Chapter 2: Decision making

Question 1

TRUE OR FALSE:
The higher the management level is, the bigger and more complicated decision making becomes:

Answer 1

True

Question 2

According to William G. Nickels, it is “the heart of all management functions”

Answer 2

Decision making

Question 3

Steps of decision making process according to David H. Holt

Answer 3

1. Diagnose Problem
2. Analyze Environment
3. Articulate Problem or Opportunity
4. Develop Viable Alternatives
5. Evaluate alternatives
6. Make a choice
7. Implement Decision
8. Evaluate and adapt decision results

Question 4

“The process of identifying and choosing alternative course of action in a manner appropriate to the demands of the situation”

Answer 4

Decision making

Question 5

The various management levels (3)

Answer 5

Top
Middle
Lower

Question 6

A ____ exists whene there is a difference between an actual situation and a desired situation”

Answer 6

Problem

Question 7

Components of Environment

Answer 7

Internal
External

Question 8

Refers to organizational activities within a firm that surrounds decision making

Answer 8

Internal Environment

Question 9

Refers to variables that are outside the organization and not typically within the short run control of management

Answer 9

External Environment

Question 10

The benefits that can be expected in an alternative solution

Answer 10

Value of the alternatives

Question 11

Refers to out-of-pocket costs, opportunity costs and follow-on costs of an alternative

Answer 11

Cost of the alternative

Question 12

The likelihood of achieving the goals of the alternative.

Answer 12

Risk characteristic

Question 13

The process of selecting alternatives representing potential solutions to a problem

Answer 13

Choice making

Question 14

After a decision has been made, ______________ follows

Answer 14

Implementation

Question 15

Refers to carrying out the decision so that the objectives sought will be achieved.

Answer 15

Implementation

Question 16

To make implementation effective, a _____ must be devised.

Answer 16

Plan

Question 17

Refers to the process which requires checking at each stage of the process to assure that alternatives generated, the criteria used in evaluation, and the solution selected for implementation are in keeping with the goals and objectives originally specified.

Answer 17

Feedback

Question 18

Refers to actions made to ensure that activities performed match thee desired activities or goals, has been set

Answer 18

Control

Question 19

The manage uses _______ and ______ mechanism to ensure results and to provide information for future decision.

Answer 19

Control and feedback

Question 20

Approaches in evaluations / solving problems

Answer 20

Qualitative evaluation
Quantitative evaluation

Question 21

Refers to evaluation of alternatives using intuition and subjective judgment.

Answer 21

Qualitative evaluation

Question 22

True or False:
William J. Stevenson states that managers tend to use the qualitative approach when:
1. the problem is simple
2. The problem is familiar
3. The costs are not great
4. Immediate decisions are needed

Answer 22

True

Question 23

Refers to the evaluation of alternatives using any technique in a group classified as rational and analytical

Answer 23

Qualitative Evaluation

Question 24

Quantitative Models for decision making

Answer 24

1. Inventory models
   2.Queuing Theory
2. Network models
3. Forecasting
4. Regression analysis
5. Simulation
6. Linear programming
7. Sampling Theory
8. Statistical decision theory

Question 25

Types of Inventory models

Answer 25

Economic order quantity model Production order quantity model Back order Quantity model Quantity discount model

Question 26

Inventory model used to calculate the number of items that should be ordered at one time to minimize the total yearly cost

Answer 26

Economic order quantity model

Question 27

Economic order quantity technique applied to production order

Answer 27

Production order quantity model

Question 28

Inventory model used for planned shortages

Answer 28

Back order inventory model

Question 29

Inventory model used to minimize the total cost when quantity discount are offered by suppliers

Answer 29

Quantity discount model

Question 30

The decision making theory that describes how to determine the number of service units that will minimize both costumer waiting time and cost of service

Answer 30

Queuing theory

Question 31

Decision making models where large complex tasks are broken into smaller segments

Answer 31

Network models

Question 32

Network model that enables engineer managers to schedule, monitor and control large complex projects by employing three time estimates for each activity

Answer 32

Program Evaluation Review Technique (PERT)

Question 33

Network model that enables engineer managers to schedule, monitor and control large complex projects by employing one time factor for each activity

Answer 33

Critical Path Method (CPM)

Question 34

Defined as "the collection of past and current information to make predictions about the future"

Answer 34

Forecasting

Question 35

A forecasting method that examines the association between two or more variables.

Answer 35

Regression analysis

Question 36

A regression analysis with one independent variable

Answer 36

Simple regression

Question 37

A regression analysis with two or more independent variables

Answer 37

Multiple regression

Question 38

A model constructed to represent reality on which conclusions about real-life problems can be used

Answer 38

Simulation

Question 39

TRUE or FALSE: Simulation guarantees an optimum solution.

Answer 39

False

Question 40

Quantitative techniques used to produce and optimum solution within the bounds imposed by constraints upon the decision

Answer 40

Linear programming

Question 41

Quantitative technique where samples of populations are statistically determined to be used for a number of processes, such as quality control and marketing research

Answer 41

Sampling theory

Question 42

Quantitative technique that refers to the "rational way to conceptualize, analyse, and solve problems in situations involving limited, or partial information about the decision environment.

Answer 42

Decision theory

Question 43

" To revise and update the initial assessments of the event probabilities generated by the alternative solutions."

Answer 43

Bayesian analysis

Question 44

The criterion that selects the decision alternative having the maximum expected payoff or the minimum expected loss if he is working with a loss table

Answer 44

Bayes criterion