The fifth step in the decision making process is "Identifying the pay-off matrix for each combination of alternatives."In this step, the matrix for each alternative and event combination is generated and the outcomes are written to the matrix.

Other options can be found in payoff section of a decision tree. 

In both the objective function and constraints, the contribution of every decision variable is proportional to its value. As a result, proportionality assumption casts out any variable that has an exponent other than 1. Consider a firm that aims to maximize its profits under the constraint of its production costs. In practice, production costs are not the same for different levels of production as higher production lowers costs by the economies of scale. To avoid a violation of the proportionality assumption, some characteristics of real-life situations such as economies of scale must be ignored. That undoubtedly makes the model less reliable. The correct answer is A.

In the maximization models, the objective function is alternatively named profit function. The logic behind this is the utmost goal of maximizing something is to gain a benefit or a “profit”. The correct answer is D.

EMV max : x = 70 (0.3) + 90 (0.5) + 60 (0.2) = 21 + 45 + 12 = 78 . pg. 36. Correct answer is E.

First, the maximum values are determined for each alternative. Then, the highest value (40.000 TL) and the alternative for that value (District 4) is selected. The correct answer is D.

Decisions are given to accomplish a specific purpose. Decision making problems have two objectives: maximization and minimization (selecting the alternative that makes the maximum profit or the number of customers and selecting the alternatives that makes the minimum cost or transportation time). The correct answer is C.

In the minimization models, draw a line parallel to the objective function and near to the origin. This line should contain at least one point of the feasible region. Find the coordinates of this point by solving the equations of the drawn line and the boundary line(s) of the feasible region. The correct answer is B.

The foundation of operations research is mostly cited to studies and applications in the U.S. Army right before The World War II. However, Leonid V. Kantorovich is recognized as the first to explore this area. In 1939, Kantorovich published a paper on a method for a production plan which he claimed to be the optimal way. This study included a linear program without a systematic solution. The systematic solution which is called “simplex algorithm” was later introduced by George B. Dantzig, who had planning experience in the U.S. Army Air Force. Tjalling C. Koopmans, who built a model for ship routes, was another contributor to the field. He and Kantorovich shared 1975 Nobel Prize in economics for their studies on the optimal allocation of resources. Industrial applications of linear programming stemmed from the oil industry after William W. Cooper and his colleagues’ publications about the efficient blending of aviation fuels. As the computational ability of the solver systems advanced rapidly, operations research started to be used widely. Operations research applications, particularly linear programming, is now a standard method used in a variety of areas and processes. Some of these are urban planning, currency arbitrage, investment, production planning, inventory control, blending and refining, manpower planning, agricultural planning, diet & nutrition, transportation and, logistics.

As also understood from the information given, the correct answer is E. All of the statements above about the historical development of operations research are correct.

In practice, linear programming has some limitations that deteriorate the model fitness to real-life situations. There is a trade-off between suitability and solvability of the problem. Linear programming provides solutions under some assumptions. These are proportionality, additivity, divisibility and certainty assumptions. As also understood from the information given, the correct answer is E. These are important to mention as it will be easier for operations researcher to evaluate how well linear programming applies to a given problem. In both the objective function and constraints, the contribution of every decision variable is proportional to its value. As a result, proportionality assumption casts out any variable that has an exponent other than 1. Consider a firm that aims to maximize its profits under the constraint of its production costs. In practice, production costs are not the same for different levels of production as higher production lowers costs by the economies of scale. To avoid a violation of the proportionality assumption, some characteristics of real-life situations such as economies of scale must be ignored. That undoubtedly makes the model less reliable. Either it is the objective or the constraints, every function is the sum of the individual contribution of the respective variables. This is called the additivity assumption, which prohibits cross-product terms in the expressions of a linear program. This assumption restricts the model design as well. For instance, a linear maximization model of aggregate revenue to be received from complementary products has to exclude cross-product terms that proxy the multiplier effect of each product over the other. In a linear program, decision variables are not limited to integer values. In fact, they are divisible. In certain situations, the divisibility assumption does not hold as some decision variables can only be an integer. Methods of integer programming, which are not in the scope of this book, overcome this obstacle. The last assumption is certainty, which means that each parameter of a linear programming model is constant in all conditions. In real applications, factors affecting the decisions are not as stable as they are strictly assumed. In the modeling phase, all these assumptions need to be considered while preserving an acceptable level of similarity between reality and what is realized.

A3 with 9,33 is the most appropriate decision according criterion of realism. 

Although often good decisions yield bad results, successful outcomes will be achieved with decision analysis in the long term. On the other hand, the high quality decision should bring more profitability and lower costs, shorten delivery times, increase shareholder value, attract more new customers and provide positive responses from customers.The correct answer is 'E'.

The problem is related to the number of workers and therefore it is about manpower planning. The correct answer is A.

The correct answer is E as shown below:

The probability of occurrence of each event is 1/3.

A1 = 4*(1/3)+7*(1/3)+5*(1/3) = 5.33

A2 = 5*(1/3)+3*(1/3)+8*(1/3) = 5.33

A3 = 1*(1/3)+9*(1/3)+7*(1/3) = 5.67

The process of choosing the most appropriate one of the alternatives is called “decision making”.

The expected value of perfect information (EVPI) is the difference between the expected value under certainty and the expected value under risk.

An optimal solution is a feasible solution that reaches the most favorable value of the objective function. The correct answer is B.