Outcomes/Pay-Offs: These are the values of alternatives and events. Outcomes are usually numeric values.

The line connecting the nodes on a decision tree is called a branch. A branch is a single strategy that connects either two nodes or a node and an outcome. When a decision tree is drawn, a general approach is the direction from left to right is shown; therefore the line that comes to the right of a decision node is called the decision branch, while the line to the right of a chance node is called the chance branch. In decision making problems, decision branches are used to represent alternatives (strategies) and chance branches are used to show the states of nature (events). The chance branch is labeled with a probability which represents the decision maker’s estimate of the probability that a particular branch will be followed. The correct answer is C.

When the decision maker knows everything about the problem and outcomes of the events, the decision making environment is called “decision making under certainty”.

If decision maker has an optimistic approach, Criterion of Optimism method can be used. In this context, if the problem is the minimization, the best outcome is the lowest value. In this case, the alternative which is the smallest value is chosen. Accordingly, the correct answer is B (vending machine 2) with the smallest value (as seen in table above; 1).

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. The correct answer is C.

The third step in the decision making process is "Listing all possible decision alternatives."

When the decision maker knows everything about the problem and outcomes of the events, the decision making environment is called “decision making under certainty”

When the decision maker has no information about the probabilities of occurrence and outcomes of the events, the decision making environment is called “decision making under uncertainty”.

When the decision maker has information about the probabilities of occurrence of the events, the decision making environment is called “decision making under risk”.

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, all of the areas in the options are among the ones in which operations research applications, particularly linear programming, are now used as a standard method for decision making, so the correct answer is E.

Reality Linear programming is only effective if the model you use reflects the real world. Every model relies on certain assumptions and they may be invalid: you assume, for example, that tripling production will triple sales, but in reality it saturates the market. Linear equations sometimes give results that don’t make sense in the real world, such as a result indicating that you should contract to build 23.75 battleships for the Navy to maximize profits how will you deal with the 0.75 in practical terms? Skilled linear programmers can tweak models and equations to deal with these problems, however. The correct answer is C.

When the decision maker has no information about the probabilities of occurrence and outcomes of the events, the decision making environment is called “decision making under uncertainty”.

Operations research is an analytical method for the management of organizations that provides mathematical solutions to decision-making problems. There are definitive steps of this approach that make it analytical:

1. Problem definition
2. System analysis for the problem and data gathering
3. Model construction
4. Model solution and testing
5. The decision of implementing the solution

As also understood from the information given, the correct answer is A.

The correct answer is given in option A. Because if decision maker has an optimistic approach, this method can be used. In this method, whether the objective of problem is maximization or minimization, the best outcome for each alternative is realized and decision maker select the best among these alternatives. If the problem is the minimization, the best outcome is the lowest value. In this case, the alternative which is the smallest value is chosen. The mathematical representation of the method is as follows:

An objective function is the function of a linear programming model that is desired to be maximized or minimized.

The correct answer is D.

Expected (Monetary) Value criterion (EMV), Expected Opportunity Loss criterion (EOL), and the maximum probability criterion are the criterions in decision theory. The correct answer is D.

x = 625 – 575 = 50 . pg. 40 . Correct answer is C.