Module 2

Question 1

The first step in the decision analysis process

Answer 1

problem formulation

Question 2

The consequence resulting from a specific combination of a decision alternative and a
state of nature

Answer 2

payoff

Question 3

A table showing payoffs for all combinations of decision alternatives and states of nature

Answer 3

Payoff table

Question 4

a graphical device showing the
relationships among the decisions, the chance events, and
the consequences

Answer 4

Influence Diagram

Question 5

chronological representation of the decision problem

Answer 5

decision tree

Question 6

3 criterias for decision making

Answer 6

Maximax, Maximin, Minimax Regret

Question 7

to identify the best or
recommended decision alternative, we use?

Answer 7

Expected Value Approach

Question 8

sum of the
weighted payoffs for the decision alternative.

Answer 8

Expected value

Question 9

the increase in the expected profit that wouldresult if one knew with certainty which state of nature would occur

Answer 9

Expected value for Perfect Information

Question 10

helps the decision maker recognize the difference between:
 the expected value of a decision alternative, and
 the payoff that might actually occur

Answer 10

Risk Analysis

Question 11

shows the possible payoffs for the decision alternative along with
their associated probabilities

Answer 11

Risk profile

Question 12

can be used to determine how changes to the following inputs affect the recommended decision alternative:
- probabilities for the states of nature
- values of the payoff

Answer 12

Sensivity Analysis