Ch 9 - Managerial Decision Making Flashcards
What are teh 2 knids of decisnos? What is a main difference between the two?
1) Programmed decisions: involve situations that have occurred often enough to enable decision rules to be developed and applied in the future = REPEATED, STRAIGHT FORWARD (oft done with AI/programs now)
ex: reorder point for invevntory
2) Nonprogrammed decisions: made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization
difference: degree of uncertainty, risk, or ambiguity that managers deal with in making the decision
What are certainty, risk, uncertainty, and ambiguity? These on a scale of possibility of failure? how alogn scale with programmed and no programmed dceisons?
Certainty: situation in which all information the decision maker needs is fully available
Risk: decision has clear-cut goals and good information is available, but future outcomes associated with each alternative are subject to chance of loss or failure
Uncertainty: goals are known, but information about alternatives and future events is incomplete (even good decision can give bad outcome)
Ambiguity: goals to be achieved or problems to be solved are unclear, alternatives are difficult to define, and information about outcomes is unavailable
certainty —- risk — uncertainty — ambiguity
<———————————————————->
low pos of failure ————- high pos failure
programmed dec ———- non programmed
What are wicked decisions problems?
highly ambiguous situation involving
- conflict over goals and decision alternatives
- rapidly changing circumstances
- fuzzy information
- unclear links among decision elements
- the inability to evaluate whether a proposed solution will work
= often no right answer
What is the difference between risk and ambiguity?
ambiguity is unclear situation, alternatives hard to define, info about outcomes is unavailable
risk is clear situation, alternatives be defined, info about outcomes is unavailable/unclear
What are teh 3 decision making models? what factors does a managers choice betwen the 3 depend on?
1) Classical model
2) Administrative model
3) Political model
depends on:
- manager’s personal preference
- whether the decision is programmed or nonprogrammed
- the degree of uncertainty associated with the decision
what is the classicla model of decision making? What are 4 assumptions that underlie the model?
= based on rational economic assumptions and manager beliefs about what ideal decision making should be
assumptions
1) Decision maker operates to accomplish known goals; problems are defined
2) Decision maker strives for certainty and gathers information; results are calculated
3) Criteria for evaluation of alternatives are known; selects alternative that maximizes economic return
4) Decision maker is rational and uses logic; decision maximizes attainment of organizational goals
what is one important detail that distinguishes the classical model? when should the classical model be used?
detail: model is normative = defines how a decision maker SHOULD make a decision (not how they actually make decisions, instead gives guidelines on how to strive for an ideal outcome for the organization)
–> often unattainable bt real humans
use it for programmed decisions and decisions
characterized by certainty or low levels of risk
ex: airlines that have distinct plan laid out for nearly every situation
What is the administratiev model of decision making?
= use of a rational decision-making process within the limits of human and environmental factors
–> is “Descriptive”: how managers actually make decisions in complex situations (vs Normative)
What are some main concepts related to the administrative model? definitions for each?
Bounded rationality: there are limits or boundaries on how rational people can be (ex: time limits, etc)
Satisficing: choosing the first solution that satisfies minimal decision criteria (ex: choice needs to meet A B C, as soon as come across solution that meets all 3, that one is the one)
Intuition: quick apprehension of decision situation based on experience but without conscious thought (go with your gut!!)
Quasirationality: combining intuitive and analytical thought (intuition is there for a reason!)
What are the assupmtinos for the administrative model?
a) Goals are often vague and conflicting
b) Managers often unaware of problems or opportunities
c) Rational procedures are not always used; simplistic view of problems
d) Managers’ searches for alternatives are limited
e) Most managers settle for satisficing
What are some possible advantages and disadvantages of computer technology for managerial decision making?
Advantages: increased accuracy, timeliness, and reliability of information to improve managerial decision making.
Disadvantages: include inputting the wrong data that produces incorrect information that will be used in substantial managerial decisions, being susceptible to confirmation bias, and being overly confident in accuracy of data.
What is the political model for decision making? What is a coalition? Why need one?
for nonprogrammed decisions when conditions are uncertain, information is limited, and there is manager conflict about goals to pursue or action to take
= think about who has power/influence, where resources are, what processes are
coalition = informal alliance among managers who support specific goal - strength in numbers!
Why: Without a coalition, powerful groups can derail the decision-making process
What are the assumptions of the political model?
a) Organizations are made up of groups with diverse interests, goals, and values
b) Information is ambiguous and incomplete
c) Managers do not have the time, resources, or mental capacity to identify all dimensions and process all information regarding a problem
d) Decisions are the result of bargaining and discussion among coalition members
Which of these assumptions is included in the classical model of decision making?
a) Problems are unstructured and ill defined.
b) The decision maker strives for conditions of certainty.
c) Criteria for evaluating alternatives are unknown.
d) The decision maker selects the alternative that will eliminate risk to the organization.
b) The decision maker strives for conditions of certainty.
What are the steps of the managerial decision making process?
- recognition of decision requirement
- diagnosis and analysis of causes
- development of alternatives
- selection of an alternative
- implementation of chosen alternative
- evalution and feedback
