steps to respond to a problem. This is referred to as a ________. A) rule B) policy
C) broad guideline D) procedure Answer: D
Diff: 2 Page Ref: 127
Topic: Types of Decisions and Decision-Making Conditions
115) Michelle finds a company directive that specifically restricts her from taking certain actions. This is a ________. A) rule B) policy
C) broad guideline D) procedure Answer: A
Diff: 2 Page Ref: 128
Topic: Types of Decisions and Decision-Making Conditions
116) As she learns the general guidelines of the job, Michelle is given more decision-making authority. The guidelines establish parameters for decision making and are referred as a ________. A) rule B) policy
C) broad guideline D) procedure Answer: B
Diff: 2 Page Ref: 129
Topic: Types of Decisions and Decision-Making Conditions
117) Michelle eventually finds a problem that has no cut-and-dry solution. The problem is unique and will never occur again. This problem is referred to as ________. A) flexible B) programmed C) adaptable
D) nonprogrammed Answer: D
Diff: 2 Page Ref: 128
Topic: Types of Decisions and Decision-Making Conditions Decision-Making Conditions (Scenario) 26
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Sandy Jo is the manager for TrucksRUs, a medium-sized hauling service located in the Southeast. She is responsible for scheduling trucks, initiating new routes, and staffing both existing and new routes. She is currently struggling with existing information about the profitability of existing and future truck routes.
118) Sandy Jo can make accurate decisions if she is willing to pay $5,000 for
research about the profitability of various truck routes. If she pays for the research, she believes that she is operating under a condition of ________. A) certainty B) risk
C) uncertainty D) maximax Answer: A
Diff: 2 Page Ref: 129
Topic: Types of Decisions and Decision-Making Conditions
119) Joe, Sandy Jo's best driver, tells her that he believes he can estimate that there is a 75 percent probability that they can get the business of Pork Brothers, Inc., if they initiate a truck route through rural North Carolina. Joe is operating under a condition of ________. A) certainty B) risk
C) uncertainty D) maximax Answer: B
Diff: 2 Page Ref: 129
Topic: Types of Decisions and Decision-Making Conditions
120) Sandy Jo knows that she is operating in an uncertain environment. She is basically an optimist, and we would, therefore, expect her to follow a ________ strategy. A) certainty B) risk
C) uncertainty D) maximax Answer: D
Diff: 2 Page Ref: 130
Topic: Types of Decisions and Decision-Making Conditions
121) Sandy Jo knows that she is operating in an uncertain environment. She is basically a pessimist, and we would, therefore, expect her to follow a ________
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strategy. A) certainty B) risk
C) minimax D) maximin Answer: D
Diff: 2 Page Ref: 130
Topic: Types of Decisions and Decision-Making Conditions
122) Sandy Jo wishes to minimize her regret and will probably opt for a ________ strategy. A) certainty B) risk
C) minimax D) maximax Answer: C
Diff: 2 Page Ref: 131
Topic: Types of Decisions and Decision-Making Conditions
123) In a short essay, list and discuss the eight steps in the decision-making process. Answer:
a. Step 1: Identifying a problem?the decision-making process begins with the existence of a problem or a discrepancy between an existing and a desired state of affairs. However, a discrepancy without pressure to take action becomes a problem that can be postponed.
b. Step 2: Identify decision criteria?once the manager has identified a problem that needs attention, the decision criteria important to resolving the problem must be identified. That is, managers must determine what's relevant in making a decision.
c. Step 3: Allocating weights to the criteria?at this step, the decision maker must weigh the items in order to give them the correct priority in the decision. A simple approach is to give the most important criterion a weight of 10 and then assign weights to the rest against that standard.
d. Step 4: Developing alternatives?the fourth step requires the decision maker to list the viable alternatives that could resolve the problem. No attempt is made in this step to evaluate the alternative, only to list them.
e. Step 5: Analyzing alternatives?once the alternatives have been identified, the decision maker must critically analyze each one. From this comparison, the strengths and weaknesses of each alternative become evident.
f. Step 6: Selecting an alternative?the sixth step is the important act of choosing
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the best alternative from among those considered. All the pertinent criteria in the decision have now been determined and weighted, and the alternatives have been identified and analyzed.
g. Step 7: Implementing the alternative?implementation involves conveying the decision to those affected by it and getting their commitment to it. If the people who must carry out a decision participate in the process, they're more likely to enthusiastically support the outcome than if they are just told what to do.
h. Step 8: Evaluating decision effectiveness?the last step in the decision-making process involves appraising the outcome of the decision to see if the problem has been resolved. Did the alternative chosen and implemented accomplish the desired result? If not, the manager may consider returning to a previous step or may even consider starting the whole decision process over. Diff: 3 Page Ref: 121
Topic: The Decision-Making Process
124) In a short essay, discuss the assumptions of rationality and the validity of those assumptions.
Answer: A decision maker who was perfectly rational would be fully objective and logical. He or she would carefully define a problem and would have a clear and specific goal. Moreover, making decisions using rationality would consistently lead toward selecting the alternative that maximizes the likelihood of achieving that goal. The assumptions of rationality apply to any decision. Rational
managerial decision making assumes that decisions are made in the best economic interests of the organization. That is, the decision maker is assumed to be
maximizing the organization's interests, not his or her own interests. Managerial decision making can follow rational assumptions if the following conditions are met: the manager is faced with a simple problem in which the goals are clear and the alternatives limited; the time pressures are minimal; the cost of seeking out and evaluating alternatives is low; the organizational culture supports innovation and risk taking; and outcomes are relatively concrete and measurable. However, most decisions that managers face in the real world don't meet all of those tests. Diff: 2 Page Ref: 124
Topic: Managers Making Decisions
125) In a short essay, discuss bounded rationality and satisficing.
Answer: Despite the limits to perfect rationality, managers are expected to follow a rational process when making decisions. However, certain aspects of the decision-making process are not realistic as managers make decisions. Instead, managers tend to operate under assumptions of bounded rationality; that is, they behave rationally within the parameters of a simplified decision-making process that is limited by an individual's ability to process information. Managers satisfice, rather than maximize, because they can't possibly analyze all the information on all
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of the alternatives. That is, they accept solutions that are \being rational within the limits of their information-processing ability. Diff: 1 Page Ref: 125
Topic: Managers Making Decisions
126) In a short essay, discuss the difference between structured and unstructured problems. Include specific examples of each type of problem to support your answer. Next, discuss the type of decisions that would be used to address each of these problems.
Answer: a. Structured problems?the goal of the decision maker is clear, the problem is familiar, and information about the problem is easily defined and
complete. Examples of these types of problems might include a customer wanting to return a purchase to a retail store, a supplier being late with an important
delivery, a news team responding to an unexpected and fast-breaking event, or a college's handling of a student wanting to drop a class. Such situations are called structured problems because they are straightforward, familiar, and easily defined problems. In handling these problem situations, the manager uses a programmed decision. Decisions are programmed to the extent that they are repetitive and
routine and to the extent that a definite approach has been worked out for handling them. Since the problem is well structured, the manager doesn't have to go to the trouble and expense of going through an involved decision progress. Programmed decision making is relatively simple and tends to rely heavily on previous solutions.
b. Unstructured problems?these problems are new or unusual, and information for them is ambiguous or incomplete. For example, the selection of an architect to design a new corporate manufacturing facility in Bangkok is an example of an unstructured problem. When problems are unstructured, managers must rely on nonprogrammed decision making in order to develop unique solutions. Nonprogrammed decisions are unique and nonrecurring. When a manager
confronts an unstructured problem or one that is unique, there is no cut-and-dry solution. It requires a custom-made response through nonprogrammed decision making.
Diff: 3 Page Ref: 127
Topic: Types of Decisions and Decision-Making Conditions
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