Opman 5.1

Flashcards covering key concepts and definitions regarding decision theory and decision-making processes.

Decision Theory

A general approach to decision-making that provides a framework for analyzing decisions in operations management.

Maximax

Decision criterion that involves choosing the alternative with the best possible payoff, representing an optimistic approach.

Maximin

Decision criterion that involves choosing the alternative with the best of the worst possible payoffs, representing a conservative approach.

Laplace Criterion

Decision-making method that selects the alternative with the best average payoff when the likelihood of future states is unknown.

Minimax Regret

Decision criterion that selects the option with the least potential for regret or opportunity loss.

Bounded Rationality

The limits on decision making due to constraints like costs, human abilities, time, technology, and information availability.

Payoff Table

A table showing the expected results (payoffs) for each alternative in different possible future conditions.

Confidence

The certainty or assurance that decision makers have regarding future states of nature affecting their decisions.

Uncertainty

An environment where it is impossible to assess the likelihood of various possible future events.

Hierarchy of Decisions

Steps in the decision process, including identifying the problem, developing alternatives, and selecting the best alternative.