Business Decision Making Process
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Business Decision Making Process

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Questions and Answers

What type of decision-making primarily involves defining the organization's overall goals and aspirations for the future?

  • Tactical decisions
  • Operational decisions
  • Routine decisions
  • Strategic decisions (correct)

    • Which category of decisions is typically the responsibility of midlevel management?

  • Strategic decisions
  • Operational decisions
  • Tactical decisions (correct)
  • Administrative decisions

    • What is the primary focus of descriptive analytics?

  • To explain what has happened in the past. (correct)
  • To analyze relationships between variables.
  • To recommend the best actions to take.
  • To predict future outcomes based on past data.

    • What is the first step in the decision-making process?

    <p>Identify and define the problem</p> Signup and view all the answers

    Which technique is NOT typically associated with predictive analytics?

    <p>Cluster analysis</p> Signup and view all the answers

    Which approach to decision making is characterized by relying on instincts rather than data?

    <p>Intuition</p> Signup and view all the answers

    What distinguishes prescriptive analytics from other types of analytics?

    <p>It offers recommendations on the best course of action.</p> Signup and view all the answers

    What defines business analytics in decision making?

    <p>A process for transforming data into insight</p> Signup and view all the answers

    Which of the following is NOT a common approach to making decisions?

    <p>Relying solely on historical precedents</p> Signup and view all the answers

    Which of the following is an example of a technique used in descriptive analytics?

    <p>Data mining techniques</p> Signup and view all the answers

    In what way do tools of business analytics assist in decision making?

    <p>By creating insights from data</p> Signup and view all the answers

    How does predictive analytics utilize past data?

    <p>To learn relationships between variables for future predictions.</p> Signup and view all the answers

    Which type of decision is concerned with the day-to-day operations of a company?

    <p>Operational decisions</p> Signup and view all the answers

    What type of model is commonly referred to as a rule-based model?

    <p>Prescriptive model</p> Signup and view all the answers

    Which statement about optimization models is true?

    <p>They provide the best decisions subject to constraints.</p> Signup and view all the answers

    Which function is least likely to be performed by descriptive analytics?

    <p>Predicting future market behaviors</p> Signup and view all the answers

    What is the main purpose of portfolio models in finance?

    <p>To maximize projected returns by controlling risk</p> Signup and view all the answers

    Which model is used to determine optimal discount levels in retailing?

    <p>Price-markdown models</p> Signup and view all the answers

    What are the four Vs of Big Data as defined by IBM?

    <p>Volume, Variety, Velocity, Veracity</p> Signup and view all the answers

    What type of analytics combines probability and statistics with optimization techniques?

    <p>Simulation optimization</p> Signup and view all the answers

    In decision analysis, which theory is used to value outcomes based on risk preferences?

    <p>Utility theory</p> Signup and view all the answers

    What is the primary objective of financial analytics?

    <p>To forecast financial performance</p> Signup and view all the answers

    What do supply network design models aim to achieve?

    <p>Minimize costs while meeting service requirements</p> Signup and view all the answers

    Which statement best describes predictive analytics?

    <p>It is often referred to as advanced analytics alongside prescriptive analytics.</p> Signup and view all the answers

    Which analytics technique is most crucial for improving scheduling and treatment in health care?

    <p>Prescriptive analytics</p> Signup and view all the answers

    What is a primary focus of HR analytics within an organization?

    <p>Improving the skill set mix needed to meet organizational needs</p> Signup and view all the answers

    Which of the following is NOT a benefit of marketing analytics?

    <p>Increased operational costs</p> Signup and view all the answers

    What aspect of supply-chain analytics focuses on logistics companies achieving efficiency?

    <p>Inventory and processing control</p> Signup and view all the answers

    Which type of data is foundational for marketing analytics to understand consumer behavior?

    <p>Scanner data and social media data</p> Signup and view all the answers

    What is one of the key outcomes of using web analytics?

    <p>Configuring websites for enhanced user experience</p> Signup and view all the answers

    How does asset allocation relate to investment portfolios?

    <p>It optimizes the distribution of investments across various assets.</p> Signup and view all the answers

    Which of the following roles does simulation play in financial analytics?

    <p>Assesses risk associated with investment portfolios</p> Signup and view all the answers

    Which type of decision focuses on the overall goals and aspirations of an organization?

    <p>Strategic decision</p> Signup and view all the answers

    What type of analytics is utilized to predict future outcomes based on past data?

    <p>Predictive analytics</p> Signup and view all the answers

    Which analytical method describes patterns and relationships in large data sets?

    <p>Data mining</p> Signup and view all the answers

    What is the main goal of optimization models?

    <p>To identify the best decision given constraints</p> Signup and view all the answers

    Which type of decision focuses on the day-to-day operations of an organization?

    <p>Operational decision</p> Signup and view all the answers

    What concept examines the overall worth of an outcome based on a decision maker's attitude towards various factors?

    <p>Utility theory</p> Signup and view all the answers

    What is the role of simulation optimization in decision making?

    <p>To optimize decisions in uncertain situations</p> Signup and view all the answers

    What is a key characteristic of big data?

    <p>Too large or complex for standard data-processing techniques</p> Signup and view all the answers

    Study Notes

    Decision Making

    • Managers make strategic, tactical, or operational decisions every day
    • Strategic decisions are high-level and deal with the organization's overall direction and future goals
    • Tactical decisions focus on achieving the strategic goals and objectives, typically made by middle-level management
    • Operational decisions concern the day-to-day running of the organization, made by operations managers

    Decision Making Process

    • Identifying and defining the problem is crucial
    • Criteria for evaluating alternative solutions must be established
    • A set of alternative solutions need to be determined and evaluated
    • Selection of the best alternative is the final step

    Common Approaches to Decision Making

    • Tradition, intuition, rules of thumb, and using the relevant data are common methods

    Business Analytics Defined

    • The significant challenge in decision making is overcoming uncertainty and the vast number of alternatives
    • Business analytics aims to transform data into insights for making better decisions
    • It promotes data-driven or fact-based decision making, which is perceived as more objective

    Benefits of Business Analytics for Decision Making

    • Generates insights from data
    • Improves forecasting accuracy for planning purposes
    • Quantifies risk more effectively
    • Provides better alternatives through analysis and optimization

    Categorization of Analytical Methods

    • Descriptive Analytics describes what has happened in the past, using techniques like data queries, reports, and descriptive statistics
      • Data mining is a crucial part of descriptive analytics, using techniques like cluster analysis and sentiment analysis to understand patterns and relationships in large datasets
    • Predictive Analytics uses models based on past data to predict the future and understand the impact of variables
      • Common techniques include linear regression, time series analysis, and simulation
    • Prescriptive Analytics indicates the best course of action to take, guiding decision-makers
      • Optimization models determine the best decision within constraints
        • Examples include portfolio models in finance, supply network design models in operations, and price-markdown models in retail
      • Simulation Optimization combines probability, statistics, and optimization techniques to find good decisions in complex and uncertain situations
      • Decision Analysis helps develop optimal strategies faced with various decision alternatives and uncertain future events

    Big Data

    • Big data refers to datasets too large or complex for standard data-processing techniques and typical software
    • IBM defines big data using the 4Vs: Volume, Velocity, Variety, and Veracity

    Business Analytics in Practice

    • Financial Analytics uses models to forecast financial performance, assess investment risks, construct financial instruments, and optimize investment portfolios, often employing simulation
    • Human Resource Analytics, a newer field, aims to ensure the organization has the right mix of skills, recruits top talent, retains employees, and achieves diversity goals
    • Marketing Analytics uses data from scanner data and social media to understand consumer behavior for better advertising, pricing, demand forecasting, product management, and customer satisfaction and loyalty
    • Healthcare Analytics employs descriptive, predictive, and prescriptive analytics to improve patient, staff, and facility scheduling, patient flow, purchasing, and inventory control
    • Supply-Chain Analytics focuses on efficient delivery of goods, utilizing analytics for optimized sorting, vehicle and staff scheduling, vehicle routing, inventory and processing control, and supply chain resilience
    • Web Analytics analyzes online activity like website and social media visits, using descriptive and advanced analytics to configure websites, position ads, and utilize social networks for product and service promotion

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    2DA3 Decision Making with Analytics Lecture 1.2 PDF

    Description

    This quiz explores the various aspects of decision making within a business context, including the types of decisions managers face, the decision-making process, and common approaches to making effective choices. It emphasizes the importance of analytical tools in overcoming uncertainty and evaluating alternatives.

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