Management Decision Making Concepts

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Questions and Answers

What distinguishes data from information?

Data is relevant, while information lacks relevance.

Data is raw, unanalyzed facts while information is processed and analyzed data. (correct)

Data consists of analyzed facts while information is unanalyzed.

Data is processed while information is raw.

Which attribute does NOT contribute to the quality of information?

Efficiency (correct)

Relevance

Accuracy

Timeliness

What is the main consequence of risk in decision-making?

Unclear information interpretations.

Ability to assign probabilities to outcomes. (correct)

Lack of time for thorough decision evaluation.

Unknown future outcomes.

Which of the following defines the first step in the decision-making process?

Identify a problem. Signup and view all the answers

In what scenario are managers more likely to encounter unstructured problems?

As they progress in the organizational hierarchy. Signup and view all the answers

Which of the following is NOT considered a factor that limits access to information for decision-making?

Clarity Signup and view all the answers

What is the purpose of allocating weights to decision criteria?

To prioritize the criteria based on their importance. Signup and view all the answers

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

Evaluating decision effectiveness. Signup and view all the answers

What defines a programmed decision?

A decision made based on established guidelines and procedures. Signup and view all the answers

Which condition indicates a high possibility of decision failure?

Ambiguity Signup and view all the answers

What does bounded rationality imply?

Managers make decisions based on limited information and opt for satisfactory solutions. Signup and view all the answers

Which of the following biases involves focusing on initial information and disregarding new data?

Anchoring effect Signup and view all the answers

What is the primary goal of intuitive decision making?

To quickly arrive at a decision based on experience and feelings. Signup and view all the answers

Which system integrates various organizational processes to enhance productivity?

Enterprise Resource Planning (ERP) system Signup and view all the answers

What is the focus of evidence-based decision making?

To base decisions on the best available facts and evidence. Signup and view all the answers

What type of decision involves clear-cut goals but incomplete information about outcomes?

Uncertainty Signup and view all the answers

What is the consequence of the sunk costs error in decision making?

Incorporating initial costs into current decision criteria. Signup and view all the answers

Which of the following is an effective strategy to improve decision quality?

Encouraging rigorous debate and diverse viewpoints Signup and view all the answers

What is a characteristic of nonprogrammed decisions?

They involve custom solutions for unique situations. Signup and view all the answers

What does the term 'groupthink' refer to in decision making?

The pressure to conform within a group, suppressing dissenting views. Signup and view all the answers

What factor does overconfidence bias typically affect in decision-making?

The individual's assessment of their own knowledge and skills. Signup and view all the answers

Study Notes

Data and Information

Data is raw, unanalyzed facts.
Information is processed and analyzed data.
Useful information has quality (accuracy, reliability), timeliness, completeness (having all needed info), and relevance (suited to the situation).

Incomplete Information

Managers often lack complete information due to risk, uncertainty, ambiguity, and time/cost constraints.
Risk involves known outcomes with probabilities.
Uncertainty has unknown probabilities of outcomes.
Ambiguity has multiple, conflicting interpretations of information.
Time constraints and information costs limit managers' ability to explore all options and consequences.

Decision Making

Decision-making involves steps: identifying the problem, criteria, weights, alternatives, evaluating, selecting, implementing, and evaluating the outcome.
Structured problems are straightforward and familiar; unstructured problems are novel.
Programmed decisions are routine, with established guidelines (procedures, rules, policies).
Nonprogrammed decisions are unique, custom-made solutions to unusual opportunities or problems.

Decision Conditions

Certainty: complete information available.
Risk: clear goals and probability estimates.
Uncertainty: known goals, incomplete information about alternatives/future.
Ambiguity: unclear goals/problems, undefined alternatives/outcomes.

Decision-Making Biases

Overconfidence bias: overestimating knowledge.
Immediate gratification bias: prioritizing immediate rewards.
Anchoring effect: focusing on initial information.
Confirmation bias: seeking confirmatory information.
Hindsight bias: falsely believing outcomes were predictable.
Sunk costs error: focusing on past investment instead of future.
Self-serving bias: taking credit for successes, blaming others for failures.

Decision-Making Approaches

Rational decision-making: logical, consistent choices to maximize value (assumes objective/logical decision-makers with clear goals and understanding of all alternatives/consequences, and decisions made rationally).
Bounded rationality: rational but constrained by information processing capabilities (managers satisfice rather than maximize, accepting "good enough" solutions).
Intuitive decision-making: decisions based on experience, feelings, and judgment (quick apprehension based on experience).

Innovative Decision-Making Techniques

Brainstorming: interactive group generating alternatives.
Evidence-based decision-making: informed decisions based on best available evidence.
Rigorous debate: constructive conflict improving decision quality
Avoiding groupthink: suppressing contrary opinions.

Information Systems and Management

Information technology (IT): methods for acquiring, organizing, using, and transmitting information.
IT impact on business: creating portable offices, enabling better service and increased collaboration, improving management and creating new opportunities, supporting global exchange, offering flexibility for customization.
Information system: using IT to convert data into information for decision-making.
CRM (Customer Relationship Management) systems: compile customer info for monitoring contact.
ERP (Enterprise Resource Planning) systems: integrate organizational operations.

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Description

This quiz explores key concepts related to data, information, and decision-making processes in management. It covers topics such as the distinctions between raw data and processed information, the challenges of incomplete information, and the structured steps involved in making decisions. Ideal for students of management and related fields.