Decision Models
Final Assessment Review
(Questions & Solutions)
2025
1
, Question 1:
Which decision model is best used to optimize resource allocation
subject to linear constraints?
A. Decision tree analysis
B. Linear programming
C. Monte Carlo simulation
D. Goal programming
Correct ANS: B
Rationale:
Linear programming is specifically designed to optimize a linear objective
function subject to a set of linear constraints and is a foundational
decision model in managerial and accounting contexts.
---
Question 2:
When evaluating decisions under uncertainty, which of the following
tools helps in identifying optimal strategies by modeling sequential
decisions?
A. Sensitivity analysis
B. Decision tree analysis
C. Regression analysis
D. Data envelopment analysis
Correct ANS: B
Rationale:
Decision trees graphically represent decisions, chance events, outcomes,
and the possible paths that may be taken, making them an essential tool
for structuring sequential decisions under uncertainty.
---
2
, Question 3:
The Bellman equation is central to which of the following decision
models?
A. Dynamic programming
B. Simulation modeling
C. Network flow optimization
D. Markov decision processes
Correct ANS: A
Rationale:
Dynamic programming uses the Bellman equation to break down
complex problems into simpler sub-problems; it is instrumental in solving
multi-stage decision problems.
---
Question 4:
Which model is most appropriate for evaluating investments under risk
by incorporating probability distributions for future outcomes?
A. Deterministic linear programming
B. Monte Carlo simulation
C. Zero‑one integer programming
D. Cost‑volume‑profit analysis
Correct ANS: B
Rationale:
Monte Carlo simulation uses random sampling of probability
distributions for input variables to model risk and uncertainty in
investment or decision models.
---
Question 5:
In multi‑criteria decision making (MCDM), which method helps aggregate
3
, various performance measures into a single score?
A. Weighted sum model
B. Linear regression
C. Cluster analysis
D. Time series forecasting
Correct ANS: A
Rationale:
The weighted sum model assigns weights to each performance measure
and aggregates them to produce a composite score, enabling
comparisons across multiple criteria.
---
Question 6:
Which of the following best describes goal programming?
A. A method to optimize multiple conflicting objectives by prioritizing
goals
B. A forecasting technique that adjusts for seasonality
C. A simulation method for risk analysis
D. A statistical method for hypothesis testing
Correct ANS: A
Rationale:
Goal programming is an extension of linear programming that allows
decision makers to handle multiple, often conflicting objectives by
assigning priority levels.
---
Question 7:
What is the primary purpose of using sensitivity analysis in decision
models?
A. To determine the best fixed solution
B. To measure the effect of changes in decision model parameters on
4
Final Assessment Review
(Questions & Solutions)
2025
1
, Question 1:
Which decision model is best used to optimize resource allocation
subject to linear constraints?
A. Decision tree analysis
B. Linear programming
C. Monte Carlo simulation
D. Goal programming
Correct ANS: B
Rationale:
Linear programming is specifically designed to optimize a linear objective
function subject to a set of linear constraints and is a foundational
decision model in managerial and accounting contexts.
---
Question 2:
When evaluating decisions under uncertainty, which of the following
tools helps in identifying optimal strategies by modeling sequential
decisions?
A. Sensitivity analysis
B. Decision tree analysis
C. Regression analysis
D. Data envelopment analysis
Correct ANS: B
Rationale:
Decision trees graphically represent decisions, chance events, outcomes,
and the possible paths that may be taken, making them an essential tool
for structuring sequential decisions under uncertainty.
---
2
, Question 3:
The Bellman equation is central to which of the following decision
models?
A. Dynamic programming
B. Simulation modeling
C. Network flow optimization
D. Markov decision processes
Correct ANS: A
Rationale:
Dynamic programming uses the Bellman equation to break down
complex problems into simpler sub-problems; it is instrumental in solving
multi-stage decision problems.
---
Question 4:
Which model is most appropriate for evaluating investments under risk
by incorporating probability distributions for future outcomes?
A. Deterministic linear programming
B. Monte Carlo simulation
C. Zero‑one integer programming
D. Cost‑volume‑profit analysis
Correct ANS: B
Rationale:
Monte Carlo simulation uses random sampling of probability
distributions for input variables to model risk and uncertainty in
investment or decision models.
---
Question 5:
In multi‑criteria decision making (MCDM), which method helps aggregate
3
, various performance measures into a single score?
A. Weighted sum model
B. Linear regression
C. Cluster analysis
D. Time series forecasting
Correct ANS: A
Rationale:
The weighted sum model assigns weights to each performance measure
and aggregates them to produce a composite score, enabling
comparisons across multiple criteria.
---
Question 6:
Which of the following best describes goal programming?
A. A method to optimize multiple conflicting objectives by prioritizing
goals
B. A forecasting technique that adjusts for seasonality
C. A simulation method for risk analysis
D. A statistical method for hypothesis testing
Correct ANS: A
Rationale:
Goal programming is an extension of linear programming that allows
decision makers to handle multiple, often conflicting objectives by
assigning priority levels.
---
Question 7:
What is the primary purpose of using sensitivity analysis in decision
models?
A. To determine the best fixed solution
B. To measure the effect of changes in decision model parameters on
4
