Questions from Management Science

Q: In the previous question, suppose you have the option of receiving

In the previous question, suppose you have the option of receiving a check for $2700 instead of making the risky decision described. Would you make the risky decision, where you could lose $5000, or w...

Q: Sometimes a “single-stage” decision can be broken down

Sometimes a “single-stage” decision can be broken down into a sequence of decisions, with no uncertainty resolved between these decisions. Similarly, uncertainty can sometimes be broken down into a se...

Q: In a classic oil-drilling example, you are trying to

In a classic oil-drilling example, you are trying to decide whether to drill for oil on a field that might or might not contain any oil. Before making this decision, you have the option of hiring a ge...

Q: Your company has signed a contract with a good customer to ship

Your company has signed a contract with a good customer to ship the customer an order no later than 20 days from now. The contract indicates that the customer will accept the order even if it is late,...

Q: You must make one of two decisions, each with possible gains

You must make one of two decisions, each with possible gains and possible losses. One of these decisions is much riskier than the other, having much larger possible gains but also much larger possible...

Q: A potentially huge hurricane is forming in the Caribbean, and there

A potentially huge hurricane is forming in the Caribbean, and there is some chance that it might make a direct hit on Hilton Head Island, South Carolina, where you are in charge of emergency preparedn...

Q: It seems obvious that if you can purchase information before making an

It seems obvious that if you can purchase information before making an ultimate decision, this information should generally be worth something, but explain exactly why (and when) it is sometimes worth...

Q: Insurance companies wouldn’t exist unless customers were willing to pay the price

Insurance companies wouldn’t exist unless customers were willing to pay the price of the insurance and the insurance companies were making a profit. So explain how insurance is a win-win proposition f...

Q: Can you guess the results of a sensitivity analysis on the initial

Can you guess the results of a sensitivity analysis on the initial inventory in the Pigskin model? See if your guess is correct by using SolverTable and allowing the initial inventory to vary from 0 t...

Q: You often hear about the trade-off between risk and reward

You often hear about the trade-off between risk and reward. Is this trade-off part of decision making under uncertainty when the decision maker uses the EMV criterion? For example, how does this work...