Deck 4: Foundations of Decision Making

Question 1

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
According to Herbert Simon, having the copy machine repaired at 3 times the cost of having it replaced would be an example of

A)a policy.
B)a nonprogrammed decision.
C)suboptimization.
D)a well- structured decision.

Answer 1

C

Question 2

When a manager engages in behaviors that speed up the decision- making process in order to avoid information overload, he is engaging in judgmental shortcuts or

A)uncertainty.
B)unbounded rationality.
C)heuristics.
D)bounded rationality.

Answer 2

C

Question 3

Because bounded rationality affects most managers, decisions made are strongly influenced by all of the following except

A)self- interest.
B)organizational culture.
C)known outcomes.
D)power considerations.

Answer 3

C

Question 4

The supplier is late with the order of paper that is needed by the college during finals week. The secretary is sent to Wal- Mart to pick up an extra case until the paper arrives. This is an example of a(n)_________problem.

A)ill- structured
B)programmed
C)nonprogrammed
D)well- structured

Question 5

Jane just conducted the performance appraisals of five of her employees. Her appraisal was heavily influenced by the performance of the individuals during the last month. Jane's bias is an example of

A)representative heuristic.
B)escalation of commitment.
C)optimal decision making.
D)availability heuristic.

Question 6

Herbert Simon, an economist and management scholar, found that within certain constraints, managers

A)behave illegally.
B)act in their own self- interest.
C)act rationally.
D)engage in irrational decisions.

Question 7

Jay tends to always look at the broad picture and likes to look at many alternatives. He focuses on the long run and looks for creative solutions. He prefers which of the following styles of decision making?

A)conceptual
B)directive
C)behavioral
D)analytic

Question 8

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
The decision about how to handle the equipment repair/replacement is

A)well- structured.
B)programmed.
C)ill- structured.
D)nonprogrammed.

Question 9

When a plant manager who is trying to reduce turnover of production workers notices that turnover has decreased by 10 percent four months after he instituted a new training program, at which step in the rational decision- making process is this manager?

A)Analyze the alternatives.
B)Evaluate the decision criteria.
C)Identify the problem.
D)Evaluate the results.

Question 10

_________implies that the outcome of every alternative is known.

A)Uncertainty
B)Certainty
C)Bounded rationality
D)Unbounded rationality

Question 11

Which of the following is not an advantage of group decision making over individual decision making?

A)more complete information
B)fewer alternatives due to groupthink
C)increased acceptance of the decision
D)increased legitimacy

Question 12

Which of the following group techniques allows group members to meet together, but allows independent thinking?

A)nominal group technique
B)groupthink
C)brainstorming
D)electronic meetings

Question 13

"Decision making under risk" means _________.

A)the decision has no data on which to base his or her decision
B)the decision maker knows all of the risks involved in the situation
C)the decision maker is used to dealing with high- risk situations
D)the decision maker can estimate the risk involved in making a decision

Question 14

In an effort to demonstrate that an initial decision was not wrong, instead of searching for new alternatives, managers engage in which of the following?

A)representative heuristic
B)optimal decision making
C)availability heuristic
D)escalation of commitment

Question 15

Once a manager has identified a problem, the _________ that will be important in solving the problem must be identified.

A)decision criteria
B)scenarios
C)factor weights
D)discrepancies

Question 16

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
Situations that are well- structured problems align closely with the assumptions underlying

A)escalation of commitment.
B)representative heuristic.
C)perfect rationality.
D)available heuristic.

Question 17

A method that can be used to overcome the tendency toward conformity in group decision making is which of the following?

A)groupthink
B)nominal group technique
C)brainstorming
D)electronic meetings

Question 18

Putting a decision into action and conveying the decision to the persons who will be affected by it is known as

A)irrational decision making.
B)decision implementation.
C)problem identification.
D)rational decision making.

Question 19

Creativity refers to

A)creating something new.
B)criticizing the discovered items.
C)organizing already discovered items.
D)uncovering what is already there.

Question 20

As managers move up the organizational hierarchy, problems are more likely to become

A)ill- structured.
B)programmed.
C)well- structured.
D)nonprogrammed.

Question 21

Problems where information is ambiguous or incomplete are which type of problem?

A)well- structured
B)nonprogrammed
C)ill- structured
D)programmed

Question 22

"No smoking allowed" is an example of which of the following?

A)policy
B)procedure
C)nonprogrammed decision
D)rule

Question 23

A country's cultural environment is reflected in the decisions made by managers. Which of the following is not true about the culture and decisions made by managers in India?

A)Very senior- level managers make decisions.
B)Power distance is low.
C)Uncertainty avoidance is high.
D)Managers are very likely to make safe decisions.

Question 24

Managers will often not choose the decision alternative that rational decision making indicates to be best because they have a "vague feeling" that another alternative will be better. Which of the behavioral factors that influence decision- making does this behavior reflect?

A)Satisficing
B)Intuition
C)Escalation of commitment
D)Bounded rationality

Question 25

Next year will be the first time that a certain regional manufacturing chemical manufacturing company will close one of their plants in Baton Rouge. The type of decisions in this situation that will be encountered by its upper levels of management are called _________decisions.

A)heuristic
B)non- programmed
C)programmed
D)satisficing

Question 26

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
The problem of whether or not to order more fax paper is

A)well- structured.
B)nonprogrammed.
C)ill- structured.
D)programmed.

Question 27

Programmed decisions minimize the need for managers to

A)exercise discretion.
B)act alone.
C)make the same decision under similar circumstances.
D)none of the above

Question 28

All of the following are examples of planning- function decisions except

A)What are the organization's long- term objectives?
B)What might the competition be considering?
C)Does the human resource evaluation process comply with federal laws?
D)How difficult should individual goals be?

Question 29

_________occurred when Georgia- Pacific made a decision to spin off its holdings in Texas and Louisiana into the Louisiana- Pacific Corporation.

A)Escalation of commitment
B)Representative heuristics
C)Satisficing
D)Programmed decision- making

Question 30

The strengths and weaknesses of each alternative become obvious in which step of the decision making- process?

A)Analyze the alternatives.
B)Implement the alternative.
C)Identify the decision criteria.
D)Identify the problem.

Question 31

Which of the following is not an assumption of the rational decision- making model?

A)Preferences change slowly.
B)The problem is clear and unambiguous.
C)A single well- defined goal is to be achieved.
D)Final choice will maximize economic payoff.

Question 32

When the outcome of a management decision is uncertain, the decision involves _________.

A)uncertain outcomes
B)risk
C)fewer feasible solutions
D)bounded rationality

Question 33

_________ is not one of the eight steps in the decision making process.

A)Implementing the decision
B)Identifying the problem
C)Delegating the decision making
D)Analyzing alternative solutions

Question 34

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.

-After talking to Dave's boss, it appears that Dave decided to repair rather than replace the old fax machine in the past because he thought it would be cheaper to fix it than replace it. As it turns out, it has cost Dave three times as much to fix the machine or buy a new machine over the past two years than it would have cost to purchase a new one. Yet, Dave still persists in wanting to repair the old machine. This is an example of_________ .

A)bounded rationality
B)a programmed decision
C)ineffective decision- making
D)escalation of commitment

Question 35

When the petty cash in Elaine's drawer falls to less than $25, she places a request for additional funds to bring the total back to $100. This is an example of a(n)_________decision.

A)nonprogrammed
B)programmed
C)well- structured
D)ill- structured

Question 36

Which of the following styles of decision making is characterized by individuals who prefer complete information and consider several alternatives?

A)conceptual
B)directive
C)behavioral
D)analytic

Question 37

According to the concept of bounded rationality, decision makers are limited by _________.

A)their habits
B)time
C)less than complete information
D)all of the above

Question 38

Harvey Jones made a decision when he was uncertain of the outcome. The decision he made is likely to be

A)risky.
B)unacceptable.
C)successful.
D)of poor quality.

Question 39

Rules, procedures, and policies are most suitable for_________ problems.

A)programmed
B)ill- structured
C)well- structured
D)nonprogrammed

Question 40

The basic premise for the decision- making model is that individuals differ along two dimensions

A)experience and communication skills.
B)personality and attention to detail.
C)degree of risk preference and position within the organizational hierarchy.
D)way they think and tolerance for ambiguity.

Question 41

When decisions must be made with limited information because full knowledge of the problem is unavailable and the probability of outcomes is unknown, the condition of _________exists.

A)certainty
B)uncertainty
C)bounded rationality
D)risk

Question 42

_________decisions deal with situations where the factors are fairly structured and occur with some frequency.

A)Heuristic
B)Satisficing
C)Non- programmed
D)Programmed

Question 43

The cultural environment affects decisions made by managers. Which of the following is not correct?

A)In Germany, organizations are flexible and organic.
B)In Italy, managers rely on tried or proven alternatives.
C)In India, very senior managers make decisions.
D)In Egypt, time pressures are low.

Question 44

Suppose that you need a math elective to take in order to graduate. There are five different courses you could take. You call one friend and, on the basis of her terrific experience in one course, you choose that one. What would Herbert Simon call what you have just done?

A)Bounded rationality
B)Unbounded rationality
C)Rational decision- making
D)Escalation of commitment

Question 45

Application of the Decision- Making Process
Net income has fallen for the second quarter, and Amanda is understandably worried. She knows at the board of directors meeting on Wednesday she will be closely questioned and expected to have a plan to avoid any third- quarter losses.
Amanda begins to read slowly over the financial documents to try and ascertain areas that may be the cause. After much consideration, it appears that expenses have risen dramatically over the last few months. Amanda wonders why. She decides a meeting of the department heads is in order first thing tomorrow morning. At the meeting, Amanda would like to generate several possible solutions to the increased expenses. She wonders how to effectively explore all the options. At the meeting, the first option that is discussed is to downsize the research and development department since it is not essential to current operations. Several managers approve this plan. Amanda suggests that they need to look further at the issue. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.
What should Amanda do after the problem is defined?

A)Identify the decision criteria.
B)Select an alternative that will solve the problem.
C)Identify the real problem.
D)Assign weights to the decision criteria.

Question 46

"Good" decisions are expected to

A)be made quickly.
B)appear to follow the rational process.
C)earn promotions for decision makers.
D)produce "good" results.

Question 47

Ivan spoke out in a meeting in favor of a potential cost savings that would result from a new employee benefits program offered by the company. He later received information that showed that his initial decision about the cost savings was incorrect, but he was too embarrassed to publicly admit he was wrong, so he is sticking by his original statement. Ivan is experiencing

A)satisficing.
B)escalation of commitment.
C)bounded rationality.
D)poor use of rational making process.

Question 48

Application of Decision- Making Styles
Jeremy has noticed that the people within his organization make decisions in very different ways. Jackie is rational and has a low tolerance for ambiguity. She is efficient and generally makes decisions that are applicable to the short term. Andy tends to be very broad in his outlook and looks at many alternatives before making a decision. He generally focuses on the long term. Alexandra thinks intuitively and works well with others. She is open to suggestions and concerned about her coworkers. Jeremy himself wants to have complete information before making a decision and always carefully considers many alternatives.
The directive style of decision making is used by

A)Alexandra.
B)Jeremy.
C)Andy.
D)Jackie.

Question 49

Application of the Decision- Making Process
Net income has fallen for the second quarter, and Amanda is understandably worried. She knows at the board of directors meeting on Wednesday she will be closely questioned and expected to have a plan to avoid any third- quarter losses.
Amanda begins to read slowly over the financial documents to try and ascertain areas that may be the cause. After much consideration, it appears that expenses have risen dramatically over the last few months. Amanda wonders why. She decides a meeting of the department heads is in order first thing tomorrow morning. At the meeting, Amanda would like to generate several possible solutions to the increased expenses. She wonders how to effectively explore all the options. At the meeting, the first option that is discussed is to downsize the research and development department since it is not essential to current operations. Several managers approve this plan. Amanda suggests that they need to look further at the issue. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.
Which of the following would help Amanda develop a thorough list of alternative solutions to the problem?

A)strategic planning
B)brainstorming
C)groupthink
D)escalation of commitment

Question 50

Jill has just been given the assignment of developing the marketing strategy for the company's new product to be released at Christmas. What type of decision making will be required of Jill?

A)nonprogrammed
B)programmed
C)well- structured
D)ill- structured

Question 51

_________is a situation in which a manager who is deciding how to invest excess cash gets information from the bank that can describes various options available for type of investment, each of which have a guaranteed rate of return.

A)Optimal decision- making
B)Risk
C)Uncertainty
D)Certainty

Question 52

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.
The decision by the secretary to re- order paper from the same supplier first week of every month is an example of

A)a risk.
B)a non- programmed decision.
C)suboptimization.
D)a programmed decision.

Question 53

Once in place, expert systems allow employee and lower level managers to make high quality decisions that previously could have been made only by_________ .

A)senior managers
B)college professors
C)management experts
D)consultants

Question 54

How do managers know when they have a disparity or discrepancy in the decision- making process? The best way is to compare their current state and some standard. Which of the following would not be a relevant standard?

A)previously set goals
B)use future projections
C)the performance of some unit in or out of the organization
D)past performance

Question 55

Application of Decision- Making Styles
Jeremy has noticed that the people within his organization make decisions in very different ways. Jackie is rational and has a low tolerance for ambiguity. She is efficient and generally makes decisions that are applicable to the short term. Andy tends to be very broad in his outlook and looks at many alternatives before making a decision. He generally focuses on the long term. Alexandra thinks intuitively and works well with others. She is open to suggestions and concerned about her coworkers. Jeremy himself wants to have complete information before making a decision and always carefully considers many alternatives.
Jeremy's decision- making style can be characterized as

A)analytic.
B)conceptual.
C)behavioral.
D)directive.

Question 56

Price, size, gas mileage, color, options, and repair records are examples of which of the following when purchasing a new car?

A)factor weights
B)scenarios
C)problems
D)decision criteria

Question 57

The fact that managers make consistent, value- maximizing choices within specified constraints is known as which of the following?

A)implementation of the alternative
B)rational decision making
C)irrational decision making
D)decision implementation

Question 58

_________is when an alternative is chosen because the manager believes it is "good enough," to solve his or her problem.

A)Incomplete
B)Optimizing
C)Satisficing
D)Maximizing

Question 59

The tendency for people to base their judgments on information that is readily available is known as

A)representative heuristic.
B)availability heuristic.
C)escalation of commitment.
D)optimal decision making.

Question 60

Which of the following is not allowed in a brainstorming session?

A)clear definition of the problem
B)large number of alternatives
C)recording of all alternatives
D)criticism of poor ideas

Question 61

The decision- making process concludes with

A)evaluation of decision effectiveness.
B)identification of a problem.
C)analysis of alternatives.
D)identification of decision criteria.

Question 62

In the decision- making process known as bounded rationality,

A)the final choice minimizes economic payoff.
B)all "good enough" choices are selected.
C)the first choice that is "good enough" is chosen.
D)the final choice maximizes economic payoff.

Question 63

_________requires managers to select the best alternative from multiple criteria or alternative solutions.

A)Optimizing
B)Satisfying
C)Programmed decision- making
D)Bounded rationality

Question 64

Lon authorizes an additional $100,000 for the production of the new product. The cost of the new product seems to be increasing far beyond what was planned or even forecast. However, Lon continues to support the project. Lon is engaging in

A)representative heuristic.
B)optimal decision making.
C)escalation of commitment.
D)availability heuristic.

Question 65

_________is one of the disadvantages of group decisions that typically results in groups that are very cohesive.

A)Conflict
B)Compromise
C)Domination
D)Groupthink

Question 66

Application of Decision Making: A Contingency Approach
It seems that all Dave accomplishes is making decisions. Every time he turns around, someone wants him to decide on one more thing. Just today the secretary came in and asked if she could reorder paper for the fax machine. Somehow that seemed like a decision he really did not need to deal with. If he could avoid those types of decisions, then when the foreman came in with the news of a major piece of equipment that needs repair, in which the repair bill will be almost as much as a new machine, Dave could focus more time and attention on the more complicated issues.

-The problem of whether to repair the piece of equipment or to purchase a new machine is an example of a(n)_________problem.

A)ill- structured
B)well- structured
C)programmed
D)nonprogrammed

Question 67

"Whenever possible, we promote from within" is an example of which of the following?

A)nonprogrammed decision
B)procedure
C)policy
D)rule

Question 68

Which of the following is the most effective number of people to have in a group?

A)3- 7
B)3- 12
C)5- 7
D)2- 10

Question 69

In general, the greater the risk in making a decision, the greater the

A)information available.
B)rewards.
C)outcomes.
D)uncertainty.

Question 70

After all factors have been determined, weights have been assigned, and alternatives have been identified, the next step in decision making is to

A)identify the problem.
B)analyze the alternatives.
C)identify the decision criteria.
D)implement the alternative.

Question 71

Application of the Decision- Making Process
Net income has fallen for the second quarter, and Amanda is understandably worried. She knows at the board of directors meeting on Wednesday she will be closely questioned and expected to have a plan to avoid any third- quarter losses.
Amanda begins to read slowly over the financial documents to try and ascertain areas that may be the cause. After much consideration, it appears that expenses have risen dramatically over the last few months. Amanda wonders why. She decides a meeting of the department heads is in order first thing tomorrow morning. At the meeting, Amanda would like to generate several possible solutions to the increased expenses. She wonders how to effectively explore all the options. At the meeting, the first option that is discussed is to downsize the research and development department since it is not essential to current operations. Several managers approve this plan. Amanda suggests that they need to look further at the issue. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.
What is the first step in the decision- making process facing Amanda?

A)Assignment of weights to the decision criteria.
B)Identification of the decision criteria.
C)Identification of the real problem.
D)Selection of an alternative that will solve the problem.

Question 72

Application of the Decision- Making Process
Net income has fallen for the second quarter, and Amanda is understandably worried. She knows at the board of directors meeting on Wednesday she will be closely questioned and expected to have a plan to avoid any third- quarter losses.
Amanda begins to read slowly over the financial documents to try and ascertain areas that may be the cause. After much consideration, it appears that expenses have risen dramatically over the last few months. Amanda wonders why. She decides a meeting of the department heads is in order first thing tomorrow morning. At the meeting, Amanda would like to generate several possible solutions to the increased expenses. She wonders how to effectively explore all the options. At the meeting, the first option that is discussed is to downsize the research and development department since it is not essential to current operations. Several managers approve this plan. Amanda suggests that they need to look further at the issue. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.

-Once alternatives have been identified, the decision maker must critically analyze the _________ and of each one, which become evident as they are compared with the criteria and weights established in steps 2 and 3.

A)costs; effects
B)strengths; weaknesses
C)images; profits
D)potentials; costs

Question 73

Application of Decision- Making Styles
Jeremy has noticed that the people within his organization make decisions in very different ways. Jackie is rational and has a low tolerance for ambiguity. She is efficient and generally makes decisions that are applicable to the short term. Andy tends to be very broad in his outlook and looks at many alternatives before making a decision. He generally focuses on the long term. Alexandra thinks intuitively and works well with others. She is open to suggestions and concerned about her coworkers. Jeremy himself wants to have complete information before making a decision and always carefully considers many alternatives.

-Every decision maker in Jeremy's organization brings a unique set of_________ to his or her problem solving efforts.

A)preconceived notions
B)experiences
C)personal characteristics
D)brain patterns

Question 74

_________is the aspect of decision making that is based on such facts as costs, revenues, and product design specifications.

A)Optimizing
B)Satisficing
C)Decision quality
D)Escalation of commitment

Question 75

_________is when a manager evaluates alternatives until she comes to one that meets some minimum standard of sufficiency, selects it, and then goes on to other problems without considering the remaining rational alternatives.

A)Optimizing
B)Satisficing
C)Rational decision- making
D)Bounded Rationality

Question 76

A variation of the electronic meeting that links together media from different locations is

A)e- conference.
B)video conference.
C)the Delphi technique.
D)e- commerce.

Question 77

Which of the following is an advantage of group decision- making when compared to individual decision- making?

A)Groupthink may occur.
B)The group process takes less time.
C)One person can dominate the group.
D)More decision alternatives are generated.

Question 78

Managers often seek solutions that are satisfactory and sufficient. This is known as which of the following?

A)optimal decision making
B)satisfactory decision making
C)risk
D)satisficing

Question 79

Joe, the manager of Internet Made Easy, is concerned. He is trying, like all technological based companies, to stay ahead of the competition by being the first to offer the new services available on the Internet. His business offers training to local businesses, and so he must offer the latest available information; however, he must also advertise the classes and the content, which means going to the publisher with that information six weeks before a class is to begin. What should his next series of classes offer? Joe is operating under which of the following conditions?

A)risk
B)optimal decision making
C)uncertainty
D)certainty

Question 80

_________use(s)software programs to encode the relevant experience of an expert and allow a system to act like that expert in analyzing and solving ill structured problems.

A)Networks
B)Expert systems
C)Microsoft
D)Stand alones