Formative Assessment (Decision Analysis)
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ENIDFormative Assessment (Decision Analysis)
Uploaded by
ENIDFormative Assessment (Decision Analysis)
Table 1 represents the payoff table for IT Equipment Fabrication where there are three
alternatives and three possible state of nature. Select the best decision for IT Equipment
Fabrication using the specified decision approach.
What is the best decision using maximin approach?
Small Investment
What is the best decision using maximax approach?
Large Investment
What is the best decision using minimax regret approach?
Medium Investment
Consider the decision tree.
Find the expected value for decision alternative D.
74.8
Find the expected value for decision alternative C.
21.2
Find the expected value for decision alternative K.
41.1
Find the expected value for decision alternative A.
33.39
Which of the methods for decision making without probabilities best protects the decision
maker from undesirable results?
the conservative approach
Square nodes in a decision tree indicate that a decision must be made.
TRUE
If a decision maker feels very pessimistic about the future event, which of the following is the
best approach to use in selecting the best decision alternative?
Conservative approach
Expected value is the sum of the weighted payoff possibilities at a circular node in a decision
tree.
TRUE
If a decision maker feels very positive about the future event, which of the following is the
best approach to use in selecting the best decision alternative?
Optimistic approach
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.
TRUE
Which of the methods for decision making without probabilities best describe a decision
maker who feels he/she will commit a mistake in the decision?
Minimax regret approach
What is the next step in the decision-making process after the decision maker has listed all
possible solution and possible state of nature?
Construct a payoff table
The expected value of an alternative can never be negative.
FALSE
If a decision maker feels that he/she will commit a mistake in the decision, then which of the
following is the best approach to use in selecting the best decision alternative?
Minimax regret approach
In a decision problem having eight possible alternatives and seven possible state of nature,
identify the number of payoffs.
None of the choices
52 payoffs (WRONG)
52 payoffs
6 payoffs
70 payoffs (WRONG)
15 payoffs (WRONG)
Circular nodes in a decision tree indicate that it would be incorrect to choose a path from the
node.
TRUE