MANAGEMENT SCIENCE (MID EXAM) Flashcards
What is another name for management science?
a. Business analytics
b. Operations research
c. Strategic management
d. financial modeling
b. Operations research
Management science primarily uses what approach to aid decision-making?
a) Intuitive
b) Scientific
c) Qualitative
d) Subjective
b) Scientific
What is a key goal of management science?
a) To complicate decision-making
b) To replace managers
c) To assist managers in making more effective decisions
d) To eliminate the need for communication
c) To assist managers in making more effective decisions
According to some, using inaccurate data or inappropriate models could result in what?
a) Positive outcomes
b) Detrimental effects on the organization
c) Neutral results
d) Faster decision-making
b) Detrimental effects on the organization
Which of the following is an argument against using management science?
a) Its simplicity
b) Its low cost
c) It can be time-consuming
d) Its lack of potential
c) It can be time-consuming
What does transportation planning aim to achieve?
a) To increase delivery time
b) To minimize costs of delivering goods
c) To complicate delivery routes
d) To maximize fuel consumption
b) To minimize costs of delivering goods
Management science is considered a(n) ___ field
a) Independent
b) Interdisciplinary
c) Theoretical
d) Abstract
b) Interdisciplinary
Which of the following is NOT a characteristic of management science?
a) Emphasis on managerial decisions
b) Use of scientific methods
c) Reliance on intuition
d) Use of mathematical models
c) Reliance on intuition
Management science integrates knowledge from which of these areas?
a) Economics only
b) Engineering only
c) Business consulting only
d) Economics, engineering, and business consulting
d) Economics, engineering, and business consulting
One of the limitations of management science is that it relies on ____ by managers
a) Interpretation
b) Implementation
c) Intuition
d) Feedback
a) Interpretation
Which area of application involves the design of a new factory layout?
a) Portfolio analysis
b) Facility design
c) Market research
d) Transportation planning
b) Facility design
Which of the following is a use case for the allocation of scarce resources?
a) Deciding how to distribute funds among departments
b) Hiring new staff
c) Expanding office space
d) Buying new marketing material
a) Deciding how to distribute funds among departments
This field uses a scientific approach to aid decision-making, also called operations research:
Management science
What would be an example of applying management science for “investment decisions?”
a) Hiring new employees
b) Developing a new brand
c) Deciding which new projects to invest in
d) Choosing a location for a new office
c) Deciding which new projects to invest in
(6) What are the Special Characteristics of Management Science
•A primary emphasis on decisions made by managers.
•The utilization of scientific methods in the process of decision-making.
•Analyzing the decision-making scenario from a comprehensive viewpoint.
•Incorporating methodologies and knowledge derived from various disciplines.
•Depending on well-defined mathematical models.
•Employing technology, such as computers, software, or applications.
The scientific analysis involved often necessitates expertise in translating _______
into actionable steps, potentially posing a challenge for individuals without such skills
numerical values
Some individuals believe that
______ cannot be conveyed to those who do not possess the skills to arrive at them.
optimal solutions
** (6) Major Limitations of Management Science**
The sources provide a list of arguments against using management science in real-life situations:
- Time-consuming
- Difficulty in assessing uncertainties
- The tendency to be more costly relative to the size of the problem.
- Some decision-makers do not appreciate the results
- The use of oversimplified mathematical tools that do not match real-life situations
- Experiments/studies are not used for various reasons, which take up unnecessary expenses
This could involve determining the optimal quantity of raw materials a manufacturing company needs
to keep on hand to minimize storage costs while ensuring production needs are met.
Inventory control:
An example is deciding the layout of a new factory to optimize workflow and minimize transportation time
between different production stages
Facility design:
This might include choosing the best combination of stocks, bonds, and other investments for a client’s portfolio, based on their risk tolerance and financial goals
Portfolio analysis and securities:
An example would be deciding how many of each product a company should produce to
maximize profit given constraints on production capacity and demand.
Product-mix determination:
This could involve creating a schedule for a construction project that minimizes the total project time by ordering the different tasks efficiently.
Scheduling and sequencing:
Determining the most cost-effective routes for delivering goods from warehouses to retail stores
is an example.
Transportation planning:
An example is creating a database and reporting system that allows a
company to monitor sales performance and inventory levels in real-time.
Design of management information systems:
Deciding how to distribute limited funds among different departments within a company
to maximize overall productivity is an example.
Allocation of scarce resources:
This may involve evaluating whether to invest in a new piece of equipment by calculating its net present value and return on investment.
Project management or capital budgeting:
Deciding which new projects to invest in based on their projected cash flows and return on
investment.
Investment decisions:
An example is a pharmaceutical company deciding whether to develop and launch a new drug
based on market analysis and projected profitability.
New product decisions:
This could involve determining how many sales representatives a company should hire to cover a specific territory, based on the potential sales volume.
Manpower or sales force decisions:
An example is deciding which customer segments to target with a new marketing campaign after market research has been conducted.
Market research and development decisions:
This includes determining the best prices for a company’s products based on competitive pricing and
market demand analysis.
Pricing decisions:
Selecting the optimal locations for warehouses and distribution centers to minimize shipping
costs and delivery times is an example
Distribution decisions2:
Determining the optimal credit terms for customers to balance sales revenue with the risk of bad
debt.
Credit policy analyses2:
Optimizing the sequence of production to minimize machine setup time and increase efficiency is an example.
Machine setup problems in production2:
This involves deciding which research projects to pursue to maximize the
return on R&D investment.
Research and development effectiveness2:
What is the primary focus of decision theory?
a) Analyzing past events
b) Predicting future outcomes with certainty
c) Making rational choices under uncertainty and risk
d) Ignoring preferences and beliefs
c) Making rational choices under uncertainty and risk
A central assumption in many decision theories is that decision-makers are:
a) Always emotional
b) Rational and aim to maximize their expected utility
c) Random in their choices.
d) Always influenced by cognitive biases
b) Rational and aim to maximize their expected utility
Which of the following is NOT a step in the decision-making process according to decision theory?
a) Defining the problem and objectives
b) Identifying alternative courses of action
c) Ignoring possible states of nature
d) Evaluating alternatives and selecting the optimal choice
c) Ignoring possible states of nature
Decision theory explicitly addresses situations where the outcomes of decisions are?
a) Certain
b) Uncertain
c) Predictable
d) Always positive
(b) Uncertain
What is a “state of nature” in decision theory?
a) A choice made by the decision-maker
b) A possible future event that affects the decision outcome but is beyond the decision-maker’s control
c) The value of the decision outcome
d) A tool used to analyze decisions
b) A possible future event that affects the decision outcome but is beyond the decision-maker’s control
Which is NOT a characteristic of a state of nature?
a) Uncontrollable
b) Mutually Exclusive
c) Controllable
d) Collectively Exhaustive
c) Controllable
What are “alternative courses of action”?
a) The different choices available to a decision-maker
b) Events outside the decision-maker’s control
c) Outcomes of a decision
d) Probabilities of different events
a) The different choices available to a decision-maker
Which is a characteristic of alternative courses of action?
a) Uncontrollable
b) Dependent on the state of nature
c) Controllable
d) Uncertain
c) Controllable
What is a “payoff” in decision theory?
a) The cost of making a decision
b) The result of a specific action and state of nature combination
c) The probability of an event occurring
d) The process of choosing an action
b) The result of a specific action and state of nature combination
What does normative decision theory prescribe?
a) How decisions are actually made
b) How decisions are made based on emotions
c) How decisions should be made, assuming rationality
d) How decierons are influenced by psychological factors
c) How decisions should be made, assuming rationality
What do decision trees map out?
a) Only costs
b) Only probabilities
c) Possible courses of action, potential outcomes, probabilities, and costs
d) Past decisions
c) Possible courses of action, potential outcomes, probabilities, and costs
Which field does NOT contribute to decision theory?
a) Mathematics
b) Economics
c) Psychology
d) Astrology
d) Astrology
Which type of decision theory deals with situations where the probabilities of possible outcomes are unknown?
a) Decision making under certainty
b) Decision making under risk
c) Decision making under uncertainty
d) Game theory
c) Decision making under uncertainty
Which of the following is a tool/technique used in decision theory?
a) Astrology
b) Decision Trees
c) Tarot cards
d) Palm reading
b) Decision Trees
In which field is decision theory NOT applied?
a) Business and Management
b) Finance
c) Public Policy
d) Mythology
d) Mythology
Payoffs are typically expressed in:
a) Qualitative terms
b) Numerical terms
c) Subjective opinions
d) Abstract concepts
b) Numerical terms
What does a payoff table (or matrix) show?
a) The probabilities of different states of nature
b) The potential outcomes for each combination of alternative and state of nature
c) The decision-maker’s preferences
d) The steps in the decision-making process
b) The potential outcomes for each combination of alternative and state of nature
The probability of occurrence of a state of nature is:
a) Always based on objective data
b) A qualitative assessment
c) The likelihood that a particular state of nature will occur
d) Always equal to 50%
c) The likelihood that a particular state of nature will occur
Probabilities of states of nature must
a) Be greater than 1
b) Be negative values
c) Sum to 1 (or 100%)
d) Sum to 0
c) Sum to 1 (or 100%)
What is the range of values for probability?
a) 0 to 1
b) -1 to 1
c) 1 to 100
d) 0 to infinity
b) -1 to 1
