BUSOBA 2321 Midterm Question and Answer
[2026] | UPDATED ACTUAL Exam | Detailed
Solutions
• Strategic Decisions -✓✓ Impact an extremely long time frame and have significant
consequences for an incorrect decision
Business Example: Mergers and Acquisitions
Personal Example: Purchasing a House
• Tactical Decisions -✓✓ Involve a significant amount of time and may have high
consequences for an incorrect decision.
Business Example: Forecasting a Product Production
Personal Example: Purchasing a Car
• Operational Decisions -✓✓ Impact a limited amount of time and usually have low
consequences for an incorrect decision.
Business Example: Assigning employees to jobs
Personal Example: Purchasing Lunch
• Decision Consequences -✓✓ Decisions can be analyzed using monetary returns, the
amount of risk involved, or other factors.
• Decision Analysis - Good Decision -✓✓ * Is based on logic
* Considers all possible alternatives
* Examines all available information about the future
* Good decisions sometimes result in unfavorable outcomes
• Decision Analysis - Bad Decision -✓✓ * Does not consider alternatives
* Does not use all available information
* Bad decisions can sometimes yield favorable results
• How many marriages in the U.S. end in divorce? -✓✓ 44%
• How many people make up the population of China? -✓✓ 1.7 Billion
• Quota Sampling -✓✓ A non-probability sampling technique wherein the assembled
sample has the same proportions of individuals as the entire population with respect to
known characteristics, traits, or focused phenomenon.
, • What is a model? -✓✓ Any simplification of reality that captures the important
characteristics/details
• Basic Profit Model -✓✓ Profit = Revenue - Costs
---------------------------
pi = Profit
P = Price per unit
s = Selling price per unit
Q or X = Quantity or number of units (items)
FC = F = f = Fixed Cost
VC = v = Variable Cost per unit
c = Contribution per unit to profit = P - v
• Options are... -✓✓ Controllable
• 5 Steps in the Decision Analysis -✓✓ 1. Define the Problem
2. List all possible alternatives
3. Identify the possible outcomes for each decision alternative
4. Identify the payoff (or regret) for each combination
5. Select a decision analysis modeling techniques, apply the decision model and make
the decision.
• Linear Program (LP) -✓✓ A mathematical optimization model built entirely from linear
equations and/or inequalities
• Optimization -✓✓ The process of finding the best (most efficient) or OPTIMAL way of
using limited resources to achieve the objective(s) of an individual or organization.
• Descriptive Analytics -✓✓ Technique that describes what has happened in the past.
• Descriptive Analytics -✓✓ Models constructed from past data to predict the future.
• Prescriptive Analytics -✓✓ Indicates the best course of action to take and the output is
a decision
• A Good Decision -✓✓ • Is based on logic
• Considers all possible alternatives
• Examines all available information about the future
• Good decisions sometimes result in unfavorable outcomes.
• A Bad Decision -✓✓ • Does not consider alternatives
• Does not use all available information
• Bad decisions can sometimes yield favorable results
• Decision Making Criteria -✓✓ • Maximax = best among the best payoffs
[2026] | UPDATED ACTUAL Exam | Detailed
Solutions
• Strategic Decisions -✓✓ Impact an extremely long time frame and have significant
consequences for an incorrect decision
Business Example: Mergers and Acquisitions
Personal Example: Purchasing a House
• Tactical Decisions -✓✓ Involve a significant amount of time and may have high
consequences for an incorrect decision.
Business Example: Forecasting a Product Production
Personal Example: Purchasing a Car
• Operational Decisions -✓✓ Impact a limited amount of time and usually have low
consequences for an incorrect decision.
Business Example: Assigning employees to jobs
Personal Example: Purchasing Lunch
• Decision Consequences -✓✓ Decisions can be analyzed using monetary returns, the
amount of risk involved, or other factors.
• Decision Analysis - Good Decision -✓✓ * Is based on logic
* Considers all possible alternatives
* Examines all available information about the future
* Good decisions sometimes result in unfavorable outcomes
• Decision Analysis - Bad Decision -✓✓ * Does not consider alternatives
* Does not use all available information
* Bad decisions can sometimes yield favorable results
• How many marriages in the U.S. end in divorce? -✓✓ 44%
• How many people make up the population of China? -✓✓ 1.7 Billion
• Quota Sampling -✓✓ A non-probability sampling technique wherein the assembled
sample has the same proportions of individuals as the entire population with respect to
known characteristics, traits, or focused phenomenon.
, • What is a model? -✓✓ Any simplification of reality that captures the important
characteristics/details
• Basic Profit Model -✓✓ Profit = Revenue - Costs
---------------------------
pi = Profit
P = Price per unit
s = Selling price per unit
Q or X = Quantity or number of units (items)
FC = F = f = Fixed Cost
VC = v = Variable Cost per unit
c = Contribution per unit to profit = P - v
• Options are... -✓✓ Controllable
• 5 Steps in the Decision Analysis -✓✓ 1. Define the Problem
2. List all possible alternatives
3. Identify the possible outcomes for each decision alternative
4. Identify the payoff (or regret) for each combination
5. Select a decision analysis modeling techniques, apply the decision model and make
the decision.
• Linear Program (LP) -✓✓ A mathematical optimization model built entirely from linear
equations and/or inequalities
• Optimization -✓✓ The process of finding the best (most efficient) or OPTIMAL way of
using limited resources to achieve the objective(s) of an individual or organization.
• Descriptive Analytics -✓✓ Technique that describes what has happened in the past.
• Descriptive Analytics -✓✓ Models constructed from past data to predict the future.
• Prescriptive Analytics -✓✓ Indicates the best course of action to take and the output is
a decision
• A Good Decision -✓✓ • Is based on logic
• Considers all possible alternatives
• Examines all available information about the future
• Good decisions sometimes result in unfavorable outcomes.
• A Bad Decision -✓✓ • Does not consider alternatives
• Does not use all available information
• Bad decisions can sometimes yield favorable results
• Decision Making Criteria -✓✓ • Maximax = best among the best payoffs
