MODULE 2

Question 1

It is one of the responsibilities
of an engineer manager

Answer 1

DECISION MAKING

Question 2

It is a very important function of the engineer manager.

Answer 2

Decision Making

Question 3

It can be determined by non-quantitative means, such as intuition, facts,
experiences and opinions.

Answer 3

Decision Making

Question 3

The process of choosing a specific procedure or course of action from
among several possible alternatives.

Answer 3

Decision Making

Question 4

It can also be determined by quantitative means such as operations
research, linear programming, simulation, Monte Carlo, gaming and
program evaluation review technique.

Answer 4

Decision Making

Question 4

It is defined as the selection of a course of action from among
alternatives; it is at the core of planning.

Answer 4

Decision Making

Question 5

A plan cannot be said to exist unless a decision has been made.

Answer 5

Decision Making

Question 6

It is a commitment of resources, direction, or reputation

Answer 6

Decision

Question 6

Managers sometime see it as their central job because they must constantly choose what is to be done, who is to do it, and when, where, and occasionally even how it will be done.

Answer 6

Decision Making

Question 6

It helps to place the decision making
environment in its proper perspective.

Answer 6

Business system Model

Question 7

Three levels of management

Answer 7

Operational, Tactical and Strategic.

Question 8

They determine long-term strategies and set
corporate objectives and policy consistent with these objectives

Answer 8

Strategic-level Managers

Question 8

They complete specific tasks as directed by the tactical-level managers.

Answer 8

Operational-level Managers

Question 8

They are charged with the responsibility of
implementing the objectives and policies set forth at the strategic level of
management. To do this, the manager identifies specific tasks that need
to be accomplished.

Answer 8

Tactical-level Managers

Question 9

Steps in Rational Decision Making

Answer 9

• Monitor the decision environment
• Define the decision problem
• Specify decision objectives
• Diagnose the Problem
• Develop alternative solutions
• Evaluate alternatives
• Choose the best alternatives
• Implement the chosen alternatives

Question 10

The existence of a problem implies the need for a decision maker to make at least one decision, and typically a series of
decisions, to resolve a problem. In the first step, the decision maker _______ for the decision.

Answer 10

Sets Objectives

Question 10

It limits the decision maker’s choices. It could be defined by legal, economic or political
considerations. Decision ___ are sometimes presented in terms of desired specification or performance standards.

Answer 10

Identify Constraints

Question 10

Steps in Decision Making Process

Answer 10

• Set objectives
• Identify constraints
• Identify alternatives
• Gather appropriate information
• Evaluate alternatives
• Choose the most acceptable alternatives

Question 11

The decision making process involves making a choice between two or more alternatives. In this step, the decision maker
identifies________ solutions that meet the constraints outlines in step 2. In most cases, these are chosen because they provided a solution to the problem, but often one of it is to do nothing.

Answer 11

Identify Alternatives

Question 11

The information requirements for a given
decision vary considerably depending on the complexity and scope of the decision to be made. During this step, the decision maker gathers ____ that may provide insight as to which alternative to choose.

Answer 11

Gather appropriate information

Question 12

In this step, the decision maker evaluates each _____. A decision can be rendered based on available information.

Answer 12

Evaluate alternatives

Question 13

In this step, the manager examines the ranking of alternatives and selects the most acceptable alternatives, which is often the top-ranked alternative. On occasion, extending circumstances caused managers to look past the highest-ranking alternative
and select a lower-ranking alternative. Decisions, especially those made collectively by several managers, are often the result of creativity.

Answer 13

Choose the most acceptable alternatives

Question 13

Major steps in Decision Making

Answer 13

• Identifying Alternatives and the Limiting Factor
• Evaluation of Alternatives
• Selecting an Alternative: Three Approaches

Question 13

It is something that stands in the way of
accomplishing a desired objective.

Answer 13

Limiting Factor

Question 14

Ability/ways to develop alternatives are by?

Answer 14

Ingenuity, research, and
common sense

Question 14

This is the point of ultimate decision making, although decisions must also be made in the other steps of planning—in selecting goals, in choosing critical premises, and even in
selecting alternatives.

Answer 14

Evaluation of Alternatives

Question 15

Because of complexities in evaluating alternatives, newer methodologies and applications and analysis are needed: (What are they?)

Answer 15

 Advantages/ Disadvantages
 Strengths/ Weaknesses
 Cost-Benefit Analysis (C.B.A.)
 Decision Trees

Question 16

Three approaches of selecting an alternative

Answer 16

Experimentation
Research and Analysis
Reliance on the past

Question 16

In a situation involving _____, people are reasonably sure about what will happen when they make a decision. The information is reliable and is considered to be reliable, and the cause and effect relationships are known.

Answer 16

Certainty

Question 16

In a situation of _______ , on the other hand, people have only a meager database, they do not know whether or not the data are reliable, and they very unsure about whether or not the situation may change.

Answer 16

Uncertainty

Question 17

Techniques used in Decision Making Process

Answer 17

• Marginal Analysis.
• Financial Analysis.
• Break-even Analysis.
• Ratio Analysis.
• Operations Research Techniques.

Question 17

In a situation with ______, factual information may exist, but it may be
incomplete. To improve decision making, one may estimate the
objective probability of an outcome by using, for example,
mathematical models. On the other hand, subjective probability,
based on judgment and experience, may be used.

Answer 17

Risk

Question 17

This tool is used in decision making to figure out how much more output will result if one or more variable (worker) is added. Samuelson defines a marginal product as the extra product or output added by one extra unit of that factor. While other factors are being held constant. This technique is particularly useful for evaluating alternatives in the decision making process.

Answer 17

Marginal Analysis.

Question 18

This is another tool in decision making used for estimating the profitability of an investment, calculating the payback period, and analyzing cash inflows and outflows. Investment
alternatives can be evaluated using a discounted peso analysis of cash inflows and outflows.

Answer 18

Financial Analysis.

Question 19

This is another tool which enable a manager to see the effects of alternatives available based on price, fixed cost, and variable cost per unit. With this tool it is possible to determine what will be the break-even point for a company as a whole or any of its product. At break-even point, total revenue equals total cost and there is no profit.

Answer 19

Break-even Analysis.

Question 19

It is an accounting tool used for the interpretation of accounting information. The basic financial ratios compare costs and revenue for a particular period. These ratios bring out a relationship between two financial aspects.

Answer 19

Ratio Analysis.

Question 20

Some ratios are:

Answer 20

Current Assets = Current Assets/Current Liabilities
Debt to Equity = Total Debt/ Equity
Inventory Turnover = Sale/Inventory
Net Operating Margin = Net Operating Profit/ Sales
Return on Capital = Net profit after taxes/ Net Worth

Question 20

Operations research involves the application of quantitative methods to decision making. OR has been defined by Miller and Starr as “ Applied Decision Theory”, in which the decision maker seeks scientific, logical or mathematical means. Observation, analysis, hypothesis formulation and experimentation are the methods generally used in ORT.

Answer 20

Operations Research Techniques.

Question 21

Method under Operations Research Techniques.

Answer 21

• Queuing or Waiting-ling Method.
• Linear Programming.
• Game Theory.
• Simulation.
• Decision Tree.

Question 22

This method used mathematical techniques for balancing waiting lines and services
provided. When there is irregular demand, waiting lines occur and manager must decide how to handle the situation. If people are waiting in queues are not going to be provided quick service, they may go elsewhere.

Answer 22

Queuing or Waiting-ling Method.

Question 22

This technique is used in decisions involving the allocation of resource or limited resources to reach a particular objective such as, least cost, highest margin and so on. When these resources have several alternative uses. This methods is used for solving simple, complex and routine problems. In order to apply this method, the situation must involve two or more activities competing for limited resources and all relationships in the situation must be linear.

Answer 22

Linear Programming.

Question 22

This involves selecting the best strategy, taking into consideration one’s actions and action of one’s competitors. Thus, it is a “conflict of interest” situation where one individual tries to win. McDonald contends that the strategic situation is the theory which lies in the instruction between two or more individuals, each of whose actions is based on an expectation concerning the actions of others over whom he has no control. When one individual wins, the
other losses. Minimizing the maximum loss and maximizing the minimum gain are two concepts used in this game.

Answer 22

Game Theory.

Question 23

This technique involves the building of a model that represents a real or an existing system. These models are useful in evaluating and selecting the best one. The blueprint of a proposed
building is an example of simulation. In recent years, computers are being widely used in this techniques. Role playing or teaching concepts through case studies are some form of this techniques.

Answer 23

Simulation

Question 24

This is an interesting technique used in analyzing a decision. Through a graphic illustration, the alternative solutions can be identified and probability estimates are assigned to these alternatives and pay-offs relating to alternatives can be determined.

Answer 24

Decision Tree.