Chapter 6 – Decision-Making: The Essence of the Manager’s JobTrue/False Questions4. The first step in the decision-making process is identifying a problem.True (easy)6. It is possible at the end of the decision-making process that you may be required to start the decisionprocess over again.True (easy)10. Decision-making is synonymous with managing.True (easy)12. One assumption of rationality is that we cannot know all of the alternatives.False (difficult)13. Accepting solutions that are "good enough" is termed satisfying.False (easy)15. Managers regularly use their intuition in decision-making.True (easy)16. Rational analysis and intuitive decision-making are complementary.True (moderate)18. Programmed decisions tend to be repetitive and routine.True (easy)21. Most managerial decisions in the real world are fully nonprogrammed.False (easy)24. Risk is a situation in which a decision maker has neither certainty nor reasonable probability estimates.False (difficult)25. An optimistic manager will follow a maximin approach.False (moderate)Multiple ChoiceTHE DECISION-MAKING PROCESS34. A series of eight steps that begins with identifying a problem and decision criteria and allocating weights tothose criteria; moves to developing, analyzing, and selecting an alternative that can resolve the problem;implements the alternative; and concludes with evaluating the decision's effectiveness is the ______________.a. decision-making process. (easy)b. managerial process.c. maximin style.d. bounded rationality approach.e. legalistic opportunism process.36. "A discrepancy between an existing and a desired state of affairs" describes which of the steps in thedecision-making process?a. criteria weight allocationb. analysis of alternativesc. problem identification (difficult)d. decision effectiveness evaluatione. decision criteria identification38. Which of the following must be present in order to initiate the decision-making process?a. plenty of timeb. pressure to act (moderate)c. a lack of authorityd. a lack of resourcese. environmental certainty39. Managers aren't likely to characterize something as a problem if they perceive ______________.a. they don't have authority to act. (difficult)b. pressure to act.c. a discrepancy.d. they have sufficient resources.e. they have budgetary authority.44. Selecting an alternative in the decision-making process is accomplished by ______________.a. choosing the alternative with the highest score. (easy)b. choosing the one you like best.c. selecting the alternative that has the lowest price.d. selecting the alternative that is the most reliable.e. choosing the alternative you think your boss would prefer.47. Which of the following is the final step in the decision-making process?a. identifying the problemb. evaluating the decision's effectiveness (easy)c. identifying decision criteriad. selecting an alternative that can resolve the probleme. allocating weights to alternatives.48.Which of the following is important to remember in evaluating the effectiveness of the decision-makingprocess?a. Ignore criticism concerning the decision-making.b. You may have to start the whole decision process over. (difficult)c. Restart the decision-making process if the decision is less than 50% effective.d. 90% of problems with decision-making occur in the implementation step.e. Keep track of problems with the chosen alternative, but only change those issues that uppermanagement demand.49. Decision-making is synonymous with ______________.a. managing. (easy)b. leading.c. controlling.d. planning.e. organizing.51. Which of the following is not an "organizing" decision?a. What are the organization's long-term objectives? (moderate)b. How many employees should I have report directly to me?c. How should jobs be designed?d. How much centralization should there be in the organization?e. When should the organization implement a different structure?52. Which of the following is not a "leading" decision?a. How do I handle employees who appear to be low in motivation?b. What is the most effective leadership style in a given situation?c. How will a specific change affect worker productivity?d. When is the right time to stimulate conflict?e. How should jobs be designed? (moderate)53. Which of the following is not a "controlling" decision?a. What activities in the organization need to be controlled?b. How should those activities be controlled?c. When is a performance deviation significant?d. When is the right time to stimulate conflict? (moderate)e. What type of management information system should the organization have?54. Managers are assumed to be ______________; they make consistent, value-maximizing choices withinspecified constraints.a. rational (easy)b. leadersc. organizedd. satisficerse. programmed57. Which of the following is not a valid assumption about rationality?a. The problem is clear and unambiguous.b. A single well-defined goal is to be achieved.c. Preferences are clear.d. Preferences are constantly changing. (difficult)e. No time or cost constraints exist.58. In "bounded rationality," managers construct ______________ models that extract the essential featuresfrom problems.a. multipleb. bindingc. interactived. simplified (difficult)e. past59. According to the text, because managers can’t possibly analyze all information on all alternatives, managers______________, rather than ______________.a.maximize; satisficeb.maximize; minimizec.satisfice; minimized.satisfice; maximize (moderate)62. An increased commitment to a previous decision despite evidence that it may have been wrong is referredto as _____________.a.economies of commitmentb.escalation of commitment (moderate)c.dimensional commitmentd.expansion of commitment64. According to the text, all of the following are aspects of intuition EXCEPT:a.experienced-based decisionsb.affect-initiated decisionsc.cognitive-based decisionsd.values or ethics-based decisionse.programmed decisions (easy)65.According to the text, _____________ are straightforward, familiar, and easily defined problems.a.poorly-structured problemsb.well-structured problems (moderate)c.unique problemsd.non-programmed problemse.programmed problems68. ______________ decision-making is relatively simple and tends to rely heavily on previous solutions.a. Nonprogrammedb. Linearc. Satisficingd. Integrativee. Programmed (moderate)70. A ______________ is a series of interrelated sequential steps that a manager can use for responding to astructured problem.a. procedure (easy)b. rulec. policyd. systeme. solution71. A ______________ is an explicit statement that tells a manager what he or she ought or ought not to do.a. procedureb. policyc. rule (moderate)d. solutione. system72. A ______________ provides guidelines to channel a manager's thinking in a specific direction.a. systemb. rulec. solutiond. policy (moderate)e. procedure75. A business school's statement that it "strives for productive relationships with local organizations," is anexample of a ______________.a. rule.b. policy. (moderate)c. procedure.d. commitment.e. contract.78. Which of the following terms is associated with nonprogrammed decisions?a. unique (moderate)b. recurringc. routined. repetitivee. well-defined79. Lower-level managers typically confront what type of decision-making?a. uniqueb. nonroutinec. programmed (moderate)d. nonprogrammede. nonrepetitive83. If an individual knows the price of three similar cars at different dealerships, he/she is operating under whattype of decision-making condition?a. riskb. uncertaintyc. certainty (easy)d. factuale. unprogrammed84. ______________ is those conditions in which the decision maker is able to estimate the likelihood ofcertain outcomes.a. Certaintyb. Risk (easy)c. Uncertaintyd. Maximaxe. Maximin85. A retail clothing store manager who estimates how much to order for the current spring season based on lastspring's outcomes is operating under what kind of decision-making condition?a. seasonalb. risk (difficult)c. uncertaintyd. certaintye. cyclical86. ______________ is a situation in which a decision maker has neither certainty nor reasonable probabilityestimates available.a. Certaintyb. Riskc. Uncertainty (easy)d. Maximaxe. Maximin87. A person at a horse racetrack who bets all of his/her money on the odds-based longshot to "win" (ratherthan "place" or "show") is making what kind of choice?a. maximax (moderate)b. maximinc. minimaxd. minimin89. An individual making a "maximin" type of choice has what type of psychological orientation concerninguncertain decision-making?a. optimistb. realistc. pessimist (moderate)d. satisficere. extremist91. According to the text, a manager who desires to minimize his or her maximim “regret” will opt for a______________ choice.a. maximaxb. maximinc. minimax (moderate)d. minimin93. Which of the following decision-making styles have low tolerance for ambiguity and are rational in theirway of thinking?a.directive (moderate)b.egotisticalc.analyticd.conceptuale.behavioral95. The decision-making style that makes fast decisions and focuses on the short terms is referred to as the______________ style.a.directive (moderate)b.egotisticalc.analyticd.conceptuale.behavioral98. According to the text, ______________ are best characterized as careful decision makers with the ability toadapt or cope with unique situations.a. conceptualb. behavioralc. empiricald. analytic (moderate)e. spatial99. Which of the following is the decision-making style that would most likely look at as many alternatives aspossible and focus on the long run?a. analyticalb. directivec. conceptual (moderate)d. behaviorale. spatial101. A manager who would decide what computer system to purchase for the department by holding a meeting and receiving feedback from his/her subordinates matches with which type of decision-making style?a. analyticalb. behavioral (difficult)c. conceptuald. directivee. empiricalScenariosDecision-Making Conditions (Scenario)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.116. Bubba, Sandy Jo's best driver tells her that he believes that he can estimate that there is a 75% probability that they can get the business of Pork Brothers Inc. if they initiate a truck route through rural North Carolina. Bubba is operating under a condition of ______________.a. certainty.b. risk. (difficult)c. uncertainty.d. maximax.e. maximin.117. 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. (difficult)b. risk.c. uncertainty.d. maximax.e. maximin.118. 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. certaintyb. riskc. uncertaintyd. maximax (moderate)e. maximin119. 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 ______________ strategy.a. certaintyb. riskc. minimaxd. maximaxe. maximin (moderate)120. Sandy Jo wishes to minimize her regret and will probably opt for a ______________ strategy.a. certainty.b. risk.c. minimax (moderate)d. maximax.e. maximin.Essay QuestionsTHE DECISION-MAKING PROCESS121. In a short essay, list and discuss the eight steps in the decision-making process.Answera.Step 1: Identifying a problem– the decision-making process begins with t he existence of a problem ora discrepancy between an existing and a desired state of affairs.However, a discrepancy withoutpressure 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, thedecision 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 inorder 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 alternative s –the fourth step requires the decision maker to list the viablealternatives that could resolve the problem. No attempt is made in this step to evaluate the alternative, only to list them.e.Step 5: Analyzing alternative s – once the alternatives have been identified, the decision maker mustcritically 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 the best alternative fromamong those considered. All the pertinent criteria in the decision have now been determined, weighted, and the alternatives have been identified and analyzed.g.Step 7: Implementing the alternativ e –implementation involves conveying the decision to thoseaffected 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 involvesappraising the outcome of the decision to see if the problem has been resolved. Did the alternative chose 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.(difficult)123. In a short essay, discuss the assumptions of rationality and the validity of those assumptions.AnswerA decision maker who was perfectly rational would be fully objective and logical. He or she wouldcarefully 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, in which the time pressures are minimal and the cost of seeking out and evaluating alternatives is low, for which the organizational culture supports innovation and risk taking, and in which o utcomes are relatively concrete and measurable. However, most decisions that managers face in the real world d on’t meet all those tests.(moderate)126. In a short essay, discuss the difference between well-structured and poorly structured 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.Answera.Well-structured problems - the goal of the decision marker is clear, the problem is familiar, andinformation about the problem is easily defined and complete. Examples of these types of problems might include a customer’s wanting to return a purchase to a retail store, a supplier’s being late with an important delivery, a news team’s 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 well-structured problems since 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 a nd to the extent that a definite approach has been worked out for handling them.Because 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.Poorly-structured problems –these problems are new or unusual and for which information isambiguous or incomplete.For example, the selection of an architect to design a new corporate manufacturing facility in Bangkok is an example of a poorly-structured problem. When problems are poorly-structured, managers must rely on nonproprammed decision making in order to develop unique solutions.Nonprogrammed decisions are unique and nonrecurring. When a manager confronts a poorly-structured problem, or one that is unique, there is no cut-and-dried solution. It requires a custom-made response through nonprogrammed decision making.(difficult)130. In a short essay, list and discuss the four decision-making styles as described in the text.Answera.Directive style – people using the directive style have low tolerance for ambiguity and are rational intheir way of thinking. They’re efficient and logical. Directive types make fast decisions and focus on the short run. Their efficiency and speed in making decisions often result in their making decisions with minimal information and assessing few alternatives.b.Analytic style – decision-makers with an analytic style have much greater tolerance for ambiguity thando directive types. They want more information before making a decision and consider more alternatives than a directive style decision-maker does. Analytic decision-makers are best characterized as careful decision-makers with the ability to adapt or cope with unique situations.c.Conceptual style – individuals with a conceptual style tend to be very broad in their outlook and willlook at many alternatives. They focus on the long run and are very good at finding creative solutions to problems.d.Behavioral style –these decision markers work well with others. They’re concerned about theachievements of subordinates and are receptive to suggestions from others. They often use meetings to communicate, although they try to avoid conflict. Acceptance by others is important to this decision-making style.(moderate)。