16,200, 18,000, 19,800, or 21,600 copies per month with probabilities of .05, .10, .15, .25, .25, and .20 respectively. a. Construct a monthly payoff table for Cashman in terms of costs. b. What is the optimal plan using the expected value approach? (Hint: This is a cost minimization problem.)

A line or arc connecting the nodes of a decision tree is called a(n)