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OMGT 101 (Finals) > Decision Theory > Flashcards

Decision Theory Flashcards

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1
Q

Are the two classifications of decisions according to the degree of certainty.

A

Deterministic Model and Probabilistic Model

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2
Q

The manager assumes complete certainty and each strategy results in a unique payoff.

A

Deterministic Model

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3
Q

Each strategy results in more than one payoff and tye manager attaches a probability measures to these payoffs.

A

Probabilistic Model

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4
Q

Can be viewed as occurring on the two extremes of scale, which represents the range of assumed certainty.

A

Decision-making under certainty (DMUC) and Decicion-making under uncertainty (DMUU)

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5
Q

The area between the two extremes of scale and aligns with the idea of probabilistic model is called as

A

Decision-making under risk (DMUR)

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6
Q

These are the other classification of decisions that must be taken into consideration before creating a model.

A

Linear or non-linear behavior, static or dynamic conditions, single or multiple objectives

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7
Q

Is a study that emphasizes technique for choosing tye best course of action when there are several options and it is impossible to foresee how they will work out. Its primary goal us to make a decision under risk and uncertainty.

A

Decision theory

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8
Q

Conclusion of a process designed to weigh the relative
utilities or merits of a set of available alternatives so that the most preferred course
of action can be selected for implementation.

A

Decision

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9
Q

Resolution made after thoughtful consideration.

A

Decision

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10
Q

Entails doing all
required to determine which option is most suited to achieving the desired goal or
objective.

A

Decision-making

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11
Q

Needs to include a set of
priorities, a system of goals or objectives, techniques for listing all possible and viable route options, and a way for determining which option is most beneficial.

A

Decision-making

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12
Q

According to management theory, the fundamental role of management is to

A

Allocate resources to achieve organizational goals

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13
Q

Why must a decision be made?

A

Resources are limited, human
desires and needs are diverse and limitless, and everyone seeks to meet their
requirements in a setting with finite resources.

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14
Q

Are taken to achieve
these goals and objectives.

A

Decisions

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15
Q

Helps in making a choice that will best meet their needs.

A

Decision Theory

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16
Q

There is friction between two persons while they are working in an organization because of their different

A

Behavior, attitude, mindsets

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17
Q

Each department in an organization has a goal of its own, but they are
dependent on the general objective of the organization.

A

Decision and Conflict

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18
Q

Decision-makers must take into account all these elements of decision-making to minimize the impact of conflicts across departments or between subordinate goals to achieve the overall objective of the organization.

A

Through the fire

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19
Q

It is crucial and requires the application of multiple
considerations such as psychological, philosophical, economic, sociological,
statistics, and even political science and operations research.

A

Decision Theory

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20
Q

What are the two phases of decision making?

A
  1. Decision-maker sets up a structure of details to come up with the decisions.
  2. Decision-maker is now in the process of analyzing all the
    considerations and the process of selecting the optimal strategy.
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21
Q

Decisions can be categorized generally as

A

Strategic and Administrative Decisions

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22
Q

Involves the external environment of the organization

A

Strategic Decisions

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23
Q

Are made for daily operations.

A

Administrative Decisions

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24
Q

Other classifications relating to the nature of problem are

A

Programmed and Non-Programmed Decisions

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25
Q

Which provide solutions for clearly structured
and repetitive problems.

A

Programmed Decisions

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26
Q

Which answer unusual or
non-routine problems.

A

Non-Programmed Decisions

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27
Q

Some types of decisions rely on their scope, complexity, and the
measurement of involved people in the decision which are called

A

Individual and Managerial Decisions

28
Q

May include solutions to ethical dilemmas for instance.

A

Individual Decisions

28
Q

Are larger in scope and more
complex.

A

Managerial Decisions

29
Q

In the aspect of the sphere of interest, whether it is political, economic, or scientific, etc., decisions can be classified as

A

Static or Dynamic Decisions

30
Q

Need only one
decision

A

Static

31
Q

A series of decisions

A

Dynamic

32
Q

Steps in Decision Theory Approach

A
  1. Decision-maker must list all the possible strategies that are feasible and need to be considered in the decision.
  2. After the alternatives are listed, the latter projects and enumerates the states
    of nature known as future events.
  3. Continuing the process, payoff tables will then be constructed. In this step, each payoff table created contains one viable alternative paired with a state of
    nature.
33
Q

When decisions made by the managers reach complete certainty on the scale
of assumed certainty.

A

Decision-making under certainty (DMUC)

34
Q

This model provides an overview in which there is more than one outcome, and managers know the probability measure of each outcome.

A

Decision-making under risk (DMUR)

34
Q

This scenario of decision-making can be described as measurable wherein managers
know the basis for deciding. Moreover, It implies that the state of nature is clear and
highly probable which follows the approach of a deterministic model.

A

DMUC

34
Q

The optimal strategy in decision-making under risk is identified by the strategy with the

A

Highest expected utility (or highest expected value)

34
Q

Is the most popular
and widely used method in decision-making under risk. It is defined as the product of payoffs of each state of nature and probabilities of the respective states of nature

A

Expected Monetary Value (EMV)

35
Q

Is equal to the maximum of the EMVs of all decision alternatives.

A

Optimal Expected Monetary Value (OEMV)

35
Q

Is formulated exactly in the same way as decision-making under risk, the only difference is that no probability to each strategy is attached.

A

Decision-making under uncertainty (DMUU)

35
Q

Two approaches to solving the problem of decision-making under uncertainty:

A

Pessimistic and Optimistic Approach

35
Q

Determines the best possible outcome in each strategy.

A

Criterion of Optimism

35
Q

Determines the worst possible outcome in each strategy.

A

Criterion of Pessimistic

36
Q

The criteria that minimize the
maximum regret.

A

Criterion of Regret/Opportunity Loss Matrix

37
Q

Assumes that all probability of occurrence for the state of nature are equal, and thus each state of nature is equally likely.

A

Equal Probability Criterion

38
Q

In criterion of _____, the idea is to choose the maximum of the maximum values or Maximax

A

Optimism

39
Q

Under this criterion, first, determine the worst possible outcome in each strategy (row minimums), and select the best of the worst outcome. This
process is also known as Maximin.

A

Pessimism

40
Q

In each column, identify the highest element and then subtract all the individual elements of that column, cell by cell, from the highest
element to obtain the corresponding column of the regret matrix.

A

Criterion of Regret/Opportunity Loss Matrix Applied

41
Q

Is applied when no objective evidence is present. As
these objectives are not evidence in the problem, equal probabilities can be applied
to each state of nature.

A

Equal Probability Criterion or Laplace Criterion/Criterion of
Insufficient Reason.

42
Q

This model provides an overview of the competitive situations in which competitors or opponents apply logical processes and techniques to choose a strategy that best suits their situation.

A

Decision-Making Under Conflict and Competition

43
Q

Which means that whatever one gains, one will lose the
same.

A

2 Person Zero Sum Game

44
Q

If a single strategy is chosen by the player.

A

Pure Strategy Game

45
Q

It falls under making decisions under uncertainty. It is also known as the weighted average criterion, which is a compromise between the
optimistic (maximax) and pessimistic (maximin) decision criteria.

A

Hurwicz Criterion (Criterion of Realism)

46
Q

Only one decision is made at a single stage, and the available data are not subject to revision. However, there are situations where it is necessary to make
several decisions simultaneously. Due to the impact of one decision on subsequent decisions, these problems have become a multistage problem.

A

Decision Trees

47
Q

In cases where the business requires a sequence of decisions, it can utilize a functional device known
as a __________. It is a schematic representation of a decision
problem.

A

Decision Tree

48
Q

Decision tree consists of

A

nodes, branches, probability estimates, and payoffs

49
Q

There are two (2) types of nodes:

A

Decision node and Chance node

50
Q

It is represented by a square, which requires a conscious decision to be made, to choose one of the branches that emanate from the node.

A

Decision node

51
Q

There are also two (2) types of
branches:

A

Decision branch and Chance branch

52
Q

It is denoted by parallel lines that represent a strategy or a course of action.

A

Decision branch

53
Q

It is represented by a single line that represents a chance-determined event.

A

Chance branch

54
Q

When a branch marks the end of a decision tree, it is not followed by a decision, or the
chance node will be called a

A

Terminal branch

55
Q

______ can either be positive or
negative. They can also be associated with a decision or chance branch. These can be placed alongside the appropriated branch, except that these are associated with the terminal branches of the decision tree will be shown at the end of these branches.

A

Payoff

56
Q

There are no chance nodes,
and only one decision is involved in a

A

Single-stage deterministic decision tree

57
Q

It contains at least one chance node and involves the making of only one decision.

A

Single-stage stochastic decision tree

58
Q

It contains at least one chance node and involves the making
of a sequence of decisions.

A

Multistage stochastic decision tree

OMGT 101 (Finals) (3 decks)

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