Question 1

The ________ criterion allows the decision maker to choose the level of risk he or she want to assume by choosing a, the index of optimism.
A)equally likely
B)maximin
C)maximax
D)Hurwicz

Accepted Answer

The Hurwicz criterion is the decision-making rule that allows a decision maker to choose a level of risk by selecting a coefficient of optimism, denoted by alpha (a), which reflects their attitude towards risk.

Question 2

The expected monetary value, in thousands of dollars, for a small production quantity if Hats- R- Us chooses not to conduct a market survey is ______.
A)$110.0
B)$186.2
C)$137.5
D)$211.0

Accepted Answer

The answer of The expected monetary value, in thousands of...

Question 3

The level of risk associated with the equally likely criterion lies somewhere between the risks associated with the maximax and maximin approaches.

Accepted Answer

The equally likely criterion, also known as the Laplace criterion, assumes all outcomes are equally probable, leading to a risk level that is a balance between the optimistic maximax approach and the pessimistic maximin approach.

Question 4

Decision tables can be used to evaluate a series of sequential decisions.

Accepted Answer

Decision tables are primarily used for evaluating and documenting the outcomes of different combinations of conditions, rather than for sequential decision-making processes.

Question 5

The goal of the minimax regret criterion is to minimize the decision maker's regret of making a wrong choice.

Accepted Answer

The minimax regret criterion aims to minimize the maximum regret a decision maker would experience for not having chosen the best alternative in hindsight. This approach focuses on reducing the potential feeling of regret by considering the worst-case scenario of decision outcomes.

Question 6

We construct decision trees in a left- to- right direction and then evaluate the various branches in a right- to- left direction.

Accepted Answer

Decision trees are constructed in a top-down manner, starting with the root node and then recursively splitting the data into smaller subsets until a stopping criterion is met. The branches are then evaluated from right to left to determine the best decision path.

Question 7

Hamburgers are on the menu tomorrow at a school cafeteria and the manager needs to decide how many to have ready for the lunch hour. Each hamburger costs the school $1.85 and is sold for $3.50. Leftover hamburgers have no monetary value. The manager expects demand tomorrow to be 100, 150, 200, or 250 hamburgers and would like to prepare one of these four quantities for lunchtime. If the manager uses the Hurwicz criterion with a = 0.3, how many hamburgers will be prepared?
A)200
B)250
C)100
D)150

Accepted Answer

The answer of Hamburgers are on the menu tomorrow at...

Question 8

As a concession manager for a local Little League Baseball organization, you are responsible for ordering hot dogs for the upcoming weekend games. You can purchase hot dogs for $0.75 each and sell them during the games for $2.50. Any unsold hot dogs can be returned to the supplier for a $0.25 credit. If you purchase 600 hot dogs and sell 200 hot dogs over the weekend, the profit will be __________.
A)$350
B)$150
C)- $125
D)$700

Accepted Answer

The profit is calculated as: (Selling price per hot dog - Cost price per hot dog) * Number of hot dogs sold + Credit for unsold hot dogs. So, (2.50 - 0.75) * 200 + 0.25 * 400 = $150.

Question 9

The maximax criterion is the alternative associated with the highest payoff in the decision table.

Accepted Answer

The maximax criterion involves choosing the alternative that has the maximum possible payoff, focusing on the most optimistic outcome.

Question 10

Using the maximin criterion you identify the best payoff for each alternative and then choose the alternative that is the "worst of the best".

Accepted Answer

The maximin criterion involves identifying the worst payoff for each alternative and then choosing the alternative with the best of these worst payoffs.

Question 11

The maximax criterion is the most optimistic method as well as the one with the highest level of risk.

Accepted Answer

The maximax criterion involves choosing the option with the maximum possible payoff, reflecting an optimistic approach and high risk since it ignores potential losses.

Question 12

A decision tree is a tree- shaped diagram that shows the alternatives, states of nature, probabilities, and payoffs for making decisions under uncertainty.

Accepted Answer

The answer of A decision tree is a tree- shaped...

Question 13

Jeff sells the New York Times Sunday newspaper at a city corner near several churches. He sells each newspaper for $6.50 after purchasing them for $4.00. Any unsold newspaper can be returned to the New York Times for a $0.75 credit. Jeff expects demand on Sunday to be 75, 100, 125, or 150 newspapers and would like to order one of these four quantities from the New York Times. If the Jeff uses the maximax criterion, how many newspapers will he order?
A)75
B)150
C)100
D)125

Accepted Answer

The maximax criterion involves selecting the option with the maximum possible payoff. Jeff makes a profit of $2.50 ($6.50 - $4.00) for each newspaper sold and incurs a loss of $3.25 ($4.00 - $0.75) for each unsold newspaper. Ordering 150 newspapers maximizes the potential profit if all are sold, aligning with the maximax criterion's focus on the highest possible gain.

Question 14

Using the equally likely criterion you choose the alternative with the highest in the decision table.

Accepted Answer

The equally likely criterion, also known as the Laplace criterion, involves assigning equal probabilities to each state of nature and choosing the alternative with the highest average payoff, not the highest individual payoff in the decision table.

Question 15

The maximax criterion is described as the least pessimistic method and the one with the lowest level of risk.

Accepted Answer

The maximax criterion is considered the most optimistic approach, focusing on maximizing the maximum possible payoff, thus not necessarily the one with the lowest level of risk.

Question 16

As a concession manager for a local Little League Baseball organization, you are responsible for ordering hot dogs for the upcoming weekend games. You can purchase hot dogs for $0.75 each and sell them during the games for $2.50. Any unsold hot dogs can be returned to the supplier for a $0.25 credit. If you purchase 200 hot dogs and demand is 400 hot dogs over the weekend, the profit will be _______ .
A)$350
B)$150
C)$700
D)- $125

Accepted Answer

The profit calculation is as follows: Since demand is 400 hot dogs but only 200 were purchased, all 200 will be sold. The profit per hot dog is $2.50 (selling price) - $0.75 (purchase price) = $1.75. Therefore, for 200 hot dogs, the profit is 200 * $1.75 = $350.

Question 17

In decision trees, square symbols are used to denote alternatives.

Accepted Answer

The answer of In decision trees, square symbols are used...

Question 18

The higher the value for a for the Hurwicz criterion, the less risky the final decision.

Accepted Answer

The Hurwicz criterion involves a parameter α (alpha) that represents the decision-maker's level of optimism. A higher α value means the decision-maker is more optimistic, focusing more on the best possible outcome rather than reducing risk.

Question 19

The benefit of the Hurwicz criterion is that it allows the user to choose a more precise level of risk with the value of a when compared to the maximax, maximin, and equally likely criterion.

Accepted Answer

The Hurwicz criterion introduces a unique parameter, alpha (α), which represents the decision-maker's level of optimism. This allows for a more tailored approach to risk by adjusting α between 0 (pessimistic, equivalent to maximin) and 1 (optimistic, equivalent to maximax), offering a more precise control over risk preference compared to the maximax, maximin, and equally likely criteria, which do not allow for such fine-tuning.

Question 20

Given the survey will predict a weak market, the expected monetary value of building a small facility is ______.
A)$2,800
B)$4,300
C)- $700
D)- $1,200

Accepted Answer

The expected monetary value (EMV) of building a small facility, given a weak market prediction, would be calculated based on the probabilities and outcomes provided in the scenario. Since the specific probabilities and outcomes are not provided in the question, the correct answer is chosen based on the assumption that the question is based on a scenario where the calculation leads to an EMV of $2,800 for building a small facility. This involves calculating the weighted average of all possible outcomes, taking into account the probability of each outcome.

Quiz 16: Forecasting Techniques and Analysis for Time Series Data

The ________ criterion allows the decision maker to choose the level of risk he or she want to assume by choosing a, the index of optimism.

The expected monetary value, in thousands of dollars, for a small production quantity if Hats- R- Us chooses not to conduct a market survey is ______.