Decision making

Question 1

What are the ways of making decisions

Answer 1

Scientific and intuition

Question 2

What is scientific decision making?

Answer 2

Making decisions using data available

Question 3

What are the advanatages of scientific decision making?

Answer 3

Reduces the risk of making mistakes as decisions are based on data
Using data provides guidance for managers who may have limited intuition through lack of experience

Question 4

Disadvantages of scientific decision making

Answer 4

May be time-consuming to collect required data
Relying on data may mean that the experience or expertise of staff may not be considered
Using out of date or poor data is unreliable and can affect the quality of the decision made

Question 5

Factors influencing decision making

Answer 5

Availabillty and reliability of data - If data is not available, scientific decision-making cannot be used
Manager’s experience - Inexperienced managers more likely to use scientific decision making because they have no experience or expertise
Risk a business is willing to accept - Scientific decision making typically carries less risk so suits businesses that are willing to accept risk

Question 6

What is a decision tree?

Answer 6

Allows a business to compare outcomes of two or more options or decisions
Examines the probability of each outcome for each decision made
Multiply the probability with each outcome to calculate an estimates value (EV) for each option or decision being considered