BUSOBA 2321 FINAL UPDATED
2026/2027 ACTUAL Exam Questions and
CORRECT Answers
Regret Table - ANSWER -- create an additional row ("maximum")
- determine the maximum payoff for each state of nature (column)
- subtract each payoff from the maximum of each state of nature (column)
Minimax Regret criteria (competitive behavior) - ANSWER -Best Among Worst
in Regret Table
- create an additional column ("maximum")
- determine the maximum regret for each decision (row)
- choose the minimum value in the "maximum" column
decisions using probabilities - ANSWER -- expected monetary value (EMV)
- expected opportunity loss (EOL)
Expected Monetary Value (EMV) - ANSWER -- a weighted average that is
calculated by multiplying every payoff of a decision by the probabilities of the
state of nature
- choose the decision with the highest EMV
EMV indifference points - ANSWER -- set the probability of state A to "p" and
state B to "1-p" (state C to "1-p-q", if necessary)
- determine the equation for each decision
- set each decision's EMV equal to one another to find the indifference point
- use a test point to find the best options in an indifference table
Expected Opportunity Loss (EOL) - ANSWER -- a weighted average that is
calculated by multiplying every regret of a decision by the probabilities of the state
of nature
, - choose the decision with the smallest EOL
EOL indifference points - ANSWER -- set the probability of state A to "p" and
state B to "1-p" (state C to "1-p-q", if necessary)
- determine the equation for each decision
- set each decision's EOL equal to one another to find the indifference point
- use a test point to find the best options in an indifference table
Equally Likely Criteria - ANSWER -probability = 1/n
equally likely EMV and EOL - ANSWER -- multiply each payoff (or regret) by
the probability
- sum all those numbers
- divide by n to get the average of the payoffs (or regrets)
expected value with perfect information (EVwPI) - ANSWER -- add a row to the
payoff table ("maximum")
- calculate the EMV using the maximum of each state of nature
expected value of perfect information (EVPI) - ANSWER -EVPI = EVwPI -
maximum (EMVi) for a given value of p
EMV graphing - ANSWER -- take the payoff from the left column and plot it on
the right axis (p=1)
- take the payoff from the right column and plot it on the left axis (p=0)
- connect the points on the graph
- EVwPI connects the maximums of each axis
- EVPI is the region between the EVwPI line and the line containing corner points
decision trees - ANSWER -- time increases from left to right (most current
activity is on the right)
- squares represent decisions and circles represent states of nature
- payoffs are placed at the end of the "branches"
- calculations and decisions are made from right to left
- place the EMV above the corresponding icon
2026/2027 ACTUAL Exam Questions and
CORRECT Answers
Regret Table - ANSWER -- create an additional row ("maximum")
- determine the maximum payoff for each state of nature (column)
- subtract each payoff from the maximum of each state of nature (column)
Minimax Regret criteria (competitive behavior) - ANSWER -Best Among Worst
in Regret Table
- create an additional column ("maximum")
- determine the maximum regret for each decision (row)
- choose the minimum value in the "maximum" column
decisions using probabilities - ANSWER -- expected monetary value (EMV)
- expected opportunity loss (EOL)
Expected Monetary Value (EMV) - ANSWER -- a weighted average that is
calculated by multiplying every payoff of a decision by the probabilities of the
state of nature
- choose the decision with the highest EMV
EMV indifference points - ANSWER -- set the probability of state A to "p" and
state B to "1-p" (state C to "1-p-q", if necessary)
- determine the equation for each decision
- set each decision's EMV equal to one another to find the indifference point
- use a test point to find the best options in an indifference table
Expected Opportunity Loss (EOL) - ANSWER -- a weighted average that is
calculated by multiplying every regret of a decision by the probabilities of the state
of nature
, - choose the decision with the smallest EOL
EOL indifference points - ANSWER -- set the probability of state A to "p" and
state B to "1-p" (state C to "1-p-q", if necessary)
- determine the equation for each decision
- set each decision's EOL equal to one another to find the indifference point
- use a test point to find the best options in an indifference table
Equally Likely Criteria - ANSWER -probability = 1/n
equally likely EMV and EOL - ANSWER -- multiply each payoff (or regret) by
the probability
- sum all those numbers
- divide by n to get the average of the payoffs (or regrets)
expected value with perfect information (EVwPI) - ANSWER -- add a row to the
payoff table ("maximum")
- calculate the EMV using the maximum of each state of nature
expected value of perfect information (EVPI) - ANSWER -EVPI = EVwPI -
maximum (EMVi) for a given value of p
EMV graphing - ANSWER -- take the payoff from the left column and plot it on
the right axis (p=1)
- take the payoff from the right column and plot it on the left axis (p=0)
- connect the points on the graph
- EVwPI connects the maximums of each axis
- EVPI is the region between the EVwPI line and the line containing corner points
decision trees - ANSWER -- time increases from left to right (most current
activity is on the right)
- squares represent decisions and circles represent states of nature
- payoffs are placed at the end of the "branches"
- calculations and decisions are made from right to left
- place the EMV above the corresponding icon
