Decision Analysis Chapter 4
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Questions and Answers

What is the primary goal of decision making?

  • To identify a problem
  • To evaluate the decision's effectiveness
  • To allocate weights to decision criteria
  • To make a choice from two or more alternatives (correct)

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

  • Identifying a problem (correct)
  • Developing alternatives
  • Implementing the selected alternative
  • Analyzing alternatives

    • What is a characteristic of a problem?

  • It is always a minor issue
  • It is always a sudden event
  • It is always a complex issue
  • A manager must have the authority to solve it (correct)

    • What is the purpose of allocating weights to decision criteria?

    <p>To prioritize the importance of each criterion</p> Signup and view all the answers

    How many steps are involved in the decision-making process?

    <p>8</p> Signup and view all the answers

    What is the final step in the decision-making process?

    <p>Evaluating the decision's effectiveness</p> Signup and view all the answers

    What do decision makers assume when they satisfice?

    <p>They will choose the first alternative that satisfactorily solves the problem.</p> Signup and view all the answers

    What is an example of escalation of commitment?

    <p>Committing more resources to a decision despite evidence it may have been wrong.</p> Signup and view all the answers

    What is characteristic of an unstructured problem?

    <p>It is a new or unusual problem with ambiguous information.</p> Signup and view all the answers

    What is a programmed decision?

    <p>A repetitive decision that can be handled using a routine approach.</p> Signup and view all the answers

    What is an example of a procedure?

    <p>A series of interrelated steps to respond to a structured problem.</p> Signup and view all the answers

    What is the main difference between structured and unstructured problems?

    <p>Structured problems are routine and familiar, while unstructured problems are new and unusual.</p> Signup and view all the answers

    What is the primary purpose of Step 3 in the decision-making process?

    <p>To determine the relative priority of each decision criterion</p> Signup and view all the answers

    What is the ultimate goal of Step 6 in the decision-making process?

    <p>To choose the best alternative</p> Signup and view all the answers

    What is a disadvantage of group decision making?

    <p>Increases pressures to conform to the group's mindset</p> Signup and view all the answers

    What is the purpose of assigning weights to each criterion in the decision-making process?

    <p>To place the criteria in order of their importance</p> Signup and view all the answers

    What is the purpose of calculating the expected value of revenues?

    <p>To evaluate the risk and potential outcome of a decision</p> Signup and view all the answers

    What is the goal of the economic order quantity (EOQ) model?

    <p>To balance purchase, ordering, carrying, and stock-out costs</p> Signup and view all the answers

    What is the primary focus of Step 2 in the decision-making process?

    <p>Identifying the relevant decision criteria</p> Signup and view all the answers

    What is the purpose of Step 8 in the decision-making process?

    <p>To judge the soundness of the decision by its outcomes</p> Signup and view all the answers

    What is a characteristic of an effective decision-making process?

    <p>It blends analytical with intuitive thinking</p> Signup and view all the answers

    What is the purpose of a payoff matrix?

    <p>To evaluate the outcomes of different decisions</p> Signup and view all the answers

    What is the result of Step 5 in the decision-making process?

    <p>A value judgment of each alternative</p> Signup and view all the answers

    What is a disadvantage of the group decision-making process related to responsibility?

    <p>Ambiguous responsibility for outcomes</p> Signup and view all the answers

    What is the primary purpose of a rule in an organization?

    <p>To limit what a manager or employee can or cannot do</p> Signup and view all the answers

    What is an example of a procedure?

    <p>Following all steps for completing merchandise return documentation</p> Signup and view all the answers

    What is the term for a situation where a manager can make accurate decisions because the outcome of every alternative is known?

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

    What is the approach of a manager who wants to maximize the minimum payoff?

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

    What is the term for a situation where a decision maker has neither certainty nor reasonable probability estimates available?

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

    What is the approach of a manager who wants to minimize maximum regret?

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

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