QUESTION 1 A decision tree a. presents all decision alternatives first and follo

ID: 470350 • Letter: Q

Question

QUESTION 1 A decision tree

a. presents all decision alternatives first and follows them with all states of nature.

b. presents all states of nature first and follows them with all decision alternatives.

c. alternates the decision alternatives and states of nature.

d. arranges decision alternatives and states of nature in their natural chronological order.

QUESTION 2 Lakewood Fashions must decide how many lots of assorted ski wear to order for its three stores. Information on pricing, sales, and inventory costs has led to the following payoff table, in thousands What decision do you expect a conservative person will take?

a. Alternative 1 (1 lot)

b. Alternative 2 (2 lots)

c. Alternative 3 (3 lots) d. There was a tie

QUESTION 3 A payoff table is given as If the probabilities of s1, s2, and s3 are .2, .4, and .4, respectively, then what decision should be made under expected value?

a. 10

b. 8.2

c. 9.6

d. 7.6

QUESTION 4 Continuing with question above, what is the EVPI?

a. 10.1

b. 12.4

c. 9.6

d. 2.8

QUESTION 5 Which of the following forecasting methods puts the least weight on the most recent time series value?

a. exponential smoothing with Alpha = .8

b. exponential smoothing with Alpha = .2

c. weighted moving average using the most recent 3 periods with weights of 0.7, 0.2, and 0.1

d. Cannot tell

QUESTION 6 The number of cans of soft drinks sold in a machine each week is recorded below for the last 10 weeks (from oldest to newest). Develop forecasts for week 11 using a three period moving average. 338, 219, 278, 265, 314, 323, 299, 235, 285, 350

a. 282.67

b. 290

c. 297.67

d. 310

QUESTION 7 As one increases the number of periods (n) used in the calculation of a moving average, greater emphasis is placed on more recent data.

a.True

b.False

QUESTION 8 Forecast errors can never be negative

a. True

b. False

QUESTION 9 The number of girls who attend a summer basketball camp has been recorded for the seven years the camp has been offered. The data is as follows: 47, 68, 65, 92, 98, 121, 146 Use exponential smoothing with a smoothing constant of .8 to forecast attendance for the eighth year (assume an initial forecast of 47 for first period).

a. 63.80

b. 86.55

c. 125.82

d. 139.99

QUESTION 10 Time series analysis may exhibit which of the following behaviors?

a. seasonality

b. cycles

c. trend

d. all of the above

Explanation / Answer

Question 1

Decision tree represents sequential and complex decisions in a particular connected way. Decision tree starts with the decision node than depending on the situation continues with the decision node or state of nature nodes but in a sequential manner. Thus, decision tree arranges decision alternatives and states of nature in their natural chronological order.

Correct Option: d

QUESTION 2, 3, and 4

Note: Please provide payoff table

QUESTION 5.

As per exponential smoothing method the forecast is given as per the recent period in time series.

Ft = At-1 + (1 – )Ft-1

Where,

Ft = Forecast for time period t

Ft1 = Forecast for time period t1

At1 = Actual value in period (t1)

= Smoothing constant (percentage)

thus, exponential smoothing constant of = 0.2 gives less weighted to the most recent actual time series period.

Correct Option: b

QUESTION 6.

Forecast for week 11by 3-month moving avg. = (total of usage in previous 3 months)/3

F11 = (350 +285 +235)/3 = 290

Correct option: b

QUESTION 7.

As one increases the number of periods (n) used in the calculation of a moving average, the randomness in the time series is smoothed out. Thus, with increasing data points, the emphasis on recent data points is reduced.

Ans: False

QUESTION 8

Forecast errors is difference of forecasted value form actual value, mathematically represented as follow:

Forecast Error = Actual Value – Forecast Value

Ei = Ai - Fi

It is always possible that the actual value may be less than forecast value, thus the forecast error can be negative.

Correct Option: False

Question 9:

As per exponential smoothing method the forecast is given as per the recent period in time series.

Ft = At-1 + (1 – )Ft-1

Where,

Ft = Forecast for time period t

Ft1 = Forecast for time period t1

At1 = Actual value in period (t1)

= Smoothing constant (percentage) = 0.8

F1 = 47

Ft = 0.8At-1 + 0.2Ft-1

F2 = 0.8A1 + 0.2F1 = 0.8 x 47 + 0.2 x 47 = 47

F8 = 0.8A7 + 0.2F7 = 0.8 x 146 + 0.2 x 115.94 = 139.99

Period

Number of girls (At)

Forecast (Ft)

47.00

63.80

64.76

86.55

121

95.71

146

115.94

139.99

Correct Option: d (139.99)

Question 10:

The time series may exhibit trend, seasonality, and cycles along the observed periods.

Correct Option: d. all of the above