Chapter 5 Modeling and Analysis

ITrue-False Questions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.

Simulation is a common approach to modeling.

A DSS is designed to determine what will be; an MIS is designed to report what was.
E-commerce has made the need for forecasting obsolete.
There are many different types of models, but an individual DSS can consist of only
one.
Models can be classified as static, dynamic, or both.
Dynamic models take a single snapshot, where everything occurs in a single interval.
Decision-making under certainty is always easy to solve.
Decision-making under uncertainty means there is no way to analyze the decisionmaking problem.
Decision-making under uncertainty is also called probabilistic decision-making.
Stochastic decision-making is one in which the decision-maker considers several
possible outcomes, each with a given probability of occurrence.
Influence diagrams can be constructed with varying degrees of detail.
Due to the complexity of design, DSS models require fourth generation languages for
their development.
The types of decision-making situations that may require analysis (in order of increasing
complexity) are certainty, risk, and uncertainty.
Decision trees are only applicable to problems under certainty.
Linear programming involves experimenting on a model of a system.
Simulation involves experimenting on a model of a system.
What-if analysis is effective in determining the level of input needed to achieve a
desired result.
Goal seeking analysis is effective in determining the level of input needed to achieve a
desired result.

II. Multiple Choice (only one is best correct)

1. Which model is designed to handle optimization of problems with few alternatives?
a. Decision trees
b. Markov analysis
c. Linear programming
d. Heuristic programming
2. Which model is designed to handle optimization via an algorithm?
a. Decision trees
b. Markov analysis
c. Linear programming
d. Heuristic programming
3.

Which model is designed to find a good enough solution using rules?

a. Decision trees
b. Markov analysis
c. Linear programming
d. Heuristic programming
4. Which model is designed to predict the future for a given scenario?
a. Decision trees
b. Markov analysis
c. Linear programming
d. Simulation
5. Which model takes a single snapshot of a situation?
a. Dynamic models
b. Static models
c. Mathematical models
d. Simulation models
6. Long-range planning would be considered to be a ________ model.
a. dynamic
b. static
c. mathematical
d. simulation
7.
a.
b.
c.
d.

Managers prefer to plan under conditions of :

risk.
certainty.
uncertainty.
stochastics.

8.
a.
b.
c.
d.

Investing in real estate is typically a decision of:

single goal under certainty.
single goal under risk.
multiple goal under certainty.
multiple goals under risk .

9. Expected values are computed by multiplying:

a. the largest expected results by their probability.
b. all results by their probabilities, then summing them up.
c. all results by their probabilities, then selecting the best.
d. all probabilities by their expected results.
10. Decision trees are best suited for:
a. one decision in one period.
b. one decision over several periods.

c. several decisions over one period.

d. several decisions over several periods.
11.
a.
b.
c.
d.

The technique of Mathematical programming can be classified as:

simulation.
heuristics.
optimization.
optimization subject to constraints.

12.
a.
b.
c.
d.

Simulation is a:
descriptive approach.
normative approach.
optimization approach.
linear programming approach.

13. Which is a disadvantage of simulation?

a. It is limited to deterministic situations.
b. It does not guarantee an optimal solution.
c. It cannot run on a computer.
e. None of the above.
14.
a.
b.
c.
d.

Which of the following is not an advantage of heuristic programming?

It does not guarantee an optimal solution.
It does not do not consider all feasible solutions.
It may fail in sequential decision situations.
It can sometimes provide optimal solutions.

III. Essay questions

1. Identify when it is appropriate to use heuristics.
It is appropriate to use heuristics when:
input data are inexact or limited.
reality is so complex that optimization models cannot be used.
a reliable exact algorithm is not available.
complex problems are not economical for optimization or simulation or consume excessive
computation time.
improved efficiency of the optimization process is possible.
symbolic, rather than numerical, processing in involved.
quick decisions must be made and computerization is not feasible.
2. Distinguish between static models and dynamic models.
Static models take a single snapshot of a situation. They do not change over time. Dynamic
models are continuously changing. They represent scenarios that change over time.
3.

Distinguish between decision-making under certainty, risk, and uncertainty.

Decision-making under certainty assumes that complete knowledge is available and accessible to
the decision-maker and that the decision-maker knows the exact outcome of each course of action.
It is assumed that there is only one outcome for each alternative.
Decision-making under uncertainty considers situations in which several outcomes are possible
for each course of action. The decision-maker does not know the probability of occurrence of the
possible outcomes.
Decision-making under risk considers situations in which several outcomes are possible; however,
unlike uncertainty, the decision-maker is able to calculate the probability of occurrence.
4.

What is an influence diagram?

An influence diagram is a graphical representation of a model used to assist in model design,
development, and understanding. Influence diagrams provide a means to communicate to the
model builder or development team.

5. Describe What-if analysis, goal-seeking, sensitivity analysis and optimization analysis.

What-if analysis is structured to analyze what happens to the solution of an input variable or
assumption that is changed. Excel Solver is an example of a tool that provides what-if analysis.
What-if analysis is common in expert systems. (an end user makes changes to variables, or
relationships among variables, and observes the resulting changes in the values of other variable. )
Goal-seeking: Reverses of the direction of the analysis done in what-if and sensitivity analysis.
Also called how can analysis. Goal-seeking sets a target value (a goal) for a variable and then
repeatedly changes other variables until the target value is achieved.
Sensitivity analysis: is a special case of what-if analysis. Typically, the value of only one variable
is changed repeatedly, and the resulting changes on other variables are observed.
Optimization analysis: is a more complex extension of goal-seeking analysis. Instead of setting a
specific target value for a variable, the goal is to find the optimum value for one or more target
variables, given certain constraints. Then one or more other variables are changed repeatedly,
subject to the specified constraints, until the best values for the target variables are discovered.
6.

List the steps involved in the simulation process?

Problem definition
Construction of the simulation model
Testing and validating the Model
Design of the experiment
Conducting the experiment
Evaluating the results
Implementation