BUSOBA 2321 Midterm Exam Questions with Correct Answers Latest Update 2026/2027
The 5 Steps in the Decision Making Process - Answers 1.) Define the Problem
2.) List ALL of the Alternatives (options)
3.) Identify the Outcomes for each Alternative (states of nature)
4.) Identify the Payoff for each combination of Alternatives and Outcomes
5.) Pick a Technique
Alternatives - Answers Options
Outcomes - Answers States of Nature
Strategic Decisions - Answers 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 - Answers 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 - Answers 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 - Answers Decisions can be analyzed using monetary returns, the
amount of risk involved, or other factors.
Decision Analysis - Good Decision - Answers * 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 - Answers * 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? - Answers 44%
How many people make up the population of China? - Answers 1.7 Billion
Quota Sampling - Answers 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? - Answers Any simplification of reality that captures the important
characteristics/details
Basic Profit Model - Answers 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... - Answers Controllable
5 Steps in the Decision Analysis - Answers 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
The 5 Steps in the Decision Making Process - Answers 1.) Define the Problem
2.) List ALL of the Alternatives (options)
3.) Identify the Outcomes for each Alternative (states of nature)
4.) Identify the Payoff for each combination of Alternatives and Outcomes
5.) Pick a Technique
Alternatives - Answers Options
Outcomes - Answers States of Nature
Strategic Decisions - Answers 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 - Answers 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 - Answers 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 - Answers Decisions can be analyzed using monetary returns, the
amount of risk involved, or other factors.
Decision Analysis - Good Decision - Answers * 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 - Answers * 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? - Answers 44%
How many people make up the population of China? - Answers 1.7 Billion
Quota Sampling - Answers 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? - Answers Any simplification of reality that captures the important
characteristics/details
Basic Profit Model - Answers 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... - Answers Controllable
5 Steps in the Decision Analysis - Answers 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
