Exhibit 14.8 The Following Questions Use the Information Below

question 75

Multiple Choice

Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
-Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis?

• A) Incorporating uncertainty via probabilities.
• B) Incorporating risk via utility theory functions.
• C) Incorporating uncertainty via exponential distributions.
• D) Structuring decision strategies via decision trees.

---

Definitions:

Quarterly Demand

Refers to the amount of goods or services demanded by consumers over a three-month period.

Exponential Smoothing

A forecasting method that uses weighted averages of past observations, with the weights decaying exponentially as the observations get older, to predict future trends.

Alpha

A measure of the active return on an investment compared to a market index, used to assess the performance of an investment such as a stock or portfolio.

MAD

An acronym for Mean Absolute Deviation, which measures the average magnitude of errors in a set of predictions, without regard to direction.