Deck 4: Managing Decision Making

Question 1

Which of the following statements is true in the context of decision making under a state of risk?

A) The decision maker clearly knows the alternatives.
B) The decision maker uses probability estimates to assess alternatives.
C) The decision maker is least likely to choose a bad alternative.
D) The decision maker has an accurate understanding of payoffs of all the alternatives.
E) The decision maker seldom considers his or her past experience while making the decision.

Answer 1

B
A state of risk is a condition in which the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.

Question 2

In decision making, a condition of _____ exists when a decision maker knows what the alternatives are and what conditions are associated with each alternative.

A) risk
B) uncertainty
C) certainty
D) imperfect information
E) ambivalence

Answer 2

C
When the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative, a state of certainty exists.

Question 3

A nonprogrammed decision:

A) is relatively more frequent that programmed decisions.
B) is highly structured.
C) requires more time and resources than programmed decisions.
D) is typically regarding daily organizational transactions.
E) typically applies to basic operating systems and procedures.

Answer 3

C
A nonprogrammed decision is a decision that is relatively unstructured and occurs less frequently than a programmed decision. Managers faced with such decisions must treat each one as unique, investing enormous amounts of time, energy, and resources into exploring the situation from all perspectives.

Question 4

When Irene wants to buy new laptops for her marketing executives and she has to pick them up from a single brand that is preinstalled with the marketing software that her company needs, she's making a decision under a condition of _____.

A) imperfect information
B) ambiguity
C) risk
D) certainty
E) unclear alternatives

Question 5

When decision making is under a condition of uncertainty:

A) the alternatives are not known.
B) no ambiguity is involved.
C) errors are least likely to occur.
D) the consequences of solutions are known.
E) the decision situation is simple.

Question 6

Which of the following statements is true about the decision-making process?

A) It exclusively applies to problem situations.
B) It requires that the nature of a particular situation be defined.
C) It seldom applies to situations that are positive.
D) It typically involves only one individual and seldom applies to groups.
E) It results in the generation of only one alternative.

Question 7

Which of the following illustrates a programmed decision?

A) A cafe owner buys a hundred cartons of coffee every month.
B) A fast food chain decides to enter into a new franchise agreement.
C) A content development company decides to sue a competitor for copyright infringement.
D) A health drink manufacturing company decides to launch a new product in the market.
E) An IT company decides to lay off a hundred employees.

Question 8

Programmed decisions:

A) can only be made by the top management.
B) generally deal with long-term matters such as expanding business in another country.
C) lack structure.
D) recur more frequently than nonprogrammed decisions.
E) are typically made by shareholders.

Question 9

Which of the following statements is true about the process of decision making?

A) It ends when the decision situation has been defined.
B) It includes putting the chosen alternative to practice.
C) The first step in the process is to identify alternatives to a problem.
D) The process is said to be complete when a set of alternatives to a problem has been created.
E) In a business scenario, the decision-making process is always aimed at finding a way to increase profits.

Question 10

When the inventory manager of Cuisine Royale, a restaurant, decides to order a batch of brown bread because the stock is almost empty, she's making a(n) _____ decision.

A) programmed
B) unstructured
C) intuitive
D) irrational
E) strategic

Question 11

Decisions made by top managers involving strategy, such as signing mergers or making acquisitions, are examples of _____ decisions.

A) frequent
B) nonprogrammed
C) structured
D) operational
E) programmed

Question 12

Which of the following statements is true in the context of decision making under a condition of uncertainty?

A) A decision maker greatly relies on intuition, judgment, and experience.
B) A decision maker clearly knows all the risks associated with alternatives to a problem.
C) A decision maker puts in least effort and uses a pre-determined structure for decision making.
D) A decision maker is able to estimate the payoffs and risks associated with alternatives.
E) A decision maker identifies only two alternatives to the decision situation.

Question 13

Managers are most prone to error in a condition of _____.

A) certainty
B) uncertainty
C) risk
D) rationality
E) perfect information

Question 14

Ryan, the production manager at the Tan Shoes Company, chose the cheapest leather-cutting machine from a set of five machines from different manufacturers. Ryan was engaged in _____.

A) decision making
B) optimizing
C) rationalizing
D) brainstorming
E) social loafing

Question 15

A(n) _____ decision is a decision that is relatively structured or recurs with some frequency (or both).

A) custom-made
B) novel
C) unstructured
D) intuitive
E) programmed

Question 16

The process of choosing one alternative from among a set of alternatives is called _____.

A) rational ignorance
B) altruism
C) bounded rationality
D) decision making
E) groupthink

Question 17

Decisions regarding standard organizational transactions are most likely to be _____ decisions.

A) unstructured
B) infrequent
C) programmed
D) intuitive
E) irrational

Question 18

Nutrimax Inc. sponsors a football championship in Oriel in August every year. The championship is organized by the Oriel Football Association (OFA) to encourage new talent, and Nutrimax bears all the expenses incurred during the championship. The Oriel regional manager of Nutrimax sends across a check to the OFA in July of each year in order for them to prepare for the championship. The regional manager's decision about when to send the check to OFA is a(n) _____ decision.

A) programmed decision
B) unstructured decision
C) intuitive decision
D) contingency decision
E) satisficing decision

Question 19

Venus Electronics Inc. decided to explore markets in different countries. It has now set up a branch in Selenasia. This is an example of a(n) _____ decision.

A) structured
B) nonprogrammed
C) standard
D) programmed
E) operational

Question 20

Professor Campbell needs to recommend a biology textbook for his senior class. Only two well-known publishers, Educate and WordTree, publish biology textbooks in the state, and both publishers are known for the clarity and extensiveness of their content. When Campbell chooses a textbook from one of the two publishers, he is making a decision in a state of _____.

A) certainty
B) irrationality
C) risk
D) imperfect information
E) ambiguity

Question 21

In general, while identifying alternatives, the more important the decision, _____.

A) the more alternatives should be generated
B) the lesser the time needed to make the decision
C) the lesser the chances of managers making the right decision
D) the more the tendency of managers to ignore intuitions
E) the lesser the chances of managers using expert opinion to make the decision

Question 22

An alternative should be eliminated during evaluation if:

A) it is supported by the most number of individuals.
B) it involves minimal costs.
C) it is found to have passed the satisfactoriness test.
D) it has several unaffordable consequences.
E) it requires minimal resources.

Question 23

Libra Inc. chose to settle a lawsuit for $75 million. In the context of the rational decision-making model, when executives of the company begin to compare the cost of the settlement to those of other financial institutions, they will be _____.

A) developing a set of rational alternatives
B) evaluating the possible alternatives
C) consulting with other decision makers
D) recognizing and defining the decision situation
E) following up and evaluating the results of a chosen alternative

Question 24

When making a decision under a condition of risk:

A) the decision maker is relatively more likely to make errors.
B) the decision maker clearly knows the consequences of alternatives.
C) the decision maker needs to put in the least amount of time and resources.
D) the decision maker relies exclusively on information and not on experience or intuition.
E) the decision maker clearly knows the payoffs associated with the alternatives.

Question 25

The _____ decision model is a prescriptive approach that tells managers how they should make decisions; it assumes that managers are logical and rational and that their decisions will be in the organization's best interests.

A) behavioral
B) classical
C) administrative
D) bureaucratic
E) probabilistic

Question 26

The final step in the decision-making process requires that managers _____.

A) evaluate the results of the chosen alternative
B) select the best alternative
C) implement the chosen alternative
D) identify the available alternatives
E) define the decision situation

Question 27

Tina works at a coffee shop. One of the four coffee machines at the coffee shop has not been functioning well; the same machine has broken down thrice in two weeks. Now, Tina is looking at the machine and trying to decide if the problem is a bad machine or if people are just using the machine wrong. Tina is currently _____.

A) implementing an alternative
B) evaluating the results of a chosen alternative
C) consulting with other decision makers
D) recognizing and defining the decision situation
E) eliminating feasible alternatives

Question 28

According to the classical decision model, managers:

A) evaluate all aspects of a decision situation logically and rationally.
B) are inefficient at eliminating uncertainty.
C) never have adequate information about decision situations.
D) never make errors even under uncertain conditions.
E) can never assess alternatives appropriately.

Question 29

A plant manager had taken a few measures to try to reduce worker turnover. For four months he monitored the implementation of the measures. He now finds that the turnover rate is reduced by 10 percent. Which step of the rational decision-making model is illustrated in the scenario?

A) Evaluating the results
B) Identifying alternatives
C) Recognizing the decision situation
D) Selecting the best alternative
E) Developing a set of alternatives

Question 30

After being laid off by their companies, many individuals recognized three options they could choose from before they could secure new jobs: to spend less, to use savings, or to use credit. In the context of the steps involved in the rational decision-making model, they were _____.

A) monitoring implementation
B) selecting the best alternative
C) identifying alternatives
D) implementing alternatives
E) evaluating decision effectiveness

Question 31

In which step of the rational decision-making model does the decision maker test the feasibility and satisfactoriness of alternatives before choosing one?

A) Identifying alternatives
B) Implementing the chosen alternative
C) Defining the situation
D) Following up the implementation
E) Evaluating alternatives

Question 32

Which of the following statements is true in the context of selecting the best alternative?

A) The decision maker can only select one best alternative.
B) The decision maker can develop subjective estimates and weights for choosing an alternative.
C) The decision maker must choose the alternative that involves the most costs.
D) The decision maker must only stick to completely rational, mathematical analysis while selecting an alternative.
E) The decision maker can choose an alternative that does not pass the consequence, satisfactoriness, and feasibility test.

Question 33

Christine, a teacher, notices that the performances of her students at class tests have been declining. While attempting to find a solution to the problem, she thinks of three choices: rewarding students who get good grades, holding class tests more often, or punishing students when they perform poorly in the tests. Which step of the rational decision-making process is Christine in?

A) Identifying alternatives
B) Implementing an alternative
C) Defining the decision situation
D) Selecting the best alternative
E) Evaluating the decision effectiveness

Question 34

The first step in rational decision making is _____.

A) identifying alternatives
B) implementing an alternative
C) selecting the best alternative
D) recognizing and defining the decision situation
E) evaluating alternatives

Question 35

Delta Corp. introduced a new set of policies, giving its employees more flexibility in work timings. This decision was made in response to complaints from employees about fatigue. Which step of the rational decision-making process is illustrated in the scenario?

A) Defining the situation
B) Evaluating the possible alternatives
C) Selecting the alternative
D) Implementing an alternative
E) Evaluating decision effectiveness

Question 36

In the rational decision-making process, optimization means:

A) identifying obvious, standard alternatives.
B) choosing the alternative with the best overall expected outcomes.
C) gathering the most complete information before making the decision.
D) developing the maximum number of creative, innovative alternatives.
E) choosing an alternative that is feasible even if it is not satisfactory or has undesirable consequences.

Question 37

The rational decision-making process:

A) begins when a decision maker chooses the best solution.
B) involves the evaluation of different alternatives.
C) ends when alternatives have been identified.
D) does not include the implementation of an alternative.
E) ends when a decision situation has been defined.

Question 38

When the prices of oil came down, the demand for sport utility vehicles (SUVs) increased. Automakers chose to increase production of full-size SUVs as the profit from large vehicles is greater than that from small vehicles. Which step in the rational decision-making model is illustrated in the scenario?

A) Developing a set of rational alternatives
B) Evaluating the possible alternatives
C) Selecting the best alternative and implementing it
D) Recognizing and defining the decision situation
E) Evaluating decision effectiveness

Question 39

In the rational decision-making model, once the alternatives have been evaluated, the next step is to _____.

A) select the best alternative
B) implement the chosen alternative
C) evaluate the results of the chosen alternative
D) identify the available alternatives
E) define the decision situation

Question 40

Peter was looking for alternatives to double his plant's production capacity, and he considered acquiring the production plant of a rival company. The engineers in Peter's company advised him against it because acquiring the new plant would only increase their company's production by 15 percent. Therefore, Peter's idea failed the test for _____ in the context of the rational decision-making process.

A) feasibility
B) satisfactoriness
C) bounded rationality
D) satisficing
E) escalation of commitment

Question 41

Chelsea has been contemplating buying a red car. When she visits the used cars dealership, she looks at a red Ford Hatchback and buys it even before checking for its technical specifications. Chelsea's decision is an example of _____.

A) optimization
B) escalation of commitment
C) an evidence-based decision
D) satisficing
E) a decision under uncertainty

Question 42

Bounded rationality is assumed in the _____ model of decision making.

A) administrative
B) rational
C) classical
D) groupthink
E) irrational

Question 43

According to the evidence-based management approach, managers must _____.

A) discourage employees from telling the unpleasant truth
B) be committed to fact-based decision making
C) avoid experimentation
D) completely rely on the recommendations made by others
E) base decisions on untested but strongly held beliefs

Question 44

_____ is an innate belief about something without conscious consideration.

A) Optimization
B) Intuition
C) Logic
D) Ethics
E) Risk propensity

Question 45

_____ is one major element of organizational politics that is especially relevant to decision making.

A) Coalitions
B) Intuition
C) Escalation of commitment
D) Satisficing
E) Risk propensity

Question 46

A marketing manager decides to launch a new product because it is the first product that came to his mind, even if there are several better products to be explored. Which of the following is illustrated in the scenario?

A) Escalation of commitment
B) Rational decision making
C) Bounded rationality
D) Satisficing
E) Optimization

Question 47

Which of the following statements is true about the administrative model of decision making?

A) It suggests that political forces do not exist in business scenarios.
B) It suggests that managers may not always make decisions that best serve the interests of their organizations.
C) It suggests that managers use a blend of subjective knowledge and analysis to choose the best alternative.
D) It suggests that decisions should only be made individually and not in groups.
E) It suggests that decisions made by groups are better than decisions made by individuals.

Question 48

According to the administrative model, decision makers:

A) use incomplete and imperfect information.
B) are never constrained by bounded rationality.
C) tend to avoid satisficing when making decisions.
D) are not limited by their values and unconscious reflexes while making decisions.
E) always act in the best interests of their organizations.

Question 49

Which of the following statements is true about the administrative model of decision making?

A) It suggests that most managers make decisions rationally and logically.
B) It suggests that decisions that are based on instincts are better than the ones based on logic.
C) It suggests that managers tend to satisfice when making decisions.
D) It suggests that managers have the most accurate information about decision situations.
E) It suggests that managers should not make decisions based on mathematical analysis.

Question 50

For his work in developing the administrative model to describe how managers make decisions in the real world, Herbert Simon won the Nobel Prize in _____.

A) Medicine
B) Economics
C) Peace
D) Psychology
E) Management

Question 51

_____ is one of the factors that makes an alternative infeasible.

A) Decrease in expenditure
B) Increase in production capacity
C) Low costs
D) Increased satisfactoriness
E) Legal barriers

Question 52

The administrative model of decision making argues that decision makers _____ while making decisions.

A) use complete and perfect information
B) do not use intuition while making decisions
C) are constrained by bounded rationality
D) completely avoid escalation of commitment
E) use only instincts

Question 53

Tim is the production manager at a steel factory. One of the steel processing machines in the factory has broken down and has to be replaced. Tim decides to buy a new machine from a company that he has read reviews of in industry magazines, even though there are other companies offering a discount on machines with better functionality. This is an example of how managers are constrained by _____.

A) bounded rationality
B) escalation of commitment
C) risk propensity
D) groupthink
E) political forces

Question 54

Lucy needs to buy a new laptop for her business, and she buys a particular brand even though it does not support the software that is required for her business. She does this because all her family members have used computers of the same brand all their lives. This is an example of how decision makers are constrained by _____.

A) political forces
B) bounded rationality
C) Lucy's high risk propensity
D) logic
E) organizational strategies

Question 55

Mike is in a hurry to appoint a personal assistant to help him with scheduling his meetings with clients. He posts an advertisement on a job website, and picks the first person who sends in her resume for the job. He only checks for the candidate's qualification and does not consider her work experience. This is an example of _____.

A) rational decision making
B) classical decision making
C) satisficing
D) evidence-based management
E) optimizing

Question 56

_____ was one of the first experts to develop the administrative model of decision making.

A) Elton Mayo
B) George Bennett
C) Martin Johnson
D) Jack Welch
E) Herbert Simon

Question 57

Keisha is the vice president of accounting, and she has to decide which computer software to purchase for her department. She has looked at all of the possible alternatives and is leaning toward the system with which she is most familiar. This is an example of _____.

A) optimizing
B) bounded rationality
C) satisficing
D) synergy
E) escalation of commitment

Question 58

Political forces, intuition and escalation of commitment, risk propensity, and ethics constitute the _____ aspects of decision making.

A) rational
B) administrative
C) classical
D) behavioral
E) sequential

Question 59

_____ is the tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency.

A) Satisficing
B) Groupthink
C) Optimization
D) Bounded rationality
E) Escalation of commitment

Question 60

_____ is a concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits.

A) Satisficing
B) Escalation of commitment
C) Risk propensity
D) Groupthink
E) Bounded rationality

Question 61

_____ is a situation that occurs when a group or team's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision.

A) Groupthink
B) Groupshift
C) Brainstorming
D) Condorcet's paradox
E) Group polarization

Question 62

The Delphi group technique is a group decision-making technique in which:

A) the members are involved in extensive discussions with each other.
B) the opinions of group member are combined and averaged.
C) the daily operational problems of an organization are addressed.
D) the members are most likely to indulge in groupthink.
E) the members are most likely to be first-line employees belonging to the same department.

Question 63

Eric is a manager who recently introduced a new process for screening potential employees. Eric has noticed that the new screening process is not very efficient and is not helping recruiters find the best candidates. However, Eric continues to use the same process because it was so expensive to set up the initial system. Which of the following concepts is illustrated in the scenario?

A) Evidence-based decision making
B) Escalation of commitment
C) Rational decision making
D) Optimization
E) Satisficing

Question 64

Which of the following is true of nominal groups?

A) Innovative ideas are not generated in nominal groups.
B) Members of nominal groups are brought together in a face-to-face setting.
C) Members of nominal groups talk freely among themselves, argue, agree, form internal coalitions, and so forth.
D) Only one individual dominates a nominal group.
E) Nominal groups are most often used for forecasting technological breakthroughs.

Question 65

One advantage of group decision making is:

A) groupthink.
B) saved time.
C) more acceptance of the final decision.
D) lowered cost of decision making.
E) elimination of political forces.

Question 66

A(n) _____ is a form of group decision making in which a group arrives at a consensus of expert opinion.

A) interacting group
B) Delphi group
C) inactive group
D) unconventional group
E) unstructured group

Question 67

_____ is the extent to which a decision maker is willing to gamble when making a decision.

A) Risk propensity
B) Intuition
C) Optimization
D) Satisficing
E) Bounded rationality

Question 68

Macy Computers Inc. faced a major software error that brought all work in the company to a standstill. Roger, the CEO, arranged for a panel of well-known engineers in the state to estimate the time that it would take for the error to be set right. Each engineer made an estimate and sent it to the group's leader, Dr. Rajesh. Dr. Rajesh averaged the estimates and sent the average back out to the group. People who had submitted unusual estimates were asked to say why those estimates were chosen. Roger used a(n) _____to help his company get rid of the software crisis.

A) interacting group
B) Delphi group
C) standing committee
D) work group
E) unstructured group

Question 69

When managers want to be sure to get innovative and creative ideas, they will often create a(n) ____ group..

A) judge-advisor system
B) coalition
C) advocacy group
D) nominal group
E) political group

Question 70

Which of the following disadvantages of group decisions typically results from the group being very cohesive?

A) Disagreement
B) Groupthink
C) Lower acceptance of the final decision
D) Minimal participation of members
E) Conflicts

Question 71

A disadvantage of using interacting groups to make decisions is that:

A) it fosters political forces.
B) it discourages creativity.
C) it generates very few alternatives.
D) it involves more costs than all other group decision techniques.
E) it does not foster understanding between members.

Question 72

The nominal group decision-making technique:

A) involves maximum interaction among group members.
B) is used to generate creative and innovative ideas.
C) is a technique in which members are not brought together in a face-to-face setting.
D) always results in groupthink.
E) is a technique in which the manager lacks the authority to reject an alternative.

Question 73

William had invested in an initial public offering. He kept incurring losses due to unfavorable market conditions. However, he decided to keep the investment because he had spent so much money on it. This scenario best exemplifies _____.

A) evidence-based management
B) rational decision making
C) escalation of commitment
D) rationality
E) satisficing

Question 74

A disadvantage of group decision making is that:

A) groupthink may occur.
B) generation of different opinions does not occur.
C) communication may be curbed.
D) knowledge available is always limited.
E) only a few alternatives are likely to be generated.

Question 75

Ryan Tools Company just acquired Coney Tools. The purchase came about because the employees in both the research and development and the production departments at Ryan Tools joined forces to lobby for the purchase of Coney Tools as opposed to other companies. Both departments wanted Coney Tools because of its state-of-the-art research and production facilities. This is an example of _____.

A) satisficing
B) intuitive decision making
C) a dissection
D) escalation of commitment
E) a coalition

Question 76

Managers sometimes decide to do something because it feels right or they have a hunch. This is an example of using _____ in decision making.

A) satisficing
B) rationality
C) intuition
D) optimization
E) logic

Question 77

Managers with higher levels of risk propensity are more likely than their conservative counterparts to:

A) adhere to the rational model and be extremely cautious about their decisions.
B) avoid mistakes and infrequently make decisions that lead to big losses.
C) rely heavily on intuition and gamble big investments on their decisions.
D) reach decisions slowly after a great amount of analysis.
E) display no aggression in decision making.

Question 78

_____ is a behavioral process in which a decision maker stays with a decision even when it appears to be wrong.

A) Bounded optimization
B) Escalation of commitment
C) Risk propensity
D) Strategic maximization
E) Intuitive rationality

Question 79

Which of the following is true of interacting groups?

A) They are the least common decision-making groups.
B) They effectively eliminate the possibility of groupthink.
C) They can be regular work teams.
D) They provide little scope for new ideas.
E) They do not involve political forces.

Question 80

A manager who has a high level of risk propensity is likely to:

A) make decisions quickly.
B) avoid risks.
C) spend a lot of time evaluating alternatives.
D) be wary of making a wrong choice.
E) rely heavily on mathematical analysis.