Deck 9: Model-Based Decision Making: Optimization and Multi-Criteria Systems

Question 1

In the ExxonMobil case study, the approach taken was to find individual solutions to routing, transportation, scheduling, and inventory management, and select the best solution for one of the variables.

Answer 1

False

Question 2

Linear programming seeks to optimally allocate resources among competing activities and is likely the best known optimization model.

Answer 2

True

Question 3

Most managerial problems can be properly evaluated and solved using a single goal, such as profit maximization.

Answer 3

False

Question 4

The trend is towards developing and using Web tools and software to access and run modeling software.

Question 5

In order to be effective, analysts must use models to solve problems with no regard to the organizational culture to find optimal results.

Question 6

Using data cubes in OLAP systems opens the data up to analysis by more classes of models.

Question 7

The analytic hierarchy process incorporates both qualitative and quantitative decision making criteria.

Question 8

In the Harrah's Cherokee Casino and Hotel case study, the revenue management system modified room prices based on demand and offered the same price/availability to all customers at any one time.

Question 9

AHP can be used effectively for optimization with problems containing a small number of alternatives.

Question 10

Sensitivity analysis seeks to assess the impact of changes in the input data and parameters on the proposed solution.

Question 11

Taking a decision under risk is different from taking the decision under uncertainty.

Question 12

If linear programming can be successfully applied a problem, the output is usually optimal.

Question 13

Goal seeking is roughly the opposite of "what-if" analysis.

Question 14

Modeling can be viewed as a science in its entirety.

Question 15

Using expected value (EV) with decision trees is totally appropriate for situations where one outcome could lead to an immense loss for the company.

Question 16

When using Excel's Solver, we can have multiple constraints and multiple objective cells.

Question 17

In the Midwest ISO opening vignette, the solution provided by the model's output determined the best output level to be produced by each power plant.

Question 18

In the U.S. HUD case study, the use of AHP brought standards and coherence to project selection, resulting in a 10% decrease in project requests from 1999 levels.

Question 19

Spreadsheets are the second most popular tool for modeling.

Question 20

Another name for result variables is independent variables.

Question 21

Managers in organizations typically have

A) single goals that can be optimized using linear and nonlinear programming.
B) a small number of goals that can be independently optimized using linear and nonlinear programming.
C) single goals that cannot be optimized using linear and nonlinear programming.
D) multiple goals that need to be simultaneously or jointly optimized.

Question 22

Environmental scanning is important for all of the following reasons EXCEPT

A) organizational culture is important and affects the model use.
B) it is critical to identify key corporate decision makers.
C) environmental factors may have created the current problem.
D) environments have greater impact on a model than the organization does.

Question 23

Decision trees are best suited to solve what types of problems?

A) problems with a large number of alternatives
B) problems with a tabular representation
C) problems where probabilities are unknown
D) problems with a single goal

Question 24

Linear programming belongs to a family of tools called

A) decision tree models.
B) qualitative models.
C) mathematical programming models.
D) heuristic programming models.

Question 25

Which of the following statements about expected utility is true?

A) It does not affect decisions made with expected values.
B) Used in decision making, it is an objective value, not subjective.
C) Used in decision making, it can bring huge risk to a small startup with limited resources.
D) In calculating utility, it assumes the decision will be made thousands of times, making the probabilities more likely on average.

Question 26

What is an influence diagram?

A) a diagram showing the influence of decision makers
B) a graphical representation of a model
C) a map of the environment around decision makers
D) a map of the environment around a model

Question 27

In an LP model, what does the fourth hidden component contain?

A) product mix variables
B) slack and surplus variables
C) financial and accounting variables
D) constraint and limit variables

Question 28

The question "How many servers will be needed to reduce the waiting time of restaurant customers to less than 9 minutes?" is a type of

A) goal-seeking analysis.
B) what-if analysis.
C) sensitivity analysis.
D) utility modeling.

Question 29

In handling uncertainty in decision modeling, what does the pessimistic approach do?

A) It assumes the worst possible outcome of one alternative will occur and then avoids it.
B) It assumes the worst possible outcome of some alternatives will occur and then selects the best of them.
C) It assumes the worst possible outcome of each alternative will occur and then selects the worst of them.
D) It assumes the worst possible outcome of each alternative will occur and then selects the best of them.

Question 30

Which of the following statements about the analytic hierarchy process (AHP) is true?

A) It is really not a decision model at all.
B) It can handle multiple criteria and goals.
C) It is based entirely on quantitative data.
D) It is an opaque "black box" in the same way as neural networks.

Question 31

Which of the following is NOT a component of a linear programming problem?

A) internal metrics
B) constraints
C) objective function
D) decision variables

Question 32

Today, it is critical for companies to consider

A) how to get products to the right customer.
B) how to sell products at the right price.
C) how to package products in the right format.
D) all of the above

Question 33

Sensitivity analysis is important in management support systems for all of the following reasons EXCEPT

A) it allows flexibility and adaptation to changing conditions.
B) it permits the manager to input data to increase his/her confidence in the model.
C) it improves the mathematical optimality of the generated solutions.
D) it provides a better understanding of the model and the decision-making situation.

Question 34

Spreadsheets are particularly useful for all of the following reasons EXCEPT

A) they are able to import and export to many different file formats.
B) it is easy to manipulate data and see results instantly.
C) they can be used to build static and dynamic models.
D) they easily import and manipulate massive databases.

Question 35

Which of the following statements about the end-of-chapter CARE International case study is true?

A) CARE ran its own shipping operation with vehicles that needed route optimization.
B) CARE used a linear programming model for optimization.
C) CARE's objective was to respond to natural disasters faster.
D) CARE set out to exclusively use international suppliers with large capacity to better serve people affected by disasters.

Question 36

Models can be built with the help of human knowledge and expertise. Another source of help in building these models is

A) the customer.
B) classification and clustering methods.
C) customer service reps.
D) business partners.

Question 37

The question "What advertising budget is needed to increase market share by 7%?" is a type of

A) goal-seeking analysis.
B) what-if analysis.
C) sensitivity analysis.
D) utility modeling.

Question 38

In handling uncertainty in decision modeling, the optimistic approach assumes

A) the best possible outcome of most alternatives will occur.
B) the best possible outcome of some alternatives will occur.
C) the best possible outcome of each alternative will occur.
D) the best possible outcome of one alternative will occur.

Question 39

The question "What will total earnings be if we reduce our inventory stocking costs by 10%?" is a type of

A) goal-seeking analysis.
B) what-if analysis.
C) sensitivity analysis.
D) utility modeling.

Question 40

Using modeling for decision support can currently achieve all of the following EXCEPT

A) enhance the decision making process.
B) enable organizations to see likely results of their decisions.
C) replace strategy formulation at top levels of the organization.
D) reduce the costs of providing services to customers.

Question 41

In comparison to static models, ________ models represent behavior over time.

Question 42

Testing the robustness of decisions under changing conditions is an example of ________ analysis.

Question 43

________ models are used to predict the future and are used widely in e-commerce.

Question 44

________ modeling uses rules to determine solutions that are good enough.

Question 45

In the opening vignette, Midwest ISO used optimization ________ in their problem solving.

Question 46

Utility ________ is a modeling method for handling multiple goals.

Question 47

In the Fletcher Allen Health Care case, the ________ engine in Excel was used to find a feasible solution to the assignment problem.

Question 48

In the end-of-chapter CARE International case study, an optimization model was used to decide on warehouse ________.

Question 49

In the American Airlines case study, the modeling used for contract bidding could best be described as decision making under ________.

Question 50

The analytic hierarchy process can be used to great effect to solve multi-________ problems.

Question 51

In non-quantitative models, the relationships are symbolic or ________.

Question 52

________ tables conveniently organize information and knowledge in a systematic, tabular
manner to prepare it for analysis and consideration of alternatives.

Question 53

In the Fred Astaire East Side Dance Studio case study, a(n) ________ model was used to organize ballroom showcases and arrange participants and timeslots accordingly.

Question 54

A decision tree can be cumbersome if there are many ________ or states of nature.

Question 55

Deciding to purchase an FDIC-insured Certificate of Deposit at a U.S. bank can be viewed as decision making under ________.

Question 56

In mathematical programming, of available solutions, the ________ solution is the best; i.e., the degree of goal attainment associated with it is the highest.

Question 57

Identifying a model's ________ (e.g., decision and result) and their relationships is very important in creating and using models.

Question 58

Most quantitative models are based on solving for a single ________.

Question 59

In decision-making, fixed factors that affect the result variables but are not manipulated by decision maker are called ________ variables.

Question 60

________ seeking calculates the values of the inputs necessary to achieve a desired level of an output.

Question 61

Can customer relationship management (CRM) systems and revenue management systems (RMS) recommend not selling a particular product to certain customers? If so, why; if not, why not?

Question 62

What is the most common method for treating risk in decision trees and tables?

Question 63

All quantitative models are typically made up of four basic components. List and describe them as well as what links them together.

Question 64

List four things sensitivity analyses are used for.

Question 65

List and describe four categories of models. Give examples in each category.

Question 66

In the CARE International end-of-chapter case study, what were the intended benefits of the model used and the actual benefits after deployment?

Question 67

List four rational economic assumptions the linear programming allocation model is based upon.

Question 68

List four difficulties that may arise when analyzing multiple goals.

Question 69

How are pairwise comparisons used in the analytic hierarchy process (AHP) to select an alternative?

Question 70

Compare and contrast decision making under uncertainty, risk and certainty.