The Central Limit Theorem

question 59

Multiple Choice

The Central Limit Theorem:

• A) is the theoretical foundation of the c-chart.
• B) states that the average of assignable variations is zero.
• C) allows managers to use the normal distribution as the basis for building some control charts.
• D) states that the average range can be used as a proxy for the standard deviation.
• E) controls the steepness of an operating characteristic curve.

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Definitions:

Minimax Strategy

A decision-making strategy, especially in game theory, aiming to minimize the possible loss for a worst case (maximum loss) scenario.

Largest Cost

Refers to the highest expense in either a specific project or operation typically identified to assess and reduce financial outlays.

Payoff Table

A table used in decision analysis to display the outcomes of different strategies under various states of nature.

Decision Tree Model

A tool for making decisions and predicting outcomes, where choices branch into subsequent potential consequences, forming a tree-like structure.