Quiz 3
MGMT 430 Quiz 3 Name:_____________________________
1) Which one of the following statements is not correct when making decisions?
A) The sum of the state of nature probabilities must be 1.
B) Every probability must be greater than or equal to 0.
C) All probabilities are assumed to be equal.
D) Probabilities are used to compute expected values.
E) Perfect information assumes that the state of nature that will actually occur is known.
2) Testing how a problem solution reacts to changes in one or more of the model parameters is
called:
A) analysis of tradeoffs.
B) sensitivity analysis.
C) priority recognition.
D) analysis of variance.
E) decision analysis.
3) Determining the worst payoff for each alternative and choosing the alternative with the "best
worst" is the criterion called:
A) minimin.
B) maximin.
C) maximax.
D) maximum likelihood.
E) Bayes decision rule.
4) Based on the following payoff table, answer the following:
Alternative High Low
Buy 90 −10
Rent 70 40
Lease 60 55
Prior Probability 0.4 0.6
The maximin strategy is:
A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
MGMT 430 Quiz 3 Name:_____________________________
5) Based on the following payoff table, answer the following:
Alternative High Low
Buy 90 −10
Rent 70 40
Lease 60 55
Prior Probability 0.4 0.6
The maximum likelihood strategy is:
A) Buy.
B) Rent.
C) Lease.
D) High.
E) Low.
6) Forecasts can help a manager to:
A) anticipate the future.
B) develop strategies.
C) make staffing decisions.
D) All of the answers choices are correct.
E) None of the answer choices is correct.
7) In business, forecasts are the basis for:
A) sales planning.
B) inventory planning.
C) production planning.
D) budgeting.
E) All of the answers choices are correct.
8) Which of the following are costs of an inaccurate forecast?
A) Lost sales
B) Inventory
C) An understaffed office
D) Lower profits
E) All of the answers choices are correct.
MGMT 430 Quiz 3 Name:_____________________________
9) Time-series data may exhibit which of the following behaviors?
A) Trend
B) Seasonality
C) Cycles
D) Irregularities
E) All of the answers choices are correct
10) Refer to the following data:
Period Demand
1 58
2 59
3 60
4 61
What is the moving-average forecast for the next period based on the last three periods?
A) 58
B) 62
C) 60
D) 61
E) None of the answer choices is correct.