Week 2 | Problem Solving and Decision Making

Question 1

What are the types of managerial decisions?

Answer 1

Programmed decisions :
apply solutions from past experience to a routine problem
Non-programmed decisions :
apply specific solutions crafted for a unique problem
A ‘Crisis’ is an unexpected problem that can lead to disaster if not resolved quickly and appropriately
Progressive Organisations expect ‘Crises’ and plan ahead on how to deal with them

Question 2

Name 3 Decision condition.

Answer 2

Certain environment - alternative courses of action and their outcomes are known to decision maker
Risk environment - decision maker views alternatives and their outcomes in terms of probabilities
Uncertain environment - decision maker doesn’t know all alternatives and outcomes, even as probabilities p

Question 3

Name the 5 steps of the decision making process.

Answer 3

1. Fine and define the problem.
2. Generate and evaluate possible solutions.
3. Choose a solution.
4. Implement the solution.
5. Evaluate results.

Question 4

Explain Step 1 of the decision making process.

Answer 4

Gathering information, information processing and deliberation.
(Common mistakes: defining problem to broadly, focusing on symptoms instead of cause, choosing wrong problem to deal with)

Question 5

Explain Step 2 of the decision making process.

Answer 5

Generate and evaluate possible solutions.
The more information is gathered, data analysed, pros and cons of actions identified the better.
Involvement of other people is vital to maximize information.
Cost-benefit analysis (comparing costs and benefits of course of action)

Question 6

Explain Step 3 of the decision making process.

Answer 6

Choose a solution.

1. Classical solution - having all the information.
2. Optimising decision - choosing the absolute best solution to a problem.
3. Behavioral decision - limited information and bound rationality.
4. Satisfying decision - first satisfactory alternative that comes to your attention.

Question 7

Explain Step 4 of the decision making process.

Answer 7

Implement solutions.
Set direction and initiate problem solving action.
Managers need ability and willingness to implement decisions.

Question 8

Explain Step 5 of the decision making process.

Answer 8

Evaluate results.
The process isn’t complete until results are evaluated.
If desired results aren’t achieved, process must be renewed to allow corrective actions.