MODULE 2

Question 1

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

Answer 1

Decision Making

Question 2

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

Answer 2

Strategic-level Managers

Question 3

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 3

Tactical-level Managers

Question 4

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

Answer 4

Operational-level Managers

Question 5

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 sets the objectives for the decision.

Answer 5

Set objectives.

Question 6

in some way limit the decision maker’s choices could be defined by legal, economic or political considerations. are sometimes presented in terms of desired specification or performance standards.

Answer 6

Identify constraints.

Question 7

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

Answer 7

Identify alternatives.

Question 8

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 information that may provide insight as to which alternative to choose.

Answer 8

Gather appropriate information.

Question 9

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

Answer 9

Evaluate alternatives.

Question 10

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 10

Choose the most acceptable alternatives.

Question 11

In a situation involving certainty, 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 11

Certainty

Question 12

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 12

Uncertainty

Question 13

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 13

Risk

Question 14

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 14

Marginal Analysis

Question 14

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 14

Financial Analysis

Question 15

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 15

Break-even Analysis

Question 16

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 16

Ratio Analysis

Question 17

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 17

Operations Research Techniques

Question 18

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 18

Queuing or Waiting-ling Method

Question 19

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 19

Linear Programming

Question 20

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

Answer 20

Game Theory

Question 21

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 simulation techniques. Role playing or teaching 9 concepts through case studies are some form of simulation techniques.

Answer 21

Simulation

Question 22

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 22

Decision Tree