Decision Making

Question 0

What is Rational decision making?

Answer 0

Making logical and consistent choices to maximise outcome

All possible alternatives and consequences are known

Question 1

How Do Managers Make Decisions?

Answer 1

Step 1: Identifying the Problem
Step 2: Identifying Decision Criteria
Step 3: Allocating Weights to the Criteria
Step 4: Developing Alternatives
Step 5: Analysing Alternatives
Step 6: Selecting an Alternative
Step 7: Implementing the Decision
Step 8: Evaluating the Decision’s Effectiveness

Question 2

What is Bounded Rationality?

Answer 2

Managers are limited in their ability to process information:
They can’t analyse information on all alternatives
They operate within limits (bounds)
They satisfice

Question 3

What is Intuitive decision making?

Answer 3

Making decisions on the basis of experience, feelings and accumulated judgment

Question 4

What Are Programmed Decisions?

Answer 4

A repetitive decision that can be handled using a routine approach

Question 5

What Are Nonprogrammed Decisions?

Answer 5

A unique and nonrecurring decision that requires a custom-made solution.

Question 6

What are some Programmed Decision-Making Aids?

Answer 6

Rules
Policies
Procedures

Question 7

What Decision Making Conditions Do Managers Face?

Answer 7

Certainty - A situation in which a decision maker can make accurate decisions because all outcomes are known

Risk - A situation in which a decision maker is able to estimate the likelihood of certain outcomes

Uncertainty - A situation in which a decision maker has neither certainty nor reasonable probability estimates available

Question 8

What are the advantages of group decisions?

Answer 8

provide more complete information
Diversity of experiences and perspectives are higher
generate more alternatives
increase acceptance of a solution
increases legitimacy

Question 9

When Are Groups Most Effective?

Answer 9

Groups are more effective for decisions requiring:
Accuracy
Speed
Creativity
Acceptance

Ideal Group Size:
5-15 members

Question 10

How Can You Improve Group Decision Making?

Answer 10

Brainstorming - An idea-generating process that encourages alternatives while withholding criticism

Nominal Group Technique - A decision-making technique in which group members are physically present but operate independently

Electronic Meeting - Participants are linked by computer