CHAPTER 6 Decision Making

Groups tend to be more effective than individuals at making decisions that require speed and efficiency.

FALSE

Most managerial decisions in the real world are fully nonprogrammed

FALSE

The phenomenon of escalation of commitment refers to an increased commitment to a previous decision despite evidence that it may have been wrong

TRUE

The self-serving bias occurs when decision makers take credit for their successes and blame failure on outside factors.

TRUE

A decision criterion defines what is important or relevant to resolving a problem.

TRUE

A manager who desires to minimize his maximum "regret" will opt for a minimax choice.

TRUE

A programmed decision is a repetitive decision that can be handled by a routine approach.

TRUE

According to Karl Weick, highly reliable organizations (HROs) defer to the experts on the front line.

TRUE

According to the concept of bounded rationality, managers make decisions rationally but are limited by their ability to process information

TRUE

An advantage of group decision-making is increased acceptance of a solution.

TRUE

Decision-making is considered a process rather than just a simple act of choosing among alternatives

TRUE

Heuristics are "rules of thumb" that managers use to simplify decision-making

TRUE

In deciding whether to purchase a particular laptop computer, battery life, display quality, and carrying weight are three possible decision criteria.

TRUE

Individuals with a behavioural style of decision-making tend to work well with others.

TRUE

Individuals with a conceptual style tend to be very broad in their outlook and will look at many alternatives

TRUE

It is possible that at the end of the decision-making process you may be required to start the decision process over again.

TRUE

Managerial decision-making is assumed to be rational.

TRUE

Managers regularly use their intuition in decision-making.

TRUE

Nonprogrammed decision-making relies on procedures, rules, and policies.

TRUE

People who have a low tolerance for ambiguity and are rational in their way of thinking are said to have a directive style.

TRUE

Pressure to conform can result in groupthink, which eventually harms the quality of the group decision.

TRUE

Rational analysis and intuitive decision-making are complementary.

TRUE

The ideal situation for making decisions is one of certainty.

TRUE

Which of the following factors contrasts the difference between a policy and a rule? A) A policy establishes general parameters. B) A rule establishes general parameters. C) A policy is more explicit. D) A rule is more ambiguous. E) A policy leaves no room for interpretation.

A) A policy establishes general parameters.

__________ is a situation in which a manager can make accurate decisions because the outcome of every alternative is known. A) Certainty B) Risk C) Uncertainty D) Maximax E) Maximin

A) Certainty

Which of the following decisions involves the management function of organizing? A) How should jobs be designed? B) How difficult should individual goals be? C) How do I handle employees who appear to be low in motivation? D) When is the right time to stimulate conflict? E) When is a performance deviation significant?

A) How should jobs be designed?

Which of the following steps in the decision-making process occurs before developing alternatives? A) allocate weights to criteria B) analyze alternatives C) select an alternative D) implement the alternative E) evaluate decision effectiveness

A) allocate weights to criteria

Amanda, a single parent, is looking for a new job. Considering that she has two school-going children, she is particularly keen on finding an employer who can provide her with alternative work arrangements such as flexible work hours and telecommuting. In terms of the decision-making process, these represent Amanda's ________. A) decision criteria B) problems C) alternatives D) heuristics E) perceptions

A) decision criteria

Max is planning on going away to college next year and is currently trying to figure out which colleges he should apply to. He would like to major in English Literature at an accredited liberal arts college but is also looking for a university that offers financial aid) In terms of the decision-making process, these represent Max's ________. A) decision criteria B) problems C) alternatives D) heuristics E) perceptions

A) decision criteria

After identifying a problem, the next step in the decision-making process is ________. A) identifying decision criteria B) allocating weights to decision criteria C) analyzing alternatives D) developing alternatives E) implementing alternatives

A) identifying decision criteria

A __________ is series of interrelated sequential steps that a manager can use for responding to a structured problem. A) procedure B) policy C) precedent D) heuristic E) rule

A) procedure

The assumption that managers make consistent, value-maximizing choices within specified constraints is known as which of the following? A) rational decision-making B) unbounded rationality C) organized decision-making D) optimal decision-making E) objective rationality

A) rational decision-making

"No smoking allowed" is an example of a __________. A) rule B) precedent C) procedure D) policy E) heuristic

A) rule

The strap on Brad's backpack broke as he lifted it. On the way to class, he stopped at the first store that carries backpacks and purchased a new one from the front counter. Brad has made a(n) __________ decision. A) satisficing B) irrational C) escalating D) optimizing E) perfectly rational

A) satisficing

A policy __________. A) typically contains an ambiguous term that leaves room for interpretation B) is frequently used when a manager faces an unstructured problem C) allows little discretion on the part of the manager D) offers strict rules as to how a problem should be solved E) is a type of nonprogrammed decision

A) typically contains an ambiguous term that leaves room for interpretation

Which of the following terms is associated with nonprogrammed decisions? A) unique B) recurring C) routine D) repetitive E) straightforward

A) unique

In allocating weights to the decision criteria, which of the following is helpful to remember? A) All weights must be the same. B) Assign a weight to the most important criterion, and then assign weights to the rest against that standard. C) Every factor criterion considered, regardless of its importance, must receive some weighting. D) The most important and least important criteria should be inversely weighted. E) The total of the weights should sum to 1.0

B) Assign a weight to the most important criterion, and then assign weights to the rest against that standard.

Which of the following decisions involves the management function of planning? A) How should jobs be designed? B) How difficult should individual goals be? C) How do I handle employees who appear to be low in motivation? D) When is the right time to stimulate conflict? E) When is a performance deviation significant?

B) How difficult should individual goals be?

When managers make decisions that are rational but limited by their ability to process the information, they are following the concept of ________. A) cognitive decision-making B) bounded rationality C) escalation of commitment D) intuitive decision-making E) objective rationality

B) bounded rationality

When managers try to make decisions rationally but within the limits of their information-processing abilities, they are operating under the assumptions of __________. A) perfect rationality B) bounded rationality C) certainty D) objective rationality E) optimization

B) bounded rationality

Relying on "gut feeling" over cognitive problem solving in decision-making is a phenomenon called __________. A) sunk costs error B) intuition C) overconfidence bias D) hindsight bias E) escalation of commitment

B) intuition

A procedure __________. A) is an explicit statement detailing exactly how to deal with a decision B) is a series of interrelated sequential steps to respond to a structured problem C) is a set of guidelines that channel a manager's thinking in dealing with a problem D) allows a manager to use broad decision-making authority E) is a series of steps designed to implement decisions for unique and nonrecurring problems

B) is a series of interrelated sequential steps to respond to a structured problem

If all the decision criteria are equally important, weighting the criteria __________. A) improves decision-making when large numbers of criteria are involved B) is not necessary C) produces excellent decisions D) improves the criteria E) results in more alternatives

B) is not necessary

All relevant criteria are equally important in decision-making.

FALSE

An advantage of group decision-making is the opportunity for minority domination

FALSE

"We encourage the use of environmentally safe materials" is an example of a __________. A) rule B) policy C) procedure D) precedent E) heuristic

B) policy

A __________ is a discrepancy between an existing and a desired state of affairs. A) process B) problem C) scenario D) criterion E) decision

B) problem

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 up to $100. This is an example of a(n) __________ decision. A) nonprogrammed B) programmed C) technical D) structured E) unstructured

B) programmed

A retail clothing store manager who estimates how much to order for the current spring season based on last spring's outcomes is operating under what kind of decision-making condition? A) reliability B) risk C) uncertainty D) certainty E) rationality

B) risk

Problems that are straightforward, familiar, and easily defined are called __________ problems. A) opportunity B) structured C) unique D) nonprogrammed E) technical

B) structured

Which of the following is important to remember in evaluating decision effectiveness? A) ignore criticism concerning the decision-making process B) you may have to start the whole decision-making process over again C) you should restart the decision-making process only if the decision is less than 50 percent effective D) 90 percent of problems with decision-making occur in the implementation step E) the initial problem may still exist despite the implementation of an effective decision

B) you may have to start the whole decision-making process over again

__________ is a situation in which a decision maker has neither certainty nor reasonable probability estimates available. A) Certainty B) Risk C) Uncertainty D) Maximax E) Rationality

C) Uncertainty

Toby is hunting for a new apartment. He is specifically looking for one that is located in the heart of the city and should be available for $600 per month. However, Toby is also willing to pay up to $850 per month for a place situated slighted away from the city centre) According to him, the second option "will also do." This is an example of ________. A) experienced-based decision-making B) rational decision-making C) bounded rationality D) intuitive decision-making E) non linear thinking

C) bounded rationality

If an individual knows the price of three similar cars at different dealerships, he or she is operating under what type of decision-making condition? A) risk B) uncertainty C) certainty D) factual E) nonprogrammed

C) certainty

The process of selecting decision criteria is accomplished by __________. A) massaging the data that will support a given decision B) flipping a coin to produce a 50-50 chance of being right C) determining what is relevant in making the decision D) examining the differences between potential opportunities E) identifying a discrepancy between an existing and a desired state of affairs

C) determining what is relevant in making the decision

Creativity is most essential in which of the following steps of the decision-making process? A) analyzing alternatives B) allocating weights to the decision criteria C) developing alternatives D) identifying decision criteria E) evaluating decision effectiveness

C) developing alternatives

The final step in the decision-making process is to __________. A) select the best alternative B) reevaluate the weightings of the criteria until they indicate the correct outcome C) evaluate the outcome of the decision D) reassign the ratings on the criteria to find different outcomes E) implement the alternative to solve the problem

C) evaluate the outcome of the decision

In the purchase of a car, the assessment of factors such as speed, fuel efficiency, and price occurs at which step of the decision-making process? A) identify a problem B) analyze alternatives C) identify decision criteria D) evaluate decision effectiveness E) develop alternatives

C) identify decision criteria

"Before a health claim may be paid, the following steps must be taken" is an example of a __________." A) rule B) precedent C) procedure D) policy E) heuristic

C) procedure

To receive reimbursement for their travel expenses, managers at ABC Company must first list each item in chronological order on an expense form, then attach all receipts to the upper-left corner, then obtain their supervisor's authorizing signature, and, finally, forward the form to the finance department. This is an example of a __________. A) rule B) precedent C) procedure D) policy E) heuristic

C) procedure

Nonprogrammed decisions are typically made under a condition of __________. A) certainty B) low levels of risk C) uncertainty D) reliability E) rationality

C) uncertainty

When problems are __________, managers must rely on __________ in order to develop unique solutions. A) structured; nonprogrammed decision-making B) structured; intuition C) unstructured; nonprogrammed decision-making D) structured; programmed decision-making E) technical; programmed decision-making

C) unstructured; nonprogrammed decision-making

Which of the following statements is true concerning problem identification? A) Problems are generally obvious. B) A symptom and a problem are basically the same. C) Well-trained managers generally agree on what is considered a problem. D) The problem must exert some pressure on the manager to act. E) To be considered a problem, managers must be aware of the discrepancy but not have sufficient resources to take action.

D) The problem must exert some pressure on the manager to act.

A perfectly rational decision maker would __________. A) have changing preferences B) not consider profit maximization as an objective C) offer inconsistent decisions D) be objective and logical E) have to overcome time and cost constraints

D) be objective and logical

To determine the __________, a manager must identify the factors that are relevant to resolving the problem. A) effectiveness of the decision B) number of feasible alternatives C) weighting of decision criteria D) decision criteria E) implementation procedures

D) decision criteria

When a manager finds a disparity between their current situation and a desired situation, they are at which step of the decision-making process? A) develop alternatives B) identify decision criteria C) analyze alternatives D) identify a problem E) allocate weights to criteria

D) identify a problem

Which step in the decision-making process involves conveying the decision to those affected by it and getting their commitment to it? A) allocate weights to criteria B) analyze alternatives C) select an alternative D) implement the alternative E) evaluate decision effectiveness

D) implement the alternative

A business school's statement that it "strives for productive relationships with local organizations" is an example of a __________. A) rule B) precedent C) procedure D) policy E) heuristic

D) policy

Whenever possible, managers at ABC Company try to promote employees from within the organization before recruiting from external sources. This is an example of a __________. A) rule B) precedent C) procedure D) policy E) heuristic

D) policy

A __________ decision is repetitive and can be handled by a routine approach. A) nonprogrammed B) linear C) satisficing D) programmed E) technical

D) programmed

The most efficient way to handle a structured problem is through __________ decision-making. A) linear B) unique C) focused D) programmed E) technical

D) programmed

The inflight service manager for National Airlines is authorized to distribute drycleaning vouchers to customers who complain about spilling drinks and food on their clothes during turbulent flights. This is an example of a(n) __________ decision to a __________ problem. A) nonprogrammed; routine B) programmed; unique C) nonprogrammed; technical D) programmed; structured E) nonprogrammed; unstructured

D) programmed; structured

Because managers can't possibly analyze all information on all alternatives, they accept solutions that __________ rather than __________ payoff. A) maximize; satisfice B) maximize; minimize C) satisfice; minimize D) satisfice; maximize E) minimize; maximize

D) satisfice; maximize

The type of decision-making in which the solution is considered "good enough" is known as which of the following? A) minimizing B) rationalizing C) maximizing D) satisficing E) optimizing

D) satisficing

Nonprogrammed decisions are best described as __________. A) recurring but difficult to make B) very similar to problems in other areas of the organization C) requiring more aggressive action on the decision maker's thought processes D) unique and nonrecurring E) routine and straightforward

D) unique and nonrecurring

Which of the following is an assumption of rationality? A) The problem is ambiguous. B) Multiple goals are to be achieved. C) Tme and cost constraints are known. D) Preferences change quickly. E) All alternatives and consequences are known

E) All alternatives and consequences are known

Which of the following decisions involves the management function of controlling? A) How should jobs be designed? B) How difficult should individual goals be? C) How do I handle employees who appear to be low in motivation? D) When is the right time to stimulate conflict? E) When is a performance deviation significant?

E) When is a performance deviation significant?

Decision-making is best described as __________. A) deciding what is correct B) putting preferences on paper C) choosing among alternatives D) processing information to completion E) a comprehensive process

E) a comprehensive process

Which of the following is important in effectively implementing the chosen alternative in the decision-making process? A) getting upper management support B) double checking your analysis for potential errors C) implementing the decision quickly through power and persuasion D) ignoring criticism concerning the chosen alternative E) allowing those impacted by the outcome to participate in the process

E) allowing those impacted by the outcome to participate in the process

Intuitive decision-making ________. A) is the systematic use of the best available evidence to improve decision- making practice B) generally results in poor decisions, and hence managers should learn to ignore their gut feelings C) is only appropriate for simple problems D) complements rational decision-making but not bounded rational decision- making E) is the process of making decisions based on experience, feelings, and accumulated judgment

E) is the process of making decisions based on experience, feelings, and accumulated judgment

Alanna has just been given the assignment of developing the marketing strategy for the company's new product to be released in November. What type of decision- making will be required of Alanna? A) structured B) unstructured C) technical D) programmed E) nonprogrammed

E) nonprogrammed

Which of the following must be present in order to initiate the decision-making process? A) plenty of time B) established criteria C) implementation procedures D) viable alternatives E) pressure to act

E) pressure to act

A __________ is an explicit statement that tells a manager what he or she can or cannot do. A) procedure B) policy C) precedent D) heuristic E) rule

E) rule

A customer gives Jan a request that she has never heard before in her 15 years of experience at the hardware store. Since the request involves the application of a new technology, Jan is not sure what to do. This is an example of a(n) __________ problem. A) nonprogrammed B) programmed C) technical D) structured E) unstructured

E) unstructured

A decision is a discrepancy between an existing and a desired state of affairs.

FALSE

A hindsight bias occurs when decision makers increase their commitment to a previous decision despite evidence that it may have been wrong

FALSE

A policy is a series of interrelated sequential steps that a manager can use for responding to a structured problem.

FALSE

A procedure is an explicit statement that tells a manager what he or she can or cannot do.

FALSE

Accepting solutions that are "good enough" is termed satisfying

FALSE

According to Karl Weick, highly reliable organizations (HROs) are preoccupied with their successes.

FALSE

An optimistic manager will follow a maximin approach.

FALSE

Decision makers with an analytic style have a much lower tolerance for ambiguity than do directive types.

FALSE

Once the alternatives to solving a problem have been identified, the next step in the decision-making process is selecting one of these alternatives.

FALSE

One assumption of rationality is that time and cost constraints exist.

FALSE

Risk is a condition in which a decision maker has neither certainty nor reasonable probability estimates.

FALSE

Rules and policies are essentially the same.

FALSE

The confirmation bias occurs when decision makers tend to think they know more than they actually do and hold unrealistically positive views of themselves.

FALSE

The decision-making process begins by identifying decision criteria.

FALSE

The final step in the decision-making process is to implement the chosen alternative.

FALSE

Unstructured problems require custom-made responses through programmed decision-making.

FALSE