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Questions and Answers
What is the main characteristic that distinguishes programmed decisions from non-programmed decisions?
What is the main characteristic that distinguishes programmed decisions from non-programmed decisions?
- The availability of predetermined decision rules (correct)
- The frequency of the decision
- The level of manager making the decision
- The level of complexity of the decision
What type of problem is best handled by a programmed decision?
What type of problem is best handled by a programmed decision?
- Novel problem
- Poorly structured problem
- Well-structured problem (correct)
- Unique problem
What is a policy, in the context of programmed decisions?
What is a policy, in the context of programmed decisions?
- A guide that establishes parameters for making decisions (correct)
- A custom-made solution to a unique problem
- A series of interrelated sequential steps
- An explicit statement that tells managers what they ought or ought not to do
What type of decisions are typically made by first-line managers and many middle managers?
What type of decisions are typically made by first-line managers and many middle managers?
At what level of the organization are managers typically dealing with poorly structured problems and using non-programmed decisions?
At what level of the organization are managers typically dealing with poorly structured problems and using non-programmed decisions?
What is the assumption of rationality in managerial decision making?
What is the assumption of rationality in managerial decision making?
When can the assumptions of rationality be met in managerial decision making?
When can the assumptions of rationality be met in managerial decision making?
What are the two dimensions that differ in an individual's approach to decision-making?
What are the two dimensions that differ in an individual's approach to decision-making?
Why is the rational model flawed in actual decision-making?
Why is the rational model flawed in actual decision-making?
What is the purpose of the rational model in decision-making?
What is the purpose of the rational model in decision-making?
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Study Notes
Nature of Managerial Decision-making
- Decision making involves choosing one alternative from a set of alternatives.
- There are two types of decisions: programmed and non-programmed decisions.
Programmed Decisions
- Made in routine, repetitive, well-structured situations using predetermined decision rules.
- Often derived from established practices, procedures, or habits.
- Ideal for computers to deal with complex programmed decisions.
- Most decisions made by first-line managers and many by middle managers are programmed decisions.
Non-Programmed Decisions
- Made for novel and/or ill-structured situations where predetermined decision rules are impractical.
Types of Problems and Decisions
- Problems can be well-structured or poorly structured.
- Well-structured problems:
- Straightforward, familiar, and easily defined.
- Handled using programmed decisions and routine approaches.
- Three types of plans for programmed decisions:
- Procedures: series of interrelated sequential steps.
- Rules: explicit statements guiding manager actions.
- Policies: guides establishing parameters for decision-making.
- Poorly structured problems:
- New, unusual, with ambiguous or incomplete information.
- Handled using non-programmed decisions requiring custom-made solutions.
General Organizational Situations
- Higher levels of the organization: dealing with poorly structured problems and using non-programmed decisions.
- Lower levels: dealing with well-structured problems using programmed decisions.
Decision-Making Approaches
- Managers can make decisions based on rationality, bounded rationality, or intuition.
Assumptions of Rationality
- Managerial decision making is assumed to be rational and value-maximizing within specified constraints.
- Assumptions of rationality:
- Problem clarity
- Goal orientation
- Known options
- Clear preferences
- Constant preferences
- No time or cost constraints
- Maximum pay off
- The rational model is flawed, as perfect information is not available, and managers' values and personality factors influence decisions.
Decision-Making Styles
- Managers have different styles when making decisions and solving problems, differing in:
- Way of thinking (rational or intuitive)
- Approach to decision-making
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