Question 1

After all probabilities and payoffs are placed on a decision tree, the decision maker calculates expected values at state of nature nodes and makes selections at decision nodes.

Accepted Answer

A) True 
 B)False

Question 2

If P(high)  = .3, P(low)  = .7, P(favorable | high)  = .9, and P(unfavorable | low)  = .6, then P(favorable)  =

Accepted Answer

A)   .10
B)   .27
C)   .30
D)   .55E) B) and C)
F) A) and D)

Question 3

The efficiency of sample information is

Accepted Answer

A)   EVSI*(100%) 
B)   EVSI/EVPI*(100%) 
C)   EVwoSI/EVwoPI*(100%) 
D)   EVwSI/EVwoSI*(100%) E) None of the above
F) B) and D)

Question 4

States of nature should be defined so that one and only one will actually occur.

Accepted Answer

A) True 
 B)False

Question 5

For a minimization problem, the conservative approach is often referred to as the

Accepted Answer

A)   minimax approach
B)   maximin approach
C)   maximax approach
D)   minimum approachE) B) and C)
F) A) and B)

Question 6

For a minimization problem, the optimistic approach is often referred to as the

Accepted Answer

A)   minimax approach
B)   maximin approach
C)   maximax approach
D)   minimum approachE) None of the above
F) A) and B)

Question 7

Square nodes in a decision tree indicate that a decision must be made.

Accepted Answer

A) True 
 B)False

Question 8

EVPI equals the expected regret associated with the minimax decision.

Accepted Answer

A) True 
 B)False

Question 9

States of nature

Accepted Answer

A)   can describe uncontrollable natural events such as floods or freezing temperatures.
B)   can be selected by the decision maker.
C)   cannot be enumerated by the decision maker.
D)   All of the alternatives are true.E) None of the above
F) A) and D)

Question 10

The expected value approach is more appropriate for a one-time decision than a repetitive decision.

Accepted Answer

A) True 
 B)False  False

Question 11

A decision strategy is a sequence of decisions and chance outcomes, where the decisions chosen depend on the yet to be determined outcomes of chance events.

Accepted Answer

A) True 
 B)False

Question 12

The minimum expected opportunity loss provides the best decision, regardless of whether the decision analysis involves minimization or maximization.

Accepted Answer

A) True 
 B)False  True

Question 13

Sample information with an efficiency rating of 100% is perfect information.

Accepted Answer

A) True 
 B)False  True

Question 14

If sample information is obtained, the result of the sample information will be either positive or negative. No matter which result occurs, the choice to select option A or option B exists. And no matter which option is chosen, the eventual outcome will be good or poor. Complete the table.

Accepted Answer

The answer of If sample information is obtained, the result...

Question 15

Decision tree probabilities refer to

Accepted Answer

A)   the probability of finding the optimal strategy
B)   the probability of the decision being made
C)   the probability of overlooked choices
D)   the probability of an uncertain event occurringE) A) and B)
F) A) and D)

Question 16

Expected value is the sum of the weighted payoff possibilities at a circular node in a decision tree.

Accepted Answer

A) True 
 B)False

Question 17

In an influence diagram, decision nodes are represented by

Accepted Answer

A)   circles or ovals
B)   squares or rectangles
C)   diamonds
D)   trianglesE) B) and C)
F) A) and B)

Question 18

Which of the methods for decision making best protects the decision maker from undesirable results?

Accepted Answer

A)   the optimistic approach
B)   the conservative approach
C)   minimum regret
D)   minimax regretE) A) and B)
F) C) and D)

Question 19

A decision tree

Accepted Answer

A)   presents all decision alternatives first and follows them with all states of nature.
B)   presents all states of nature first and follows them with all decision alternatives.
C)   alternates the decision alternatives and states of nature.
D)   arranges decision alternatives and states of nature in their natural chronological order.E) A) and C)
F) All of the above

Question 20

Fold back this decision tree. Clearly state the decision strategy you determine.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Choose A....

Exam 13: Decision Analysis

After all probabilities and payoffs are placed on a decision tree, the decision maker calculates expected values at state of nature nodes and makes selections at decision nodes.

Correct AnswerverifiedShow Answer

If P(high) = .3, P(low) = .7, P(favorable | high) = .9, and P(unfavorable | low) = .6, then P(favorable) =

Correct AnswerverifiedShow Answer

The efficiency of sample information is

Correct AnswerverifiedShow Answer

States of nature should be defined so that one and only one will actually occur.

Correct AnswerverifiedShow Answer

For a minimization problem, the conservative approach is often referred to as the

Correct AnswerverifiedShow Answer

For a minimization problem, the optimistic approach is often referred to as the

Correct AnswerverifiedShow Answer

Square nodes in a decision tree indicate that a decision must be made.

Correct AnswerverifiedShow Answer

EVPI equals the expected regret associated with the minimax decision.

Correct AnswerverifiedShow Answer

States of nature

Correct AnswerverifiedShow Answer

The expected value approach is more appropriate for a one-time decision than a repetitive decision.

Correct AnswerverifiedFalse

A decision strategy is a sequence of decisions and chance outcomes, where the decisions chosen depend on the yet to be determined outcomes of chance events.

Correct AnswerverifiedShow Answer

The minimum expected opportunity loss provides the best decision, regardless of whether the decision analysis involves minimization or maximization.

Correct AnswerverifiedTrue

Sample information with an efficiency rating of 100% is perfect information.

Correct AnswerverifiedTrue

If sample information is obtained, the result of the sample information will be either positive or negative. No matter which result occurs, the choice to select option A or option B exists. And no matter which option is chosen, the eventual outcome will be good or poor. Complete the table.

Correct AnswerverifiedShow Answer

Decision tree probabilities refer to

Correct AnswerverifiedShow Answer

Expected value is the sum of the weighted payoff possibilities at a circular node in a decision tree.

Correct AnswerverifiedShow Answer

In an influence diagram, decision nodes are represented by

Correct AnswerverifiedShow Answer

Which of the methods for decision making best protects the decision maker from undesirable results?

Correct AnswerverifiedShow Answer

A decision tree

Correct AnswerverifiedShow Answer

Fold back this decision tree. Clearly state the decision strategy you determine.

Correct Answerverified Choose A....View AnswerShow Answer

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False

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True

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True

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Choose A....
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