UNIVERSIDAD DE ZAMBOANGA

SCHOOL OF BUSINESS MANAGEMENT

A. Eustaquio Quadrangle, JS Alano Street, Zone III, Zamboanga
City, 7000 Philippines

FINAL EXAMINATION
AE-1 MANAGEMENT SCIENCE

Name: Date:
Year and Section Score

TEST I. MULTIPLE CHOICE: Read and understand the questions carefully and encircle the
corresponding letter, which you think is the best answer on your answer sheet.   

1.The Laplace approach treats each state of nature as: *

a. equally likely. b. unknown c. the same d. regret free

2. In a profit-maximizing scenario, which approach would be used by an optimistic (or

desperate) decision maker? 
a. minimax regret b. maximum c. maximin d. EMV

3.In a profit-maximizing scenario, which approach would be used by a pessimistic decision

maker? *
a. maximin b. maximum c. minimax regret d. herwicz

4 . Which of these approaches would require having probabilities for the states of nature?  *
a. maximin b. maximum c. minimax regret d. EMV

5.The maximin criterion is a feature of which of the following? 

a. Optimization b. Decision-making under uncertainty
c. Deterministic model d. Decision-making under certainty

6. -------- criterion, is known as the criterion of optimism. *

a. maximax b. maximin c. minimax regret d. herwicz

7. The maximax choice in the preceding table would be: *

 a. buy
b. rent
c. lease

8. The maximin choice in the preceding table would be:

a. buy
b. rent
c. lease

9. The minimax regret choice in the preceding table would be *

a. buy
b. rent
c. lease
10. The Laplace approach choice in the preceding table would be: *

a. buy
b. rent
c. lease

TEST II. DECISION ANALYSIS: Read the scenario carefully and choose the best decision
that is applicable in the situation and explain.

1. Suppose that a business is considering two strategies: buy or sell. If economic conditions
improve, then the strategies will return, respectively, 10% and 6%. If economic
conditions condition unchanged, then the strategies will return, respectively, 1% and 2%.
If economic conditions collapse, then the strategies will return, respectively, -8% and
-3%. Using the maximax criteria, which strategy would the business select? Why?

2. Suppose that a business is considering two strategies: buy or sell. If economic conditions
improve, then the strategies will return, respectively, 10% and 6%. If economic
 conditions condition unchanged, then the strategies will return, respectively, 1% and 2%.
If economic conditions collapse, then the strategies will return, respectively, -8% and
-3%. Using the maximin criteria, which strategy would the business select? why?

3. Suppose that a business is considering two strategies: buy or sell. If economic conditions
improve, then the strategies will return, respectively, 10% and 6%. If economic
conditions condition unchanged, then the strategies will return, respectively, 1% and 2%.
If economic conditions collapse, then the strategies will return, respectively, -8% and
-3%. Using the minimax regret criteria, which strategy would the business select? Why?

TEST – III. ESSAY. Read the question carefully before responding. Be brief and concise as
much as possible.

1.What do you think is the best tools/criterion of non-probability techniques in decision making? Why? 

2. If you are going to make decision what type of criterion of non-probability technique you will use
and why?

“You Learn More From Failure Than From Success. Don’t Let It Stop You. Failure Builds
Character.” – Unknown

Prepared by:
CHRISTINE LEAL-ESTENDER
Instructor