Decision Making

Question 1

Is the action of selecting one alternative from a set of several alternatives.

Answer 1

Decision Making

Question 2

Is the process by which managers respond to opportunities and threats by analyzing options and making decisions about goals and courses of action.

Answer 2

Decision Making

Question 3

Is a conclusion or resolution reached after consideration of alternatives

Answer 3

Decision

Question 4

Are principles, Guidelines or requirements that are used to make a decision

Answer 4

Decision Criteria

Question 5

Importance of Good Decision-Making

Answer 5

•Achievement of objectives

•Optimum use of resources

•Higher efficiency

•Innovation

•Motivation

•Growth and Expansion

•Facing new Challenges

Question 6

Table showing the expected payoffs for each alternative in every possible state of nature. These tables are helpful in choosing among alternatives because they facilitate comparisons

Answer 6

Payoff Table

Question 7

Decision Making Environments

Answer 7

1. Certainty
2. Uncertainty
3. Risk

Question 8

Means that relevant parameters such as costs, capacity and demand have known values

Answer 8

Certainty

Question 9

Environment in which it is impossible to assess the likelihood of various future events

Answer 9

Uncertainty

Question 10

Means that certain parameters have probabilistic outcomes

Answer 10

Risk

Question 11

The Decision-Making Process

Answer 11

1. Recognize the need to make a decision
2. Determine decision criteria
3. Identify alternatives
4. Evaluate alternatives
5. Select best alternatives
6. Implement chosen alternatives
7. Follow up and evaluate results

Question 12

Causes of Poor Decisions

Answer 12

1. Mistakes in decision process
2. Bounded Rationality
3. Sub-Optimization

Question 13

Limitations in decision making caused by costs, human abilities, time, technology, and availability of information

Answer 13

Bounded Rationality

Question 14

Result of different departments each attempting to reach a solution that is optimum for that department

Answer 14

Sub-Optimization

Question 15

Decision Making skills

Answer 15

1. Being Intuitive
2. Being Rational
3. Being Well-informed
4. Satisficing
5. Conflict Management

Question 16

Simplest and the one of the most common ways to take a decision. Thought it is not always the best.

Includes that you have to rely on the decision that you feel appropriate, without much thinking about the logic that makes you take the choice.

Answer 16

Being Intuitive

Question 17

Cons of using Intuition

Answer 17

1. Flawed information
2. Short term emotional bias
3. Insufficient consideration of others
4. Prejudices
5. Lack of openness

Question 18

It is the use of logic to fix what is best, after reviewing all possible options then evaluating every option using logic and rationality

Answer 18

Being Rational

Question 19

More than finding the fact and logic of a decision, getting a personal opinion also impacts your decision making by giving you the confidence and assurance that you’re taking the right decision

Answer 19

Being Well informed

Question 20

Accepting the one which is satisfactory for the benefit of the company

Answer 20

Satisficing

Question 21

Identify the difference between a win-lose situation and win-win situations

Answer 21

Conflict Management

Question 22

Types of Decisions

Answer 22

1. Programmed and Non-Programmed Decision
2. Strategic, Tactical and Operational Decisions

Question 23

Decisions made at the top level of the organization, and generally determine the organization’s overall direction

Answer 23

Strategic Decision

Question 24

Decision that are taken by mid-level managers to achieve goals and objectives set by their superiors

Answer 24

Tactical Decisions

Question 25

Day-to-day decisions made by employees and lower level managers to ensure targets are met and the business is running smoothly

Answer 25

Operational Decisions

Question 26

Behavioural Aspects of Decision Making

Answer 26

1. Bounded Rationality Model of Decision Making 2. Intuitive Model of Decision Making 3. Creative Model of Decision Making

Question 27

Measures the tendency of decision makers to make risky decisions

Answer 27

Risk Propensity

Question 28

Issues emerge when decision alternatives include conflicting moral or ethical considerations

Answer 28

Ethical Decision Making

Question 29

Challenges in Decision Making

Answer 29

• Overconfidence Bias • Hindsight Bias • Anchoring • Framing Bias • Escalation of Commitment • Groupthink

Question 30

Decision makers overestimate their capability to forsee future events. Can lead to risky behaviour and faulty decision making

Answer 30

Overconfidence Bias

Question 31

Individuals look back and view events as more predictable than they really are. Managers may project this bias into others when something goes wrong

Answer 31

Hindsight Bias

Question 32

The tendency for decision makers to rely too much on one piece of information. May result in lost opportunities of fault decision.

Answer 32

Anchoring

Question 33

The way a situation is presented has a strong influence on decision makers. May lead to poor decisions simply based on how a problem is framed

Answer 33

Framing Bias

Question 34

People proceed on a failing course of action because they already invested in it. Managers fear admitting their mistakes or believe they can recover their losses.

Answer 34

Escalation of Commitment

Question 35

Members of a group put pressure on each other to conform and reach consensus, there by increasing the risk of flawed decisions. Reduces mental efficiency, reality testing, and moral judgement in making decisions.

Answer 35

Groupthink