Module 9: Improving Decision Making

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Questions and Answers

What type of decision is characterized by having a definite procedure for handling it?

Semi-structured

Dynamic

Structured (correct)

Unstructured

Which type of decision requires the decision maker to use judgment due to the absence of a clear procedure?

Unstructured (correct)

Routine

Structured

Semi-structured

Improving numerous small decisions in a firm can lead to which overall effect?

Increased complexity in decision making

Decreased operational efficiency

Lower employee morale

Significant annual value (correct)

Which of the following roles is responsible for predicting daily demand in a call center?

Call center management Signup and view all the answers

What is an example of a structured decision?

Setting daily parts inventory level Signup and view all the answers

How often does an inventory manager typically make decisions related to parts inventory level?

Daily Signup and view all the answers

What is the main feature of semi-structured decisions?

They have some clear-cut answers provided by accepted procedures. Signup and view all the answers

Which group is most likely responsible for identifying competitive bids from major suppliers?

Senior management Signup and view all the answers

What is the primary focus of the 'Intelligence' stage in the decision-making process?

Discovering and understanding problems Signup and view all the answers

Which of the following describes the 'Choice' stage in decision-making?

Selecting the best solution from alternatives Signup and view all the answers

What does 'coherence' in decision-making refer to?

The logical process that can be explained to others Signup and view all the answers

What does high-velocity automated decision-making eliminate from the process?

Human intuition in decision-making Signup and view all the answers

Which of the following is NOT a criterion for quality decision making?

Creativity in developing unique solutions Signup and view all the answers

When should a decision-maker return to an earlier stage in the decision-making process?

When the decision does not work as intended Signup and view all the answers

What is meant by 'due process' in the context of decision-making?

The process must be documented for scrutiny Signup and view all the answers

Which type of decision is characterized as 'repetitive and routine'?

Semi-structured decisions Signup and view all the answers

Study Notes

Module 9: Improving Decision Making

Module 9 focuses on improving decision-making processes.

Decision Making

Different types of decisions exist.
The decision-making process is a key topic.
Considerations for quality decisions are crucial.

Business Value of Improved Decision Making

The value of improved decision making is measurable.
Decisions at all levels of a firm are important.
Many small decisions add up to significant annual value.

Example: Business Value of Enhanced Decision Making

Various examples demonstrate the quantified business benefit of better decision-making processes.
- Allocate support to valuable customers, predict daily call center demand, decide daily parts inventory level, identify competitive bids from major suppliers, schedule production.
- Each example lists the decision maker, number of decisions, estimated value to the firm, and resulting annual value.

Types of Decisions

Structured: Repetitive, routine decisions with defined procedures. They can be handled efficiently and swiftly.
Semi-structured: A portion of the problem has clear solutions, while the rest needs judgment and procedure.
Unstructured: Novel, important, and non-routine decisions; there is no clear procedure to follow. Decisions require judgment and intuition from the decision-maker.

Information Requirements of Key Decision-Making Groups in a Firm

Decisions vary based on decision-making level (senior, middle, operational management).
Senior management handles unstructured decisions.
Middle management addresses semi-structured decisions.
Operational management is responsible for structured decisions.

The Decision-Making Process Stages

Intelligence: Discovering, identifying, and understanding problems in an organization.
Design: Identifying and exploring various solutions.
Choice: Choosing among solution alternatives.
Implementation: Executing the chosen solution and monitoring performance.

Stages in Decision Making (Diagrammatic Summary)

Problem discovery, solution discovery, and choosing solutions are parts of the decision-making process.
Testing solutions is also an essential part.
If a solution fails, revisiting an earlier stage enables adjustments.

High-Velocity Automated Decision Making

Humans are eliminated from routine decisions that can be automated.
Decision-making is handled by computer algorithms.
Acceptable solutions are predefined and implemented swiftly.
Examples such as Google searches are cited.

Quality of Decisions and Decision Making

Accuracy: Decisions accurately reflect reality.
Comprehensiveness: Decisions consider all relevant factors and factual information.
Fairness: Decisions take into account all interested parties.
Speed (efficiency): Decisions are made quickly and efficiently.
Coherence: Decisions are consistent with established rational processes.
Due process: Decisions are made via established procedures and can be challenged.

Learning Objectives Covered

Describe different types of decisions.
Explain the decision-making process.
Describe considerations for quality decisions.

Quick Review - True or False

Repetitive decisions are semi-structured.
Entering a new rubber goods market is a structured decision.
Implementing a decision is the last stage.
Revisiting earlier stages is possible if a decision fails.
A high-velocity decision process often randomly generates choices.
Google search utilizes high-velocity automated decision-making.
Quality decisions need accuracy and rationality.
In quality decisions, fairness considers interests of related parties.

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Description

Explore the intricacies of decision-making processes in this comprehensive quiz based on Module 9. Delve into various types of decisions, their implications for business value, and the importance of quality decisions at all levels of an organization. Real-world examples illuminate the measurable benefits of enhanced decision-making.