CH 13 - Decision Analysis

CH 13 - Decision Analysis © Cengage. Testing Powered by Cognero. Page 1 True / False 1. Sample information with an efficiency rating of 100% is perfect information. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.05 - 13.5 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.5 Decision Analysis with Sample Information KEYWORDS: Bloom's: Remember 2. States of nature should be defined so that one and only one will actually occur. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.01 - 13.1 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.1 Problem Formulation KEYWORDS: Bloom's: Remember 3. Decision alternatives are structured so that several could occur simultaneously. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.01 - 13.1 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.1 Problem Formulation KEYWORDS: Bloom's: Understand 4. Square nodes in a decision tree indicate that a decision must be made. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.01 - 13.1 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.1 Problem Formulation CH 13 - Decision Analysis © Cengage. Testing Powered by Cognero. Page 2 KEYWORDS: Bloom's: Remember 5. Circular nodes in a decision tree are considered chance nodes. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.01 - 13.1 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.1 Problem Formulation KEYWORDS: Bloom's: Remember 6. Risk analysis helps the decision maker recognize the difference between the expected value of a decision alternative and the payoff that may actually occur. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.04 - 13.4 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.4 Risk Analysis and Sensitivity Analysis KEYWORDS: Bloom's: Remember 7. The expected value of an alternative can never be negative. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.03 - 13.3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.3 Decision Making with Probabilities KEYWORDS: Bloom's: Understand 8. For a chance node, the expected value is the weighted average of the payoffs, where the weights are the state-of-nature probabilities. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.03 - 13.3 CH 13 - Decision Analysis © Cengage. Testing Powered by Cognero. Page 3 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.3 Decision Making with Probabilities KEYWORDS: Bloom's: Understand 9. EVPI is always greater than or equal to EVSI. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.05 - 13.5 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.5 Decision Analysis with Sample Information KEYWORDS: Bloom's: Understand 10. After all probabilities and payoffs are placed on a decision tree, the decision maker calculates expected values at stateof-nature nodes and makes selections at decision nodes. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.05 - 13.5 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.5 Decision Analysis with Sample Information KEYWORDS: Bloom's: Understand 11. A decision strategy is a sequence of decisions and chance outcomes where the decisions chosen depend on the yet-tobe-determined outcomes of chance events. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: IMS.ASWC.19.13.05 - 13.5 NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking TOPICS: 13.5 Decision Analysis with Sample Information KEYWORDS: Bloom's: Remember 12. Under the minimax regret approach to decision making, EVPI equals the expected regret that is associated with the minimax decision. a. True b. False ANSWER: True