Types of Decision

Question 1

What are the 3 pairs of decision types?

Answer 1

1) routine = decisions taken regualrly
2) non-routine = decisions which occur irregularly and may be needed because of some unexpected event (e.g. fire, change of location, entering a new market, stopping a product)

1) tactical = short term (e.g. reduce prices)
2) strategic = long term implications (e.g. moving manufacturing to a different location)

1) proactive = one taken in advance of events
2) reactive = decisions responding to events rather than trying to shape them

Question 2

What is critical path analysis?

Answer 2

• a technique of analysing and organising the tasks needed to undertake a complex project to determine the quickest and most efficient means of completing that project

Question 3

What are nodes?

Answer 3

• they represent the start or end of each activity and are drawn as circles

Question 4

What are the advantages of critical path analysis?

Answer 4

• helps managers use time efficiently
• helps to minimise costs
• reduce the time a project takes to complete
• resources can be made available when needed = reduced storage costs
• resolutions to delays can be planned in advance
• can improve efficiency & cash flow
• enhances profitability

Question 5

What are the disadvantages of critical path analysis?

Answer 5

• complex activities may be difficult or impossible to represent on a network
• external factors may change so the data may become inaccurate
• if it’s drawn and calculated incorrectly, it will be inaccurate
• it requires specialist software to apply it to large projects
• the network will often need updating

Question 6

What is a decision tree?

Answer 6

• a diagram that sets out the options available when making a decision plus the outcomes that might result by chance

Question 7

What are the advantages of decision trees?

Answer 7

• sets out problems clearly & encourages a logical & quantitative approach
• the tree can act as a focal point for discussion within a management meeting
• shows the expected values for each decision and the probability of any specific result occurring

Question 8

What are the disadvantages of decision trees?

Answer 8

• hard to get meaningful data

- easy for a manager with a case to prove to bias the result in their favour

Question 9

What is statistical process control?

Answer 9

• a monitoring system based on statistics to ensure sufficient production and quality standards
• often referred to as control charts
• e.g. questionnaires, lasers and monitored calls