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Question 1

It is the responsibility of managers to plan, coordinate, organize, and lead their organizations to better performance. Ultimately, managers’ responsibilities require that they make strategic, tactical, or operational decisions.

Answer 1

Decision Making

Question 2

➫ involve higher-level issues concerned with the overall direction of the organization
➫ these decisions define the organization’s overall goals and aspirations for the future.
➫ usually the domain of higher-level executives and have a time horizon of three to five years.

Answer 2

Strategic decisions

Question 3

concern how the organization should achieve the goals and objectives set by its strategy,
➫ they are usually the responsibility of midlevel management.
➫ usually span a year and thus are revisited annually or even every six months.

Answer 3

Tactical Decisions

Question 4

affect how the firm is run from day today
➫ they are the domain of operations managers,
who are the closest to the customer.

Answer 4

Operational decisions

Question 5

Regardless of the level within the firm, decision making can be defined as the following process

Answer 5

1. Identify and define the problem.
2. Determine the criteria that will be used to
   evaluate alternative solutions.
3. Determine the set of alternative solutions.
4. Evaluate the alternatives.
5. Choose an alternative.

Question 6

There are a number of approaches to making decisions

Answer 6

-tradition(“We’vealwaysdoneitthisway”)
-­ intuition(“gutfeeling”)
­ -rules of thumb (“As the restaurant owner, I
schedule twice the number of waiters and cooks on holidays”).

Question 7

What makes decision making difficult and challenging?

Answer 7

Uncertainty is probably the number one challenge.

Question 8

the scientific process of transforming data into insight for making better decisions.
➫ used for data-driven or fact-based decision making, which is often seen as more objective than other alternatives for decision making.

Answer 8

Business analytics

Question 9

Analytics is generally thought to comprise three broad categories of techniques

Answer 9

descriptive analytics, predictive analytics, and prescriptive analytics.

Question 10

encompasses the set of techniques that describes what has happened in the past.
➫ Examples are data queries, reports, descriptive statistics, data visualization including data dashboards, some data-mining techniques, and basic what-if spreadsheet models.

Answer 10

Descriptive Analytics

Question 11

is a request for information with certain characteristics from a database.
• For example, a query to a manufacturing plant’s database might be for all records of shipments to a particular distribution center during the month of March.

Answer 11

data query

Question 12

• are collections of tables, charts, maps, and summary statistics that are updated as new data become available.
• Dashboards are used to help management monitor specific aspects of the company’s performance rela

Answer 12

data dashboard

Question 13

the use of analytical techniques for better understanding patterns and relationships that exist in large data sets.
• For example, by analyzing text on social network platforms like Twitter, data-mining techniques are used by companies to better understand their customers.

Answer 13

data mining

Question 14

consists of techniques that use models constructed from past data to predict the future or ascertain the impact of one variable on another.
➫ Forexample,pastdataonproductsalesmaybe used to construct a mathematical model to predict future sales.
➫ This mode can factor in the product’s growth trajectory and seasonality based on past patterns.

Answer 14

Predictive Analytics

Question 15

often referred to as risk analysis, all fall under the banner of predictive analytics.

Answer 15

Linear regression, time series analysis, some data- mining techniques, and simulation,

Question 16

previously discussed as a descriptive analytics tool, is also often used in predictive analytics.

Answer 16

Data mining

Question 17

is also often used in the pharmaceutical industry to assess the risk of introducing a new drug.

Answer 17

Simulation

Question 18

differs from descriptive and predictive analytics in that prescriptive analytics indicates a course of action to take; that is, the output of a prescriptive model is a decision.
➫ Predictive models provide a forecast or prediction, but do not provide a decision.
➫ However, a forecast or prediction, when combined with a rule, becomes a prescriptive model.

Answer 18

Prescriptive Analysis

Question 19

types of prescriptive models that rely on a rule or set of rules

Answer 19

rule-based models

Question 20

models that give the best decision subject to the constraints of the situation.

Answer 20

optimization models

Question 21

Another type of modeling in the prescriptive analytics category
• combines the use of probability and statistics to model uncertainty with optimization techniques to find good decisions in highly complex and highly uncertain settings.

Answer 21

simulation optimization models