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11 Cards in this Set
- Front
- Back
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What is a model and name three types.
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A model is an abstraction of reality.
-physical: prototype of an airplane schematic: blue print mathematical: area = length x width |
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Models with the help of the techniques of
management science help managers: |
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What are the steps in The Decision Process
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Name two causes of poor decisions and explain
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Bounded Rationality: The limitations on decision making
caused by costs, human abilities, time, technology, and availability of information Suboptimization: The result of different departments each attempting to reach a solution that is optimum for that department |
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What are the three decision environments?
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-The result of different
departments each attempting to reach a solution that is optimum for that department Uncertainty - Environment in which it is impossible to assess the likelihood of various future events Risk - Environment in which certain future events have probable outcomes |
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Decision theory is suitable for a wide range of operation management decisions such as:
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-capacity planning
- location planning - product and service design - equipment selection |
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What are the decision theory elements?
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what is the decision theory process?
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What are the different types of decisions you can make under "uncertainty"?
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Maximin - Choose the alternative with the
best of the worst possible payoffs Maximax - Choose the alternative with the best possible payoff Equally likely (Laplace) - Choose the alternative with the best average payoff of any of the alternatives Minimax Regret - Choose the alternative that has the least of the worst regrets |
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What is expected monetary value?
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Expected Monetary Value (EMV) - for an
alternative is the sum of possible payoffs of the alternative, each weighted by the probability of that payoff occurring. this is what you use for decision trees with different %'s for different states of nature to decide which path is best. |
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What is expected value of perfect information?
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Expected Value of Perfect Information (EVPI) -
the difference between the expected payoff under certainty and the expected payoff under risk EVPI = expected payoff under uncertainty - expected payoff under risk |
