Questions from Management Science

Q: If you examine the decision tree (or any other decision trees

If you examine the decision tree (or any other decision trees from PrecisionTree), you will see two numbers (in blue font) to the right of each end node. The bottom number is the combined monetary val...

Q: Use SolverTable to run a sensitivity analysis on the cost per assembling

Use SolverTable to run a sensitivity analysis on the cost per assembling labor hour, letting it vary from $5 to $20 in increments of $1. Keep track of the computers produced in row 21, the hours used...

Q: A technological failure implies that the game is over—the product

A technological failure implies that the game is over—the product must be abandoned. Change the problem so that there are two levels of technological failure, each with probability 0.1. In the first l...

Q: The model has only two market outcomes, good and bad,

The model has only two market outcomes, good and bad, and two corresponding predictions, good and bad. Modify the decision tree by allowing three outcomes and three predictions: good, fair, and bad. Y...

Q: The terms prior and posterior are relative. Assume that the test

The terms prior and posterior are relative. Assume that the test has been performed, and the outcome is positive, which leads to the posterior probabilities shown. Now assume there is a second test, i...

Q: In the original OJ Simpson trial, it was accepted that OJ

In the original OJ Simpson trial, it was accepted that OJ had battered his wife. OJ’s lawyer tried to negate the impact of this information by stating that in a one-year period, only 1 out of 2500 bat...

Q: Explain what it means in general when we say a risk-

Explain what it means in general when we say a risk-averse decision maker is willing to give up some EMV to avoid risk? How is this apparent in certainty equivalents of gambles?

Q: Using the finished version of the file, use a data table

Using the finished version of the file, use a data table to perform a sensitivity analysis on the risk tolerance. Specifically, let the risk tolerance in cell B12 vary from $10,000 to $100,000 and kee...

Q: You saw how Acme prefers to abandon the product when the risk

You saw how Acme prefers to abandon the product when the risk tolerance in cell B12 is $5000 (really $5 million). This is despite the fact that the EMV from continuing with the product is well above 0...

Q: Starting with the finished version, change the decision criterion to “

Starting with the finished version, change the decision criterion to “maximize expected utility,” using an exponential utility function with risk tolerance $5000 (really $5 million). Display certainty...