When the decision maker knows everything about the problem and outcomes of the events, the decision making environment is called “decision making under certainty”. In this case, because the decision maker knows everything about the problem, it is easier to make the best decision. The correct answer is "D".

In case of uncertainty, two different ways are followed to make a good decisions. One of them is the simulation which different combinations of possible demands and startup costs will be tried on the computer. Thus, this simulation can give us a better idea of the possible values of the profit obtained. The other method is to use mathematical and statistical methods to calculate the expected value of the profit without simulation. The correct answer is A.

A linear expression appears below; the powers of its variables x and y are equal to one.

2x – 3y

A linear constraint requires a linear expression to be equal to a number, to be less/greater than or equal to a number.

x + y = 4

x – 3y ? 2

x ? y

The last expression stated above is called a non-negativity constraint, which requires the value x to be greater or equal to zero. A linear program either minimizes or maximizes a linear expression subject to defined linear constraints.

As also understood from the information given, the correct answer is E. All expressions in the options are non-negativity constraints.

A linear expression appears below; the powers of its variables x and y are equal to one.

2x – 3y

A linear constraint requires a linear expression to be equal to a number, to be less/greater than or equal to a number.

x + y = 4

x – 3y ≤ 2

x ≥ y

The last expression stated above is called a non-negativity constraint, which requires the value x to be greater or equal to zero. A linear program either minimizes or maximizes a linear expression subject to defined linear constraints. The correct answer is E.

In criterion of pessimism, the decision maker thinks that the worst outcomes for each alternative will be realized.

A decision tree is composed of some components as; branches, decision nodes, chance nodes, and payoffs. The correct answer is E.

Bayes’ theorem provides a way for combining prior probabilities with probabilities obtained by other sources; revised or posterior probabilities.

The first step in the decision-making process is to define the problem. Perhaps this is the most important and most difficult part of the process. At this step, it is very important to describe the problem statement clearly and concisely.

In application of the Criterion of Optimism, when the objective function is maximization, the maximum values for the alternatives are determined. The highest of these maximum values is selected.

Outcomes/Pay-Offs: These are the values of alternatives and events. Outcomes are usually numeric values. The correct answer is "D".

EMV min : x = 50 (0.3) + 110 (0.2) + 30 (0.3) = 56 . pg. 36. Correct answer is A.

Problem statement gives direction and meaning to all other steps of decision making. If the problem is incorrectly determined in this step, the decision will be wrong.

The decision variables are The quantities, x1 for bonds and x2 for stocks. The objective function seeks to maximize total yields of the holdings and is thus expressed as Maximize Z = (5 × 0.25)x1 + (10 × 0.50)x2 A constraint of the model reflects the liquidity requirements at the end of the year x1 + 0.8x2 ≥ 80 Another constraint is about the size of the portfolio and related to prices of the securities 5x1 + 10x2 ≤ 1000 Percentage limits of the funds to be invested in stocks should not be less than 20% and more than 40%. That means the money spent on stocks cannot exceed the %40 of the total amount of money spent on both types of security. On the other side, the money spent on stocks cannot drop down under %20. These constraints are 10x2 ≤ 0.40 (5x1 + 10x2 ) 10x2 ≥ 0.20 (5x1 + 10x2 ) Simplified expressions of these are 6x2 – 2x1 ≤ 0 and 8x2 – x1 ≥ 0. The correct answer is B.

The first step in the decision-making process is to define the problem. This step includes a good understanding of management assumptions, organizational boundaries and the desired conditions for the problem. In order to identify the problem, all information about it should be collected, factors and causes associated with the problem should be determined. The correct answer is B.

90 . pg. 39 . Correct answer is C.

A1 : x1 = (100 – 50) (0.2) + (110 – 110) (0.3) + (60 – 30) (0.5) = 10 + 0 + 15 = 25 ; A2 : x2 = (100 – 100) (0.2) + (110 – 60) (0.3) + (60 – 50) (0.5) = 0 + 15 + 5 = 20 ; A3 : x3 = (100 – 70) (0.2) + (110 – 90) (0.3) + (60 – 60) (0.5) = 6 + 6 + 0 = 12 . pg. 37 . Correct answer is C.

As known, the probability values change from 0 to 1, where 0 means the event occurrence probability is low and 1 means this probability is high. The process of determining probabilities for states of nature is very important. In the decision making process under risk, a probability value must be determined for the chance of realization of all states of nature in the strategy table and the sum of all probabilities of states of nature must be equal to 1. After these possibilities are added to the strategy table, the decision maker should determine which approach will be used to select the best course of action. The correct answer is B.

A3 with 6 is the most appropriate decision according to minimax regret method.