MODULE A: DECISION-MAKING TOOLS
TRUE/FALSE
1. Analytic decision making is based on logic and considers all available data and possible
alternatives.
True (The decision process in operations, easy)
2. The last step in the analytic decision process clearly defines the problem and the factors
that influence it.
False (The decision process in operations, easy)
3. A state of nature is an occurrence of a situation over which the decision maker has little or
no control.
True (Fundamentals of decision making, easy)
4. In a decision tree, a square symbol represents a state of nature node.
False (Fundamentals of decision making, moderate)
5. If a decision maker can assign probabilities of occurrence to the states of nature, then the
decision is being made under conditions of uncertainty.
False (Types of decision-making environments, moderate)
6. An example of a conditional value would be the payoff from selecting a particular
alternative when a particular state of nature occurs.
True (Types of decision-making environments, moderate)
7. The maximax criterion of decision making requires that all decision alternatives have an
equal probability of occurrence.
False (Types of decision-making environments, easy)
,8. The maximin criterion is pessimistic, while the maximax criterion is optimistic.
True (Types of decision-making environments, easy)
9. If a decision maker knows for sure which state of nature will occur, he/she is making a
decision under certainty.
True (Types of decision-making environments, moderate)
10. The expected value under certainty assumes that all states of nature are equally likely.
False (Types of decision-making environments, easy)
11. An example of expected monetary value would be the payoff from selecting a particular
alternative when a particular state of nature occurs.
False (Decision tables, moderate)
12. The expected monetary value of a decision alternative is the sum of all possible payoffs
from the alternative, each weighted by the probability of that payoff occurring.
True (Types of decision-making environments, easy)
13. If a decision maker has to make a certain decision only once, expected monetary value is a
good indication of the payoff associated with the decision.
False (Types of decision-making environments, moderate)
14. The expected value of perfect information is the same as the expected value under
certainty.
False (Decision tables, moderate)
15. Decision trees and decision tables can both solve problems requiring a single decision, but
decision tables are the preferred method when a sequence of decisions is involved.
False (Decision trees, easy)
,16. In a decision tree, the expected monetary values are computed by working from right to
left.
True (Decision trees, moderate)
MULTIPLE CHOICE
17. Which of the following is not considered a step in the decision-making process?
a. Clearly identify the problem.
c. Develop objectives.
d. Evaluate alternatives.
b. Select the best alternative.
e. Minimize costs whenever possible.
e (The decision process in operations, moderate)
18. The first step, and a key element, in the decision-making process is to
a. consult a specialist
b. clearly define the problem
c. develop objectives
d. monitor the results
e. select the best alternative
b (The decision process in operations, easy)
19. In terms of decision theory, an occurrence or situation over which the decision maker has
no control is called a(n)
a. decision under uncertainty
b. decision tree
c. state of nature
d. alternative
e. none of the above
, c (Fundamentals of decision making, easy)
20. A tabular presentation that shows the outcome for each decision alternative under the
various possible states of nature is called a(n)
a. isoquant table
b. payback period matrix
c. payoff table
d. feasible region
e. decision tree
c (Decision tables, easy)
21. The decision criterion that would be used by an optimistic decision maker solving a
problem under conditions of uncertainty would be the
a. expected monetary value criterion
b. equally likely criterion
c. maximax criterion
d. maximin criterion
e. minimin criterion
c (Types of decision-making environments, moderate)
22. A decision maker who uses the maximin criterion when solving a problem under
conditions of uncertainty is
a. an optimist
b. a pessimist
c. an economist
d. an optometrist
e. making a serious mistake; maximin is not appropriate for conditions of uncertainty
b (Types of decision-making environments, moderate)
23. Expected monetary value is most appropriate for problem solving that takes place
TRUE/FALSE
1. Analytic decision making is based on logic and considers all available data and possible
alternatives.
True (The decision process in operations, easy)
2. The last step in the analytic decision process clearly defines the problem and the factors
that influence it.
False (The decision process in operations, easy)
3. A state of nature is an occurrence of a situation over which the decision maker has little or
no control.
True (Fundamentals of decision making, easy)
4. In a decision tree, a square symbol represents a state of nature node.
False (Fundamentals of decision making, moderate)
5. If a decision maker can assign probabilities of occurrence to the states of nature, then the
decision is being made under conditions of uncertainty.
False (Types of decision-making environments, moderate)
6. An example of a conditional value would be the payoff from selecting a particular
alternative when a particular state of nature occurs.
True (Types of decision-making environments, moderate)
7. The maximax criterion of decision making requires that all decision alternatives have an
equal probability of occurrence.
False (Types of decision-making environments, easy)
,8. The maximin criterion is pessimistic, while the maximax criterion is optimistic.
True (Types of decision-making environments, easy)
9. If a decision maker knows for sure which state of nature will occur, he/she is making a
decision under certainty.
True (Types of decision-making environments, moderate)
10. The expected value under certainty assumes that all states of nature are equally likely.
False (Types of decision-making environments, easy)
11. An example of expected monetary value would be the payoff from selecting a particular
alternative when a particular state of nature occurs.
False (Decision tables, moderate)
12. The expected monetary value of a decision alternative is the sum of all possible payoffs
from the alternative, each weighted by the probability of that payoff occurring.
True (Types of decision-making environments, easy)
13. If a decision maker has to make a certain decision only once, expected monetary value is a
good indication of the payoff associated with the decision.
False (Types of decision-making environments, moderate)
14. The expected value of perfect information is the same as the expected value under
certainty.
False (Decision tables, moderate)
15. Decision trees and decision tables can both solve problems requiring a single decision, but
decision tables are the preferred method when a sequence of decisions is involved.
False (Decision trees, easy)
,16. In a decision tree, the expected monetary values are computed by working from right to
left.
True (Decision trees, moderate)
MULTIPLE CHOICE
17. Which of the following is not considered a step in the decision-making process?
a. Clearly identify the problem.
c. Develop objectives.
d. Evaluate alternatives.
b. Select the best alternative.
e. Minimize costs whenever possible.
e (The decision process in operations, moderate)
18. The first step, and a key element, in the decision-making process is to
a. consult a specialist
b. clearly define the problem
c. develop objectives
d. monitor the results
e. select the best alternative
b (The decision process in operations, easy)
19. In terms of decision theory, an occurrence or situation over which the decision maker has
no control is called a(n)
a. decision under uncertainty
b. decision tree
c. state of nature
d. alternative
e. none of the above
, c (Fundamentals of decision making, easy)
20. A tabular presentation that shows the outcome for each decision alternative under the
various possible states of nature is called a(n)
a. isoquant table
b. payback period matrix
c. payoff table
d. feasible region
e. decision tree
c (Decision tables, easy)
21. The decision criterion that would be used by an optimistic decision maker solving a
problem under conditions of uncertainty would be the
a. expected monetary value criterion
b. equally likely criterion
c. maximax criterion
d. maximin criterion
e. minimin criterion
c (Types of decision-making environments, moderate)
22. A decision maker who uses the maximin criterion when solving a problem under
conditions of uncertainty is
a. an optimist
b. a pessimist
c. an economist
d. an optometrist
e. making a serious mistake; maximin is not appropriate for conditions of uncertainty
b (Types of decision-making environments, moderate)
23. Expected monetary value is most appropriate for problem solving that takes place
