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?

Identify and define the problem Signup and view all the answers

Which technique is NOT typically associated with predictive analytics?

Cluster analysis Signup and view all the answers

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

Intuition Signup and view all the answers

What distinguishes prescriptive analytics from other types of analytics?

It offers recommendations on the best course of action. Signup and view all the answers

What defines business analytics in decision making?

A process for transforming data into insight Signup and view all the answers

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

Relying solely on historical precedents Signup and view all the answers

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

Data mining techniques Signup and view all the answers

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

By creating insights from data Signup and view all the answers

How does predictive analytics utilize past data?

To learn relationships between variables for future predictions. Signup and view all the answers

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

Operational decisions Signup and view all the answers

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

Prescriptive model Signup and view all the answers

Which statement about optimization models is true?

They provide the best decisions subject to constraints. Signup and view all the answers

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

Predicting future market behaviors Signup and view all the answers

What is the main purpose of portfolio models in finance?

To maximize projected returns by controlling risk Signup and view all the answers

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

Price-markdown models Signup and view all the answers

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

Volume, Variety, Velocity, Veracity Signup and view all the answers

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

Simulation optimization Signup and view all the answers

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

Utility theory Signup and view all the answers

What is the primary objective of financial analytics?

To forecast financial performance Signup and view all the answers

What do supply network design models aim to achieve?

Minimize costs while meeting service requirements Signup and view all the answers

Which statement best describes predictive analytics?

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

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

Prescriptive analytics Signup and view all the answers

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

Improving the skill set mix needed to meet organizational needs Signup and view all the answers

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

Increased operational costs Signup and view all the answers

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

Inventory and processing control Signup and view all the answers

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

Scanner data and social media data Signup and view all the answers

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

Configuring websites for enhanced user experience Signup and view all the answers

How does asset allocation relate to investment portfolios?

It optimizes the distribution of investments across various assets. Signup and view all the answers

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

Assesses risk associated with investment portfolios Signup and view all the answers

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

Strategic decision Signup and view all the answers

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

Predictive analytics Signup and view all the answers

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

Data mining Signup and view all the answers

What is the main goal of optimization models?

To identify the best decision given constraints Signup and view all the answers

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

Operational decision 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?

Utility theory Signup and view all the answers

What is the role of simulation optimization in decision making?

To optimize decisions in uncertain situations Signup and view all the answers

What is a key characteristic of big data?

Too large or complex for standard data-processing techniques 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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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.