Chapter 5
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What is Data envelopment analysis (DEA)?
A linear programming application used to measure the relative efficiency of operating units with the same goals and objectives.
What does the efficiency index represent?
Percentage of an individual operating unit’s resources that are available to the composite operating unit.
How is the expected value calculated in a mixed strategy game?
By multiplying each payoff by its probability and summing.
What is game theory?
A decision-making situation in which two or more decision makers compete by each selecting one of several strategies.
What is a hypothetical composite?
A weighted average of outputs and inputs of all operating units with similar goals.
What is a maximin strategy?
A strategy where the player selects the strategy that maximizes the minimum payoff obtainable by the other player.
What is a minimax strategy?
A strategy where the player selects the strategy that minimizes the maximum payoff obtainable by the other player.
What characterizes a mixed strategy?
When a player randomly selects its strategy based on a probability distribution.
What defines a pure strategy?
When one of the available strategies is optimal and the player always selects this strategy.
What is a saddle point?
A condition that exists when pure strategies are optimal for both players.
What is a two-person, zero-sum game?
A game with two players in which the gain to one player is equal to the loss to the other player.