208 Decision Making models

Question 1

Scientific decision making

Answer 1

Involves the use of facts and data in a systematic way to arrive at a logical and evidence based decision.

Scientific decision making can involve the use of models such as: decision trees, critical path analysis and cost benefit analysis

Question 2

Intuitive decision making

Answer 2

Uses experience and intuition (gut feeling) to make a decision

Question 3

Strategic decisions

Answer 3

They are long term and affect the direction a business takes. Affect the entire business and made by the owners or senior management

Question 4

Operational decisions

Answer 4

The day to day decisions made by a business. These are lower level decisions that tend to be short term and have little risk

Question 5

Tactical decisions

Answer 5

Short to medium term decisions, less complex than strategic decisions and usually carried out by middle
management

Tactical decisions can also be more flexible, if failing to meet objectives then can be changed

Question 6

Decision trees

Answer 6

A mathematical model used to help managers make decisions.
Uses estimates and probabilities to calculate likely outcomes.
Helps to decide wether the net gain from a decision is worthwhile

Question 7

Critical path analysis (CPA)

Answer 7

Method of planning and controlling large projects and is used to make decisions on the management of resources and time.
A technique used to find cheapest and quickest way to complete a task

Question 8

Cost benefit analysis

Answer 8

A method of assessing the viability of a project based on analysis of all the social costs and benefits involved. Includes private and external costs