Exhibit 14.8 The Following Questions Use the Information Below

question 33

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.
-Every nonprobabilistic method has a weakness for decision making. Which of the following is incorrect regarding a method and its weakness?

• A) The maximax method ignores potentially large losses.
• B) The maximin method ignores potentially large payoffs.
• C) The minimax regret method can lead to inconsistent decisions.
• D) All of these are correct.

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Definitions:

Errors

Mistakes or inaccuracies in data, calculations, or actions that can alter outcomes and interpretations.

Normally Distributed

Describes a distribution that is symmetrical, bell-shaped, and characterized by its mean, median, and mode being equal, commonly occurring in natural and social phenomena.

Oil Quality

The measure and characteristics of oil, including its viscosity, purity, and ability to perform effectively under specified conditions.

Regression Equation

A mathematical equation that describes the linear relationship between an independent variable and a dependent variable.