operations management, 10e jay heizer, barry render solutions manual and test bank
Operations Management, 11/E Jay Heizer Barry Rende solutions manual and test bank
Operations Management,
10e (Heizer/Render)
Module
A DecisionMaking Tools
1) Analytic
decision making is based on logic and considers all available data and possible
alternatives.
Answer: TRUE
Diff:
1
Topic: The decision process in operations
AACSB: Analytic Skills
Objective: no LO
2) The last step
in the analytic decision process clearly defines the problem and the factors
that influence it.
Answer: FALSE
Diff:
1
Topic: The decision process in operations
AACSB: Analytic Skills
Objective: no LO
3) A state of
nature is an occurrence of a situation over which the decision maker has little
or no control.
Answer: TRUE
Diff:
1
Topic: Fundamentals of decision making
Objective: LOModule A1
4) In a decision
tree, a square symbol represents a state of nature node.
Answer: FALSE
Diff:
2
Topic: Fundamentals of decision making
Objective: LOModule A1
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.
Answer: FALSE
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A3
6) An example of
a conditional value would be the payoff from selecting a particular alternative
when a particular state of nature occurs.
Answer: TRUE
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A3
7) The maximax
criterion of decision making requires that all decision alternatives have an
equal probability of occurrence.
Answer: FALSE
Diff:
1
Topic: Types of decisionmaking
environments
Objective: LOModule A3
8) The maximin
criterion is pessimistic, while the maximax criterion is optimistic.
Answer: TRUE
Diff:
1
Topic: Types of decisionmaking
environments
Objective: LOModule A3
9) If a decision
maker knows for sure which state of nature will occur, he/she is making a
decision under certainty.
Answer: TRUE
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A3
10) The expected
value with perfect information assumes that all states of nature are equally
likely.
Answer: FALSE
Diff:
1
Topic: Types of decisionmaking
environments
Objective: LOModule A5
11) An example of
expected monetary value would be the payoff from selecting a particular
alternative when a particular state of nature occurs.
Answer: FALSE
Diff:
2
Topic: Decision tables
Objective: LOModule A4
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.
Answer: TRUE
Diff:
1
Topic: Types of decisionmaking
environments
Objective: LOModule A4
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.
Answer: FALSE
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A4
14) The expected
value of perfect information is the same as the expected value with perfect
information.
Answer: FALSE
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
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.
Answer: FALSE
Diff:
1
Topic: Decision trees
Objective: LOModule A6
16) In a decision
tree, the expected monetary values are computed by working from right to left.
Answer: TRUE
Diff:
2
Topic: Decision trees
Objective: LOModule A6
17) Which of the
following is not considered a step in the decisionmaking process?
A) Clearly
identify the problem.
B) Select the
best alternative.
C) Develop
objectives.
D) Evaluate
alternatives.
E) Minimize costs
whenever possible.
Answer: E
Diff:
2
Topic: The decision process in operations
Objective: no LO
18) The first
step, and a key element, in the decisionmaking process is to
A) consult a
specialist
B) clearly define
the problem
C) develop
objectives
D) monitor the
results
E) select the
best alternative
Answer: B
Diff:
1
Topic: The decision process in operations
Objective: no LO
19) The last step
of the decisionmaking
process is to
A) develop a
model
B) evaluate each
alternative
C) pick the best
alternative
D) implement the
decision
E) check the
decision with senior management
Answer: D
Diff:
2
Topic: The decision process in operations
Objective: no LO
20) A square node
on a decision tree infers that
A) the node
splits into various states of nature, of which only one will occur
B) there are
several alternatives available
C) the manager
must pick choose an alternative
D) both B and C
E) A, B, and C
Answer: D
Diff:
2
Topic: Fundamentals of decision making
Objective: LOModule A1
21) The following
decision tree has how many state of nature nodes
A) 0
B) 1
C) 2
D) 3
E) 4
Answer: B
Diff:
2
Topic: Fundamentals of decision making
Objective: LOModule A1
22) 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
Answer: C
Diff:
1
Topic: Fundamentals of decision making
Objective: LOModule A1
23) 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
Answer: C
Diff:
1
Topic: Decision tables
Objective: LOModule A2
24) The outcome
of an alternative/state of nature combination is a(n)
A) price
B) conditional
value
C) expected value
D) conditional
probability
E) All of the
above are correct.
Answer: B
Diff:
2
Topic: Decision tables
Objective: LOModule A2
25) Doing nothing
would yield how much profit if favorable market conditions prevail according to
the following decision table?
Alternative

Favorable
market

Unfavorable
Market

Do Nothing

$20,000

$10,000

A) $5,000
B) $20,000
C) $10,000
D) $0
E) unable to
determine
Answer: B
Diff:
1
Topic: Decision tables
Objective: LOModule A2
26) 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
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A3
27) 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
Answer: B
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A3
28) Expected
monetary value is most appropriate for problem solving that takes place
A) when
conditions are average
B) when all
states of nature are equally likely
C) when all
alternatives are equally likely
D) under
conditions of uncertainty
E) under
conditions of risk
Answer: E
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A4
29) Suppose that
there are three options facing a manager.
He may either build a large plant for a value of $20,000 in profit, a
small plant for $10,000 in profit, or do nothing and make $3,000. What is the EMV of the decision?
A) $20,000
B) $10,000
C) $3,000
D) $33,000
E) $11,000
Answer: A
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A4
30) There are
three equally likely states of nature (High, Medium, and Low demand). If the large factory will post profits of
$50,000, $25,000, and  $10,000 under these states of nature, respectively,
what is the EMV of the factory?
A) $50,000
B) $25,000
C) $28,333.33
D) $21,666.67
E) none of the
above
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A4
31) A plant
manager wants to know how much he should be willing to pay for perfect market
research. Currently there are two states
of nature facing his decision to expand or do nothing. Under favorable market conditions the manager
would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large
plant would lose $50,000 and the small plant would make $0. If the two states of nature are equally
likely, how much should he pay for perfect information?
A) $0
B) $25,000
C) $50,000
D) $100,000
E) unable to
determine
Answer: B
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
32) The expected
value with perfect information
A) is appropriate
when solving problems under conditions of certainty
B) requires that
each decision alternative have a known probability of occurrence
C) is an input
into the calculation of the expected value of perfect information
D) is the average
of the maximax and the maximin
E) none of the
above
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
33) The
difference between the expected payoff under perfect information and the
maximum expected payoff under risk is
A) expected
monetary value
B) economic order
quantity
C) expected value
of perfect information
D) PERT
E) expected
monetary payoff
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
34) The
likelihood that a decision maker will ever receive a payoff precisely equal to
the EMV when making any one decision is
A) low (near 0%)
B) high (near
100%)
C) dependent upon
the number of alternatives
D) dependent upon
the number of states of nature
E) none of the
above
Answer: A
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A4
35) The expected
value of perfect information (EVPI) is the
A) payoff for a
decision made under perfect information
B) payoff under
minimum risk
C) average
expected payoff
D) difference
between the payoff under perfect information and the payoff under risk
E) none of the
above
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
36) A decisionmaker using the maximax criterion on the
problem below would choose Alternative __________ because the maximum of the
row maximums is __________.
States of Nature


1

2

3


Alternative A

50

55

60

Alternative B

30

50

80

Alternative C

70

80

70

Alternative D

100

10

140

A) A; 60
B) B; 80
C) C; 70
D) D; 100
E) D; 140
Answer: E
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A3
37) A decisionmaker using the maximin criterion on the
problem below would choose Alternative __________ because the maximum of the
row minimums is __________.
States of Nature


1

2

3


Alternative A

50

55

60

Alternative B

30

50

80

Alternative C

70

80

70

Alternative D

100

10

140

A) A; 55
B) B; 30
C) C; 70
D) D; 140
E) D; 10
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A3
38) The highest
value for the equally likely criterion is __________; this occurs with
alternative __________.
States of Nature


Alternatives

S1

S2

Option 1

$10,000

$30,000

Option 2

$5,000

$45,000

Option 3

$4,000

$60,000

A) $20,000;
Option 1
B) $25,000;
Option 2
C) $28,000;
Option 3
D) $32,000;
Option 3
E) $60,000;
Option 3
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A3
39) What is the
EMV for Option 1 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.3

.7

Option 1

15,000

20,000

Option 2

10,000

30,000

A) 15,000
B) 17,000
C) 17,500
D) 18,500
E) 20,000
Answer: D
Diff:
1
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
40) The expected
value with perfect information is
A) the maximum
EMV for a set of alternatives
B) the same as
the expected value of perfect information
C) valuable in
situations involving risk
D) the average
return obtained when the decision maker knows which state of nature is going to
occur before the decision is made
E) obtained using
conditional probabilities
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
Objective: LOModule A5
41) What is the
EMV for Option 2 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.3

.7

Option 1

15,000

20,000

Option 2

10,000

30,000

A) 10,000
B) 16,000
C) 20,000
D) 24,000
E) 30,000
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
42) What is the
EMV for Option 1 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.4

.6

Option 1

10,000

30,000

Option 2

5,000

45,000

Option 3

4,000

60,000

A) 10,000
B) 18,000
C) 20,000
D) 22,000
E) 30,000
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
43) What is the
EMV for Option 2 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.4

.6

Option 1

10,000

30,000

Option 2

5,000

45,000

Option 3

4,000

60,000

A) 5,000
B) 21,000
C) 25,000
D) 29,000
E) 45,000
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
44) What is the
expected value with perfect information of the following decision table?
States of Nature


Alternatives

S1

S2

p

.4

.6

Option 1

10,000

30,000

Option 2

5,000

45,000

Option 3

4,000

60,000

A) 5,000
B) 10,000
C) 40,000
D) 60,000
E) 70,000
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A5
45) What is the
EMV for Option 1 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.6

.4

Option 1

200

300

Option 2

50

350

A) 200
B) 240
C) 250
D) 260
E) 300
Answer: B
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
46) What is the
EMV for Option 2 in the following decision table?
States of Nature


Alternatives

S1

S2

p

.6

.4

Option 1

200

300

Option 2

50

350

A) 50
B) 100
C) 170
D) 200
E) 350
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
47) What is the
expected value with perfect information in the following decision table?
States of Nature


Alternatives

S1

S2

p

.6

.4

Option 1

200

300

Option 2

50

350

A) 50
B) 200
C) 260
D) 300
E) 350
Answer: C
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A5
48) What is the
expected value of perfect information of the following decision table?
States of Nature


Alternatives

S1

S2

p

.6

.4

Option 1

200

300

Option 2

50

350

A) 0
B) 20
C) 50
D) 150
E) 200
Answer: B
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A5
49) A retailer is
deciding how many of a certain product to stock. The historical probability
distribution of sales for this product is 0 units, 0.2; 1 unit, 0.3; 2 units,
0.4, and 3 units, 0.1. The product costs $8 per unit and sells for $25 per
unit. The conditional value for the decision alternative "Stock 3"
and state of nature "Sell 1" is
A) 1.4 units
B) $1 profit
C) $25 profit
D) $8 profit
E) none of the
above
Answer: B
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
50) A retailer is
deciding how many of a certain product to stock. The historical probability
distribution of sales for this product is 0 units, 0.2; 1 unit, 0.3; 2 units,
0.4, and 3 units, 0.1. The product costs $8 per unit and sells for $25 per
unit. The largest conditional value (profit) in the entire payoff table for
this scenario is
A) $24 profit
B) $8 profit
C) $17 profit
D) $51 profit
E) $75 profit
Answer: D
Diff:
2
Topic: Types of decisionmaking
environments
AACSB: Analytic Skills
Objective: LOModule A4
51) Decision
trees
A) give more
accurate solutions than decision tables
B) give less
accurate solutions than decision tables
C) are especially
powerful when a sequence of decisions must be made
D) are rarely
used because one needs specialized software to graph them
E) are too
complex to be used by decision makers
Answer: C
Diff:
2
Topic: Decision trees
Objective: LOModule A6
52) A decision
tree is a(n)
A) algebraic
representation of alternatives and states of nature
B) behavioral
representation of alternatives and states of nature
C) matrix
representation of alternatives and states of nature
D) schematic
representation of alternatives and states of nature
E) tabular
representation of alternatives and states of nature
Answer: D
Diff:
2
Topic: Decision trees
Objective: LOModule A6
53) All of the
following steps are taken to analyze problems with decision trees except
A) define the
problem
B) structure or
draw a decision tree
C) assign
probabilities to the alternatives
D) estimate
payoffs for each possible alternative/state of nature combination
E) solve the
problem by computing expected monetary values for each state of nature node
Answer: C
Diff:
2
Topic: Decision trees
Objective: LOModule A6
54) A primary
advantage of decision trees compared to decision tables is that decision trees
A) are more
accurate
B) are faster
C) are smaller
D) are cheaper
E) can be used
for sequential problems
Answer: E
Diff:
2
Topic: Decision trees
Objective: LOModule A7
55) A problem
that involves a sequence of decisions
A) cannot be
analyzed with expected monetary value
B) can be better
analyzed with a decision tree than by a decision table
C) must be
analyzed in the same order that the decisions are made
D) cannot be
analyzed with decision tree software
E) can only be
analyzed using decision making under certainty
Answer: B
Diff:
2
Topic: Decision trees
Objective: LOModule A7
56) A(n)
__________ is a tabular means of analyzing decision alternatives and states of
nature.
Answer: decision table
Diff:
1
Topic: Decision tables
Objective: LOModule A2
57) __________ is
the criterion for decision making under uncertainty that finds an alternative
that maximizes the minimum outcome or consequences.
Answer: Maximin
Diff:
2
Topic: Decision tables
Objective: LOModule A2
58) __________ is
the criterion for decision making under certainty that assigns equal
probability to each state of nature.
Answer: Equally likely
Diff:
2
Topic: Decision tables
Objective: LOModule A2
59) __________ is
the expected payout or value of a variable that has different possible states
of nature, each with an associated probability.
Answer: Expected monetary value or EMV
Diff:
2
Topic: Decision tables
Objective: LOModule A2
60) __________ is
the difference between the payoff under perfect information and the payoff
under risk.
Answer: Expected value of perfect information or EVPI
Diff:
2
Topic: Decision tables
Objective: LOModule A5
61) A(n)
__________ is a graphical means of analyzing decision alternatives and states
of nature.
Answer: decision tree
Diff:
1
Topic: Types of decisionmaking
environments
Objective: LOModule A5
62) A(n)
__________ is an occurrence or situation over which the decision maker has
little or no control.
Answer: state of nature
Diff:
1
Topic: Decision trees
Objective: LOModule A2
63) The square
symbol used in drawing a decision trees represents a __________ node.
Answer: decision
Diff:
1
Topic: Decision trees
Objective: LOModule A2
64) A branch of a
decision tree that is less favorable than other available options may be
__________.
Answer: pruned or dropped
Diff:
1
Topic: Decision trees
Objective: LOModule A2
65) In the
context of decisionmaking, define state of nature.
Answer: A state of nature is an occurrence or
situation over which the decision maker has little or no control.
Diff:
2
Topic: Fundamentals of decision making
Objective: LOModule A1
66) In the
context of decisionmaking, define alternative.
Answer: An alternative is a course of action or a
strategy that may be chosen by a decision maker.
Diff:
2
Topic: Fundamentals of decision making
Objective: LOModule A1
67) Identify, in
order, the six steps of analytical decision making.
Answer: 1. Clearly define the problem and factors
that influence it.
2. Develop
specific and measurable objectives.
3. Develop a
model–that is, a relationship between objectives and variables (which are
measurable
quantities).
4. Evaluate each
alternative solution based on its merits and drawbacks.
5. Select the
best alternative.
6. Implement the
decision and set a timetable for completion.
Diff:
2
Topic: The decision process in operations
Objective: no LO
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