Decision Analysis

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Introduction to Management Science, 10e (Taylor) Chapter 12 Decision Analysis 1) A state of nature is an actual event that may occur in the future. Answer: TRUE Diff: 1 Page Ref: 527 Main Heading: Components of Decision Making Key words: state of nature 2) A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature. Answer: TRUE Diff: 1 Page Ref: 527 Main Heading: Components of Decision Making Key words: payoff table 3) The maximax criterion results in the maximum of the maximum payoffs. Answer: TRUE Diff: 2 Page Ref: 529 Main Heading: Decision Making without Probabilities Key words: maximax criterion 4) The maximin…show more content…
Answer: TRUE Diff: 1 Page Ref: 532 Main Heading: Decision Making without Probabilities Key words: Hurwicz criterion 11) The Hurwicz criterion multiplies the best payoff by the coefficient of optimism. Answer: TRUE Diff: 1 Page Ref: 532 Main Heading: Decision Making without Probabilities Key words: Hurwicz criterion 12) The Hurwicz criterion multiplies the worst payoff by the coefficient of optimism. Answer: FALSE Diff: 1 Page Ref: 532 Main Heading: Decision Making without Probabilities Key words: Hurwicz criterion 13) A dominant decision is one that has better payoff than another decision under each state of nature. Answer: TRUE Diff: 1 Page Ref: 533 Main Heading: Decision Making without Probabilities Key words: dominant decision 14) The appropriate criterion is dependent on the risk personality and philosophy of the decision maker. Answer: TRUE Diff: 3 Page Ref: 529 Main Heading: Decision Making without Probabilities Key words: decision making criteria 15) The maximax criterion is optimistic. Answer: TRUE Diff: 3 Page Ref: 529 Main Heading: Decision Making without Probabilities Key words: decision making criteria 16) The maximin criterion maximizes the minimum regret. Answer: FALSE Diff: 1 Page Ref: 531 Main Heading: Decision Making without Probabilities Key words: maximin criterion 17) The minimax criterion minimizes the maximum payoff.

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