decisions

Question 1

what is the decision making process

Answer 1

set objectives, gathering and interpreting data, selection of the chosen option, implementing the decision and then reviewing its success

Question 2

what is a programmed decision?

Answer 2

these are decisions that businesses make on a daily basis, that they are familiar with and has little risk

Question 3

what is a non- programmed decision?

Answer 3

these deal with unique situations that require some thought and have relatively high risk

Question 4

what is a tactical decision?

Answer 4

short term targets that are easy to reverse and can be made by junior managers

Question 5

what is a strategic decision?

Answer 5

these are major, long term decisions that are made by senior managers and require a lot of resources and difficult to reverse

Question 6

what is an opportunity cost?

Answer 6

the cost of the next best alternative forgon - (missing out)

Question 7

what are decision trees?

Answer 7

a simple and visual way of presenting the alternative course of action available when making a decision

Question 8

what do decision trees identify?

Answer 8

• when a decision has to be made
• the cost assosiated with each option
• the possible outcomes related to each choice
• the likelihood of each outcome occurring
• the estimated financial result of each outcome

Question 9

what are three advantages of decision trees?

Answer 9

• encourages a logical and structured approach
• allows easy comparison between options
• calculates the estimated profitability of each outcome

Question 10

what are two disadvantages of decision trees?

Answer 10

• they aren’t accurate- relies heavily on estimates with both outcome and profitability
• it doesn’t take qualitative factors into account

Question 11

what is the formula of estimated value?

Answer 11

(profitability 1 x outcome) + (profitability 2 x outcome )

Question 12

how do you calculate net gain?

Answer 12

estimated value- associated cost