All T/F are 2 points each. Solve all problems to 3 decimal points True/False, a=

Question

All T/F are 2 points each. Solve all problems to 3 decimal points True/False, a=True.bafalse 1. Simulation modeling is the science/art of developing S. A sensitivity plot would illustrate how the decision changes as the probability of a decision alternative changes. Forecasting is part of predictive analytics and based on data obtained in the sales and marketing department. In time series forecasting models time is the Y variable. computer based models that mimic the behavior of 6. 2. Randomness relates to different outcomes that are 3. Monte Carlo simulation models can be developed in 4. The States of Nature are the alternatives being an existing/ proposed system. controlled by the decisions maker. Excel. considered 7. 8. In regression models a low R2 means a good fit. 9. The main benefit of simulation is that we can experiment in a virtual environment. 10. The payoff table provides the relationship between SNs and DAS

Explanation / Answer

1. True

Simulation is used to imitate real-world processes and system operations overtime. Hence, it can be understood as the science or art of developing computer based models that can be used to mimic any existing or proposed system behaviors.

2. False

Randomness relates to different outcomes that are NOT in control of the decision maker, thus known as random. For example: number of customers arriving, yield of an activity, etc.

3. True

Monte Carlo Simulation models use probability curves to determine an outcome’s likelihood. This can be created in excel using Rand() function for creating random numbers within the distribution, and finding its probability to estimate the outcome.

4. False

States of nature are the outcomes with which probabilities are associated in decision theory. Alternatives being considered are then evaluated for every state of nature to determine the expected payoff, for that alternative, given a state of nature.

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