Mgmt 430 Quiz 3: Which One Of The ✓ Solved

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Mgmt 430 Quiz 3 Name 1 Which One Of The

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.

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.

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 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.

Paper For Above Instructions

Making effective decisions in management is crucial for the success of any business. This discussion focuses on key concepts related to decision-making processes and forecasting, relevant to the MGMT 430 course.

Understanding Decision-Making Statements

The first question addresses the validity of various statements regarding decision-making. Among these, the assertion that "All probabilities are assumed to be equal" is not correct (Option C). In decision-making models, probabilities often reflect varying levels of belief based on past data and forecasts rather than being equal.

Sensitivity Analysis

Question two discusses sensitivity analysis, which is essential for understanding how different variables affect the outcome of a decision-making model. By varying model parameters, managers can determine the robustness of their solutions and identify key drivers of change (Option B).

Maximin Criterion

In question three, we analyze the maximin criterion, also known as the “best of the worst” approach. This strategy is particularly useful in risky scenarios where decision-makers prioritize minimizing potential losses (Option B).

Analyzing Payoff Tables

For questions four and five, payoff tables with alternatives 'Buy', 'Rent', and 'Lease' are analyzed. The maximin strategy suggests choosing the alternative with the best worst payoff; here, 'Lease' provides a guarantee of 55, making it the maximin choice (Option C). In terms of maximum likelihood, evaluating the expected payoffs suggests 'Rent' as the optimal alternative based on the probabilities assigned to market conditions (Option B).

Forecasting Basics

Forecasting is integral to strategic planning as highlighted in questions six and seven. Effective forecasts enable managers to anticipate future trends (Option A), facilitating informed decisions in sales, inventory, and production planning (Option E).

Costs of Inaccurate Forecasts

Question eight discusses the repercussions of inaccurate forecasting, which can lead to lost sales, inappropriate inventory levels, and understaffed operations, ultimately affecting profits (Option E). Organizations must invest in reliable forecasting methods to mitigate these risks.

Time-Series Analysis

Question nine evaluates time-series data behavior, which can reflect notable trends, cycles, and seasonal patterns. Understanding these behaviors aids managers in making better forecasts and aligning their strategies with market dynamics (Option E).

Moving-Average Forecasts

Finally, question ten requires calculating a moving-average forecast based on recent demand periods. This technique smooths out short-term fluctuations to highlight longer-term trends, facilitating better decision-making about future demand (Specific calculation details needed for response based on provided historical data).

In conclusion, an understanding of decision-making principles and tools, such as sensitivity analysis, payoff tables, forecasting, and time-series behavior, empowers managers to make informed strategic decisions. The proper application of these concepts can significantly impact a business's performance, driving both efficiency and effectiveness in an increasingly complex environment.

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