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.

Question

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.

Quizplus · Accepted Answer

Decision analysis typically involves incorporating uncertainty through probabilities and structuring decision strategies via decision trees, rather than using exponential distributions directly for this purpose. Exponential distributions are more specific to modeling time until an event occurs and are not a general tool for incorporating uncertainty in decision analysis.

Exhibit 14.8 The Following Questions Use the Information Below