COMMERCE 3QA3 Study Guide - Midterm Guide: Pearson Education, Prentice Hall, Minimax
13 Feb 2019
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Copyright (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
Managerial Decision Modeling w/ Spreadsheets, 3e (Balakrishnan/Render/Stair)
Chapter 8 Decision Analysis
8.1 Chapter Questions
1) Determining the best payoff for each alternative and choosing the alternative with the "best of the
best" is the approach called:
A) maximax
B) maximin
C) Laplace
D) minimax regret
E) expected monetary value
Answer: A
Page Ref: 323
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
2) Determining the worst payoff for each alternative and choosing the alternative with the "best of the
worst" is the approach called:
A) maximax
B) maximin
C) Laplace
D) minimax regret
E) expected monetary value
Answer: B
Page Ref: 323
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
3) The approach that is used for analyzing decision trees is called:
A) maximax
B) maximin
C) Laplace
D) minimax regret
E) expected monetary value
Answer: E
Page Ref: 332
Topic: Decision Trees
Difficulty: Easy
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Copyright (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
4) Determining the average payoff for each alternative and choosing the one with the best payoff is the
approach called:
A) maximax
B) maximin
C) Laplace
D) minimax regret
E) expected monetary value
Answer: C
Page Ref: 324
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
Use this information to answer the following questions.
Consider the following payoff table that represents the profits earned for each alternative (A, B, and C)
under the states of nature S1, S2, and S3.
S1 S2 S3
A $60 $145 $120 B $75 $125 $110
C $95 $85 $130
5) Refer to the payoff table. Using the maximax criterion, what would be the highest expected payoff?
A) $145
B) $124
C) $120
D) $110
E) $100
Answer: A
Page Ref: 323
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
AACSB: Analytic Skills
6) Refer to the payoff table. Using the maximin criterion, what would be the highest expected payoff?
A) $145
B) $125
C) $85
D) $75
E) $60
Answer: C
Page Ref: 323
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
AACSB: Analytic Skills
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Copyright (c) 2013 Pearson Education, Inc. publishing as Prentice Hall
7) Refer to the payoff table. Using the Laplace criterion, what would be the highest expected payoff?
A) $103.3
B) $108.3
C) $120
D) $125
E) $145
Answer: B
Page Ref: 324
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
AACSB: Analytic Skills
8) Refer to the payoff table. Using the criterion of realism and an alpha value of 0.7, what would be the
highest expected payoff?
A) $127
B) $119.5
C) $98.5
D) $116
E) $145
Answer: B
Page Ref: 324
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
AACSB: Analytic Skills
9) Refer to the payoff table. Using the minimax regret criterion, which alternative would you choose?
A) A
B) B
C) C
D) A or B
E) B or C
Answer: B
Page Ref: 325
Topic: Decision Making Under Uncertainty
Difficulty: Moderate
AACSB: Analytic Skills
10) Refer to the payoff table. Using the expected monetary value (EMV) criterion, what is the highest
attainable expected profit? Assume P(S1) = 0.5 and P(S2) = 0.25.
A) $101.25
B) $103.33
C) $108.33
D) $125
E) $145
Answer: A
Page Ref: 327
Topic: Decision Making Under Risk
Difficulty: Moderate
AACSB: Analytic Skills
Document Summary
8. 1 chapter questions: determining the best payoff for each alternative and choosing the alternative with the "best of the best" is the approach called, maximax, maximin, laplace, minimax regret, expected monetary value. Difficulty: moderate: determining the worst payoff for each alternative and choosing the alternative with the "best of the worst" is the approach called, maximax, maximin, laplace, minimax regret, expected monetary value. Difficulty: moderate: the approach that is used for analyzing decision trees is called, maximax, maximin, laplace, minimax regret, expected monetary value. : determining the average payoff for each alternative and choosing the one with the best payoff is the approach called, maximax, maximin, laplace, minimax regret, expected monetary value. Consider the following payoff table that represents the profits earned for each alternative (a, b, and c) under the states of nature s1, s2, and s3. Using the maximax criterion, what would be the highest expected payoff: , , , , .
