BUSOBA 2321 FINAL TEST LATEST UPDATED
Decision Analysis - ANSWER a methodical and systematic method of deciding
problems
Features of good decisions - ANSWER - guided by reason
- considers all available options
- considers all available information concerning the future
- at times result in unpleasant outcomes
Features of bad decisions - ANSWER - fails to consider options
- fails to utilize all available information
- at times result in good outcomes
Five steps of decision analysis - ANSWER - define the problem
- list all possible alternatives
- list potential outcomes for each alternative
- list the payoff for each combination
- select a decision analysis modeling approach, apply the model, and make the
decision
Decision types - ANSWER - strategic
- tactical
- operational
Strategic decisions - ANSWER are long and have massive consequences for
flawed decisions
Tactical choices - ANSWER take a long time and high penalty for poor choices
Operational choices - ANSWER take small time but low penalty for poor
choices
, Payoff table - ANSWER - choices in rows
- states of nature in columns
- values can be positive (profit) or negative (loss)
Maximax Criteria (Positive Approach) - ANSWER Short Sided, Potential High
Opportunity, Best Among Best in Payoff Table
- include a new column ("maximum")
- find the maximum payoff for each decision (row)
- pick the maximum value in the "maximum" column
Maximin Criteria (Negative Approach) - ANSWER Short Sided, Potential
High Opportunity Lost, Best Among Worst in Payoff Table
- include a new column ("minimum")
- find the minimum payoff for each decision (row)
- choose the maximum value in the "minimum" column
Regret Table - ANSWER - insert an additional row ("maximum")
- determine the maximum payoff of every state of nature (column)
- subtract every payoff from the maximum of every state of nature (column)
Minimax Regret criteria (competitive behavior) - ANSWER Best Among
Worst in Regret Table
- insert an additional column ("maximum")
- determine the maximum regret for every decision (row)
- choose the lowest value in the "maximum" column
decisions based on probabilities - ANSWER - expected monetary value (EMV)
- expected opportunity loss (EOL)
Expected Monetary Value (EMV) - ANSWER - a weighted average that is
calculated by multiplying every payoff of a decision by the probabilities of the
state of nature
- choose the decision with the highest EMV
Decision Analysis - ANSWER a methodical and systematic method of deciding
problems
Features of good decisions - ANSWER - guided by reason
- considers all available options
- considers all available information concerning the future
- at times result in unpleasant outcomes
Features of bad decisions - ANSWER - fails to consider options
- fails to utilize all available information
- at times result in good outcomes
Five steps of decision analysis - ANSWER - define the problem
- list all possible alternatives
- list potential outcomes for each alternative
- list the payoff for each combination
- select a decision analysis modeling approach, apply the model, and make the
decision
Decision types - ANSWER - strategic
- tactical
- operational
Strategic decisions - ANSWER are long and have massive consequences for
flawed decisions
Tactical choices - ANSWER take a long time and high penalty for poor choices
Operational choices - ANSWER take small time but low penalty for poor
choices
, Payoff table - ANSWER - choices in rows
- states of nature in columns
- values can be positive (profit) or negative (loss)
Maximax Criteria (Positive Approach) - ANSWER Short Sided, Potential High
Opportunity, Best Among Best in Payoff Table
- include a new column ("maximum")
- find the maximum payoff for each decision (row)
- pick the maximum value in the "maximum" column
Maximin Criteria (Negative Approach) - ANSWER Short Sided, Potential
High Opportunity Lost, Best Among Worst in Payoff Table
- include a new column ("minimum")
- find the minimum payoff for each decision (row)
- choose the maximum value in the "minimum" column
Regret Table - ANSWER - insert an additional row ("maximum")
- determine the maximum payoff of every state of nature (column)
- subtract every payoff from the maximum of every state of nature (column)
Minimax Regret criteria (competitive behavior) - ANSWER Best Among
Worst in Regret Table
- insert an additional column ("maximum")
- determine the maximum regret for every decision (row)
- choose the lowest value in the "maximum" column
decisions based on probabilities - ANSWER - expected monetary value (EMV)
- expected opportunity loss (EOL)
Expected Monetary Value (EMV) - ANSWER - a weighted average that is
calculated by multiplying every payoff of a decision by the probabilities of the
state of nature
- choose the decision with the highest EMV
