LOMA 335- MODULE 2 (CHAPTERS 5-
9) EXAM QUESTIONS WITH
CORRECT ANSWERS
Correlation Research - Answer-Research designed to demonstrate a relationship
between variables when the research purpose is to identify trends or relationships.
Decision Model - Answer-Describes all elements of a decision in a manner which helps
a decision maker evaluate and compare several potential courses of action.
Predictive Analytics - Answer-Applies data about past events as a basis for identifying,
selecting and recording ongoing relationships between variables, and then using those
relationships to predict future outcomes.
Business Intelligence - Answer-The process of using automation for discovering
decision-support information for business purposes.
Expert Systems - Answer-Systems that classify data by sorting it into distinctive sets,
then using sample data classification as a basis for finding more patterns in an
associated database.
Decision Theory Model - Answer-A quantitative approximation of the real-world
processes used in making rational decisions.
Certainty - Answer-No potential for deviation from expected outcome
Risk - Answer-Incomplete but reliable information is available
Uncertainty - Answer-Little or no reliable information is available and each state of
nature has an equal probability of occurring.
Payoff Table - Answer-A decision analysis tool that summarizes potential outcomes
from a decision in a tabular format.
Conditional Payoff Table - Answer-Decision analysis tool that shows 2 or more states of
nature, and each cell contains a projected payoff value based on at least 2 conditions
(the decision alternative and the state of nature).
Dominant Decision Alternative - Answer-Exists when the same decision alternative
leads to the best expected payoff no matter the state of nature.
, EMV Criterion - Answer-Requires the analyst to calculate the expected monetary value
for each potential decision outcome. When it is applied consistently over time to a
number of decisions it generally identifies the decision alternative that will yield the best
outcomes.
Insufficient Reason Criterion - Answer-Requires decision maker to select the option with
the best total payoff. This is the decision alternative with the highest profits or lowest
expenses.
Maximax Criterion - Answer-Requires the analyst to identify the decision alternative that
maximizes the maximum projected payoff.
Maximin Criterion - Answer-Designed to identify the decision alternative that will yield
the minimum payoff.
Minimax Regret Criterion - Answer-Attempts to minimize the maximum possible regret
in a decision outcome by identifying the decision alternative that would result in the least
regret.
Forecasting - Answer-The process for estimating unknown future values.
Time-Series Models - Answer-Mathematical models designed for estimating unknown
future values solely on the basis of known historical data about the unknown value or
values.
Naive Time-Series Model - Answer-Uses data values for the most recent period as the
forecast value(s) for the next future period.
Arithmetic Average Model - Answer-Uses the average of time-series data from previous
periods as the forecast value for the next future period.
Simple Moving Average Model - Answer-Requires finding the average, but only
considers a specific number of the most recent data values.
Weighted Moving Average Time-Series Model - Answer-Assigns relative weight to the
data values being used in the forecast; typically the more recent data are assigned
greater weight.
Trend - Answer-Movement in a specific direction that occurs over many years.
Variation - Answer-A change or fluctuation in a trend.
Causal Forecasting Models - Answer-Type of quantitative models that use historical
data and other relevant variables as a basis for describing unknown future data points.
9) EXAM QUESTIONS WITH
CORRECT ANSWERS
Correlation Research - Answer-Research designed to demonstrate a relationship
between variables when the research purpose is to identify trends or relationships.
Decision Model - Answer-Describes all elements of a decision in a manner which helps
a decision maker evaluate and compare several potential courses of action.
Predictive Analytics - Answer-Applies data about past events as a basis for identifying,
selecting and recording ongoing relationships between variables, and then using those
relationships to predict future outcomes.
Business Intelligence - Answer-The process of using automation for discovering
decision-support information for business purposes.
Expert Systems - Answer-Systems that classify data by sorting it into distinctive sets,
then using sample data classification as a basis for finding more patterns in an
associated database.
Decision Theory Model - Answer-A quantitative approximation of the real-world
processes used in making rational decisions.
Certainty - Answer-No potential for deviation from expected outcome
Risk - Answer-Incomplete but reliable information is available
Uncertainty - Answer-Little or no reliable information is available and each state of
nature has an equal probability of occurring.
Payoff Table - Answer-A decision analysis tool that summarizes potential outcomes
from a decision in a tabular format.
Conditional Payoff Table - Answer-Decision analysis tool that shows 2 or more states of
nature, and each cell contains a projected payoff value based on at least 2 conditions
(the decision alternative and the state of nature).
Dominant Decision Alternative - Answer-Exists when the same decision alternative
leads to the best expected payoff no matter the state of nature.
, EMV Criterion - Answer-Requires the analyst to calculate the expected monetary value
for each potential decision outcome. When it is applied consistently over time to a
number of decisions it generally identifies the decision alternative that will yield the best
outcomes.
Insufficient Reason Criterion - Answer-Requires decision maker to select the option with
the best total payoff. This is the decision alternative with the highest profits or lowest
expenses.
Maximax Criterion - Answer-Requires the analyst to identify the decision alternative that
maximizes the maximum projected payoff.
Maximin Criterion - Answer-Designed to identify the decision alternative that will yield
the minimum payoff.
Minimax Regret Criterion - Answer-Attempts to minimize the maximum possible regret
in a decision outcome by identifying the decision alternative that would result in the least
regret.
Forecasting - Answer-The process for estimating unknown future values.
Time-Series Models - Answer-Mathematical models designed for estimating unknown
future values solely on the basis of known historical data about the unknown value or
values.
Naive Time-Series Model - Answer-Uses data values for the most recent period as the
forecast value(s) for the next future period.
Arithmetic Average Model - Answer-Uses the average of time-series data from previous
periods as the forecast value for the next future period.
Simple Moving Average Model - Answer-Requires finding the average, but only
considers a specific number of the most recent data values.
Weighted Moving Average Time-Series Model - Answer-Assigns relative weight to the
data values being used in the forecast; typically the more recent data are assigned
greater weight.
Trend - Answer-Movement in a specific direction that occurs over many years.
Variation - Answer-A change or fluctuation in a trend.
Causal Forecasting Models - Answer-Type of quantitative models that use historical
data and other relevant variables as a basis for describing unknown future data points.
