Chapter 7 Decision Making

Question 0

Which one is the objective of decision making process?

Answer 0

Make it more rational, to give us consistency in the decision

Question 1

What is the definition of decision making?

Answer 1

Is what manager’s do.

Question 2

Steps of the decision making process

Answer 2

1. Identify the problem
2. Identify criteria
3. Allocate weights to the criteri
4. Developing alternatives
5. Analyzing alternatives
6. Selecting an alternative
7. Implement the alternative
8. Evaluate the decision

Question 3

Rational decision making

Answer 3

Choices are consistent
Choices are maximizing value
Choices are made within specific constraints

Question 4

Assumptions of rationality

Answer 4

1. Problem is clear an unambiguous
2. Single well-defined goal is to be achieved
3. All alternatives and consequences are known
4. Preferences are clear
5. Preferences are constant and stable
6. No time or cost constraint exist
7. Final choice will maximize pay off

Question 5

Bounded rationality

Answer 5

More realistic approach to describing how managers make decisions, managers are bounded by their ability to process information

Question 6

Intuitive decision making

Answer 6

Making decisions on the basis of experience, feelings and accumulated judment.

Question 7

Problem

Answer 7

Discrepancy between what you have vs what you want

Question 8

Problem identification

Answer 8

Discrepancy between what you think you have vs what you really have

Question 9

Structured problems and programmed decisions

Answer 9

Programmed solution : repetitive dcisions that can be handle by a routine approach.( policy, rule, procedure)

Structured problem: clear and easy to define

Question 10

Unstructured problem

Answer 10

Problems that are new or unusual and for which information is ambiguous or incomplete

Question 11

Nonprogrammed decisions

Answer 11

Unique and nonrecurring and involve custom-made solutions

Question 12

Decisions making conditions

Answer 12

Certainty: ideal situation for making decisions

Risk: more common, conditions in which the deciaion maker is able to estimate the likelihood of certain outcomea

Uncertainty: no certain about outcomes and can’t even make reasonable probability estimates.

Question 13

Decision making styles

Answer 13

Your thinking style reflects two things
1. The source of information you tend to use (external data and facts or internal sources such as feelings and intuition)

2. Wheter you process that information in a linear way (rational, logical, and analytical) or nonlinear way (intuitive, creative, and insightful)

Question 14

Linear thinking style

Answer 14

Preference for using external data and facts and processing this information through rational, logical thinking to guide decisions and actions

Question 15

Nonlinear thinking style

Answer 15

Preference for internal sources of information (feelings and intuition) and processing this information with internal insights, feelings and hunches to guide decisions and actions

Question 16

Managerial decision making :

The decision making process is afected by four factors

Answer 16

1. The decision making approach
2. The type of problem
3. Decision making conditions
4. Decision making style

Question 17

Decision making errors nd biases

Answer 17

1. Overconfidence bias
2. Inmedite gratification bias
3. Anchoring effect
4. Selctive perception bias
5. Confirmation bias
6. Framing bias
7. Availability bias
8. Representation bias
9. Randomness bias
10. Sunk cost error
11. Self-selving bias
12. Hindsight bias

Question 18

An effective decision making process:

Answer 18

1. Focuses on what is important
2. It is logical and consistent
3. Acknowledges both logical and objective thinking and blends analytical with intuitive thinking
4. Requires only as much information and analysis as is necessary to resolve a particular dilemma
5. Encourages and guides the gathering of relevant information and informed opinion
6. It is straightforward, reliable, easy to use and flexible

Question 19

Desicions

Answer 19

It affects many people

Affects the organizations in the long-term

Question 20

Why we study decision making in planning?

Answer 20

Because planning is where you make more decisions, because the decisions we make in planning affect the rest of the process

Question 21

Rational decision making

Answer 21

Consistency, value maximizing, specific constrai ts

Question 22

Bounded rationality decision making

Answer 22

Consistency
value maximizing
within specific constaints
limited by the individuals capacity to process information

Question 23

Intuitive decision making

Answer 23

Experience
Feelings
Accumulate judment

Question 24

Decision making process

Answer 24

Is more rational that intuitive

Question 25

Decision making matrix

Answer 25

Tolerance for ambiguity

Rational/intuitive

Question 26

Guidelines for effective decisions

Answer 26

1. Understanding cultural differences
2. Know when it’s time to quit
3. Use an effective decision making process
4. Build and organization that can adapt quickly to changes to faster decision making