Ch. 9 - Model-Based Decision Making: Optimization and Multi-Criteria Systems

Question 1

Modeling can be viewed as a science in its entirety.

Answer 1

False

Question 2

If linear programming can be successfully applied a problem, the output is usually optimal.

Answer 2

True

Question 3

In order to be effective, analysts must use models to solve problems with no regard to the organizational culture to find optimal results.

Answer 3

False

Question 4

AHP (Analytic Hierarchy Process) can be used effectively for optimization with problems containing a small number of alternatives.

Answer 4

True

Question 5

The trend is towards developing and using Web tools and software to access and run modeling software.

Answer 5

True

Question 6

Using data cubes in OLAP systems opens the data up to analysis by more classes of models.

Answer 6

False

Question 7

Another name for result variables is independent variables.

Answer 7

False

Question 8

Taking a decision under risk is different from taking the decision under uncertainty.

Answer 8

True

Question 9

Spreadsheets are the second most popular tool for modeling.

Answer 9

False

Question 10

Linear programming seeks to optimally allocate resources among competing activities and is likely the best known optimization model.

Answer 10

True

Question 11

When using Excel’s Solver, we can have multiple constraints and multiple objective cells.

Answer 11

False

Question 12

Most managerial problems can be properly evaluated and solved using a single goal, such as profit maximization.

Answer 12

False

Question 13

Sensitivity analysis seeks to assess the impact of changes in the input data and parameters on the proposed solution.

Answer 13

True

Question 14

Goal seeking is roughly the opposite of “what-if” analysis.

Answer 14

True

Question 15

Using expected value (EV) with decision trees is totally appropriate for situations where one outcome could lead to an immense loss for the company.

Answer 15

False

Question 16

The analytic hierarchy process incorporates both qualitative and quantitative decision making criteria.

Answer 16

True

Question 17

Using modeling for decision support can currently achieve all of the following EXCEPT
A) enhance the decision making process.
B) enable organizations to see likely results of their decisions.
C) replace strategy formulation at top levels of the organization.
D) reduce the costs of providing services to customers.

Answer 17

C) replace strategy formulation at top levels of the organization.

Question 18

Environmental scanning is important for all of the following reasons EXCEPT
A) organizational culture is important and affects the model use.
B) it is critical to identify key corporate decision makers.
C) environmental factors may have created the current problem.
D) environments have greater impact on a model than the organization does.

Answer 18

D) environments have greater impact on a model than the organization does.

Question 19

Today, it is critical for companies to consider
A) how to get products to the right customer.
B) how to sell products at the right price.
C) how to package products in the right format.
D) all of the above

Answer 19

D) all of the above

Question 20

Models can be built with the help of human knowledge and expertise. Another source of help in building these models is
A) the customer.
B) classification and clustering methods.
C) customer service reps.
D) business partners.

Answer 20

B) classification and clustering methods.

Question 21

What is an influence diagram?
A) a diagram showing the influence of decision makers
B) a graphical representation of a model
C) a map of the environment around decision makers
D) a map of the environment around a model

Answer 21

B) a graphical representation of a model

Question 22

Spreadsheets are particularly useful for all of the following reasons EXCEPT
A) they are able to import and export to many different file formats.
B) it is easy to manipulate data and see results instantly.
C) they can be used to build static and dynamic models.
D) they easily import and manipulate massive databases.

Answer 22

D) they easily import and manipulate massive databases.

Question 23

Linear programming belongs to a family of tools called
A) decision tree models.
B) qualitative models.
C) mathematical programming models.
D) heuristic programming models.

Answer 23

C) mathematical programming models

Question 24

Which of the following is NOT a component of a linear programming problem?
A) internal metrics
B) constraints
C) objective function
D) decision variables

Answer 24

A) internal metrics

Question 25

In an LP model, what does the fourth hidden component contain? A) product mix variables B) slack and surplus variables C) financial and accounting variables D) constraint and limit variables

Answer 25

B) slack and surplus variables

Question 26

Managers in organizations typically have A) single goals that can be optimized using linear and nonlinear programming. B) a small number of goals that can be independently optimized using linear and nonlinear programming. C) single goals that cannot be optimized using linear and nonlinear programming. D) multiple goals that need to be simultaneously or jointly optimized.

Answer 26

D) multiple goals that need to be simultaneously or jointly optimized.

Question 27

Sensitivity analysis is important in management support systems for all of the following reasons EXCEPT A) it allows flexibility and adaptation to changing conditions. B) it permits the manager to input data to increase his/her confidence in the model. C) it improves the mathematical optimality of the generated solutions. D) it provides a better understanding of the model and the decision-making situation.

Answer 27

C) it improves the mathematical optimality of the generated solutions.

Question 28

The question "What will total earnings be if we reduce our inventory stocking costs by 10%?" is a type of A) goal-seeking analysis. B) what-if analysis. C) sensitivity analysis. D) utility modeling.

Answer 28

B) what-if analysis.

Question 29

The question "What advertising budget is needed to increase market share by 7%?" is a type of A) goal-seeking analysis. B) what-if analysis. C) sensitivity analysis. D) utility modeling.

Answer 29

A) goal-seeking analysis.

Question 30

The question "How many servers will be needed to reduce the waiting time of restaurant customers to less than 9 minutes?" is a type of A) goal-seeking analysis. B) what-if analysis. C) sensitivity analysis. D) utility modeling.

Answer 30

A) goal-seeking analysis.

Question 31

Decision trees are best suited to solve what types of problems? A) problems with a large number of alternatives B) problems with a tabular representation C) problems where probabilities are unknown D) problems with a single goal

Answer 31

D) problems with a single goal

Question 32

In handling uncertainty in decision modeling, the optimistic approach assumes A) the best possible outcome of most alternatives will occur. B) the best possible outcome of some alternatives will occur. C) the best possible outcome of each alternative will occur. D) the best possible outcome of one alternative will occur.

Answer 32

C) the best possible outcome of each alternative will occur.

Question 33

In handling uncertainty in decision modeling, what does the pessimistic approach do? A) It assumes the worst possible outcome of one alternative will occur and then avoids it. B) It assumes the worst possible outcome of some alternatives will occur and then selects the best of them. C) It assumes the worst possible outcome of each alternative will occur and then selects the worst of them. D) It assumes the worst possible outcome of each alternative will occur and then selects the best of them.

Answer 33

D) It assumes the worst possible outcome of each alternative will occur and then selects the best of them.

Question 34

Which of the following statements about expected utility is true? A) It does not affect decisions made with expected values. B) Used in decision making, it is an objective value, not subjective. C) Used in decision making, it can bring huge risk to a small startup with limited resources. D) In calculating utility, it assumes the decision will be made thousands of times, making the probabilities more likely on average.

Answer 34

C) Used in decision making, it can bring huge risk to a small startup with limited resources.

Question 35

Which of the following statements about the analytic hierarchy process (AHP) is true? A) It is really not a decision model at all. B) It can handle multiple criteria and goals. C) It is based entirely on quantitative data. D) It is an opaque "black box" in the same way as neural networks.

Answer 35

B) It can handle multiple criteria and goals.