Decision Making

Question 1

What is a programmed decision

Answer 1

Deal with problems that are familiar amd where the information required makes them easy to define and obtain

Question 2

What are non programmed decisions

Answer 2

Deal with situations that are not familiar and require a unique solution

Question 3

What is a strategic decision

Answer 3

Long term and involve a major commitment of rescources and are difficult to reverse

Question 4

What is a tactical decision

Answer 4

Focus on the short term and involves fewer rescources

Question 5

what are tactical decisions made by

Answer 5

A computer, based on sales forecast

Question 6

What is a sales forecast

Answer 6

Using data from the last year and recent weeks

Question 7

what is scientific decision making

Answer 7

Based on numerical data not on intuition

Question 8

What is intuitive decision making

Answer 8

Trusting your gut to make decisions based on experience

Question 9

What is opportunity cost

Answer 9

The cost of missing out on the next best alternative, benefits could’ve been gained by taking a different decision

Question 10

why is opportunity cost important

Answer 10

When materials are scarce, decisions become more risky
Managers weight up the potential implications of decisions before choosing the best option

Question 11

What is a mission

Answer 11

A businesses broad purpose

Question 12

What is an objective

Answer 12

Specific and time related targets

Question 13

What are ethics

Answer 13

Provide a moral guideline for decision making by managers

Question 14

Influences on decision making

Answer 14

• risk
• external environment
• rescources

Question 15

How does risk influence decision making

Answer 15

High risk decisions will take longer to make due to additional data having to be gathered to reduce risk

Question 16

How does external environment influence decision making

Answer 16

Changes in the outside world can influence decisions e.g general income

Question 17

How do rescource constraints influence decision making

Answer 17

Need to question whether the business has enough time/money/labour/materials available to make the best decision

Question 18

What are decision trees

Answer 18

Mathematical models which help managers to make decisions

Question 19

pros to using decision trees

Answer 19

1) allows for uncertainty
2)forces managers to consider impact of alternative options
3) set out clear and logically
4) can compare outcome of different options

Question 20

Drawbacks to using decision trees

Answer 20

1) do not involve qualitative issues such as workers reactions
2) is an estimate
3) not well suited to strategic decisions