Chapter 6—Decision Making
TRUE/FALSE
1. Decision making is easy, given that everybody makes decisions everyday.
2. Decision-making must not be done amid ever-changing factors, unclear information, and conflicting
points of view.
3. A decision is a choice made from available alternatives.
4. Programmed decisions are decisions that are made for situations that have occurred often in the past
and allow decision rules to be developed to guide future decisions.
5. Two classifications of management decisions are programmed and structured.
6. Two employees in Stacey’s department quit which is normal for her department. She is faced with the
decision to fill these positions. This would be considered a nonprogrammed decision.
7. Gerald’s Groceries and Marty’s Market decided to merge their operations. This would be considered a
nonprogrammed decision.
8. WorldCom, a telecommunications company, decided to buy Skytel in 1999. This would be considered
a programmed decision.
9. Uncertainty means that a decision has clear-cut goals, and that good information is available, but the
future outcomes associated with each alternative are subject to chance.
10. The main difference between risk and uncertainty is that with risk you know the probabilities of the
outcomes.
11. Uncertainty is by far the most difficult decision situation.
12. A situation where the goals to be achieved or the problem to be solved is unclear, alternatives are
difficult to define, and information about outcomes is unavailable refers to ambiguity.
13. The classical decision making model assumes that the decision-maker is rational, and makes the
optimal decision each time.
14. Normative means it defines how a decision maker should make decisions.
15. The political model represents an “ideal” model of decision making that is often unattainable by real
people in real organizations.
16. The administrative model of decision making describes how managers actually make decisions in
difficult situations.
17. Normative decision theory recognizes that managers have only limited time and cognitive ability and
therefore their decisions are characterized by bounded rationality.
18. Satisficing behavior occurs when we choose the first solution alternative that satisfies minimal
decision criteria regardless of whether better solutions are expected to exist.
19. The administrative model is considered to be normative.
20. Goals often are vague, conflicting, and lack consensus among managers, according to the
administrative model of decision making.
21. According to the administrative model of decision making, managers’ searches for alternatives are
limited because of human, information, and resource constraints.
22. Intuition is a quick apprehension of a decision situation based on past experience but without
conscious thought.
23. According to both research and managerial experience, intuitive decisions are best and always work
out.
24. Managers need to take a balanced approach for effective decision making.
25. According to the New Manager Self-Test, linear means to use primarily intuition to make decisions;
nonlinear means using logical rationality to make decisions.
26. The process of forming alliances among managers is called coalition building.
27. The administrative model closely resembles the real environment in which most managers and
decision makers operate.
28. The political model consists of vague problems and goals, limited information about alternatives and
their outcomes, and a satisficing choice for resolving problems using intuition.
29. Nonprogrammed decisions require six steps, however, programmed decisions being structured and
well understood require only one step.
30. Managers confront a decision requirement in the form of either a problem or an opportunity.
31. Once the problem or opportunity has been recognized and analyzed, the decision-maker should
implement the alternative.
32. Step one in the managerial decision-making process is recognition of decision requirement.
33. For a non-programmed decision, feasible alternatives are hard to identify and in fact are already
available within the organization’s rules and procedures.
34. For decisions made under conditions of low uncertainty, managers may develop only one or two
custom solutions that will satisfice for handling the problem.
35. The best alternative is the one in which the solution best fits the overall goals and values of the
organization and achieves the desired results using the fewest resources.
36. The formulation stage involves the use of managerial, administrative, and persuasive abilities to ensure
that the chosen alternative is carried out.
37. Risk propensity refers to the willingness to undertake risk with the opportunity of gaining an increased
payoff.
38. Feedback provides decision-makers with information that can precipitate a new decision cycle.
39. In the implementation stage, decision makers gather information that tells them how well the decision
was implemented and whether it was effective in achieving its goals.
40. Feedback is the part of monitoring that assesses whether a new decision needs to be made.
41. People who prefer simple, clear-cut solutions to problems use the directive style.
42. Managers with an analytical decision style like to consider complex solutions based on as much data
as they can gather.
43. The behavioral style is often adopted by managers who like to consider complex solutions based on as
much data as they can gather.
44. The most effective managers are consistent in using their own decision style rather than shifting
among styles.
45. Most bad decisions are errors in judgment that originate in the human mind’s limited capacity and in
the natural biases of the manager.
46. Justifying past decisions is a common bias of managers.
47. The rapid pace of today’s business environment requires only top management to make decisions and
have the information, skills, and freedom they need to respond immediately to problems and questions.
48. Most people underestimate their ability to predict uncertain outcomes.
49. Brainstorming uses a face-to-face interactive group to spontaneously suggest a wide range of
alternatives for decision making.
50. Interestingly, major decisions in the business world are commonly made by an individual.
51. Devil’s advocate technique is similar to brainstorming in that both techniques prevent individuals from
challenging other group member’s assumptions.
52. Brainwriting refers to the tendency of people in groups to suppress contrary opinions.
53. Point-counterpoint is a decision–making technique in which people are assigned to express competing
points of view.
54. Decision making involves effort both before and after the actual choice.
55. Making a choice is the most significant part of the decision-making process.
56. In the real world, few decisions are certain.
57. A highly ambiguous situation can create what is sometimes called a wicked decision problem.
58. The approach that managers use to make decisions usually falls into one of three types – the classical
model, the administrative model, and the political model.
59. The growth of quantitative decision techniques that use computers has reduced the use of the classical
approach.
60. According to the classical model of decision making, managers’ searches for alternatives are limited
because of human, information, and resource constraints.
61. Good intuitive decision making is based on an ability to recognize patterns at lightning speed.
62. The classical model of decision-making works best in organizations that are made up of groups with
diverse interests, goals, and values.
63. Administrative and political decision making procedures and intuition have been associated with high
performance in unstable environments in which decisions must be made rapidly and under more
difficult conditions.
64. Managers should be asking questions such as “What is the urgency of the problem?” during the
development of alternatives stage of managerial decision-making.
65. Individuals with a conceptual decision-making style are more socially oriented than those with an
analytical style.
66. When managers look for information that supports their existing instinct or point of view, avoiding
information that contradicts it, they are justifying past decisions.
67. Studies show that electronic brainstorming generates about 20 percent fewer ideas than traditional
brainstorming.
68. Groupthink refers to the tendency of people in groups to suppress contrary opinions.
69. One area where speed is not particularly crucial is when an organization faces a crisis.
MULTIPLE CHOICE
1. Managers are often referred to as
a.
decision makers.
b.
peace makers.
c.
conflict creators.
d.
unnecessary layer of employees.
e.
profit suppressor.
2. ____ is a vital part of good management because decisions determine how the organization solves its
problems, allocates resources, and accomplishes its goals.
a.
Organizing
b.
Competitive visioning
c.
Proper alignment
d.
Good decision making
e.
Leadership
3. Which of the following is a choice made from available alternatives?
a.
Decision
b.
Plan
c.
Goal
d.
Tactic
e.
Strategy
4. Choosing between a differentiation strategy and an overall cost leadership strategy is an example of
a.
a plan.
b.
an objective.
c.
an alternative.
d.
a decision.
e.
a strategy.
5. Mark, a production manager at Kaylie’s Kookware, recently chose to schedule his workers to work
overtime. His alternative was to hire more workers. He is now monitoring the consequences of his
choice. This is an example of
a.
planning.
b.
decision-making.
c.
organizing.
d.
controlling.
e.
leading.
6. ____ refers to the process of identifying problems and then resolving them.
a.
Organizing
b.
Controlling
c.
Decision-making
d.
Planning
e.
Leading
7. ____ decisions are associated with decision rules.
a.
Nonprogrammed
b.
Unique
c.
Programmed
d.
Ill-structured
e.
Novel
8. Programmed decisions are made in response to ____ organizational problems.
a.
unusual
b.
recurring
c.
significant
d.
minor
e.
unique
9. Bierderlack has a policy that states that more than three absences in a six-month period shall result in a
suspension. Colleen, the manager, has just decided to suspend one of her shift employees for violating
this policy. This is an example of
a.
a programmed decision.
b.
a nonprogrammed decision.
c.
an insignificant decision.
d.
poor management.
e.
personal grudge.
10. Nordstrom Department Store’s “No questions asked – Return’s Policy” is an example of a(n)
a.
programmed decision.
b.
nonprogrammed decision.
c.
novel decision.
d.
poor management.
e.
unstructured decision.
11. If your instructor has an attendance policy, she/he is using a(n)
a.
programmed decision.
b.
unique approach.
c.
condition of ambiguity.
d.
nonprogrammed decision.
e.
none of these.
12. Nonprogrammed decisions are made in response to situations that are
a.
unique.
b.
unstructured.
c.
important to the organization.
d.
all of these
e.
unique and important to the organization.
13. Examples of nonprogrammed decisions would include the decision to
a.
reorder supplies.
b.
develop a new product or service.
c.
perform routine maintenance on one of the machines in manufacturing.
d.
terminate an employee for violation of company rules.
e.
fill a position.
14. Good examples of ____ decisions are strategic decisions.
a.
nonprogrammed
b.
programmed
c.
insignificant
d.
recurring
e.
structured
15. When a small community hospital decides to add a radiation therapy unit, it is considered a
a.
programmed decision.
b.
structured decision.
c.
nonprogrammed decision.
d.
poor management decision.
e.
certainty decision.
16. Two area banks, Bank A and Bank B, decided to merge their operations. This is an example of a
a.
programmed decision.
b.
nonprogrammed decision.
c.
decision rule.
d.
structured decision.
e.
bad community decision.
17. Associated with the condition of ____ is the lowest possibility of failure.
a.
ambiguity
b.
uncertainty
c.
certainty
d.
risk
e.
all of these
18. Which of the following means that all the information the decision-maker needs is fully available?
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
None of these
19. Under conditions of ____, statistical analyses are useful.
a.
certainty
b.
ambiguity
c.
risk
d.
uncertainty
e.
conflict
20. Which of the following means that a decision has clear-cut goals and that good information is
available, but the future outcomes associated with each alternative are subject to chance?
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
Brainstorming
21. ____ means that managers know which goals they wish to achieve, but information about alternatives
and future events is incomplete.
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
Advocacy
22. Bobby, a product manager, wants to increase the market share of his product. He is unsure about how
to go about it, not knowing for sure how costs, price, the competition, and the quality of his product
will interact to influence market share. Bobby is operating under a condition of
a.
risk.
b.
ambiguity.
c.
certainty.
d.
uncertainty.
e.
brainstorming.
23. When managers know which goals they wish to achieve, but information about alternatives and future
events is incomplete, the condition of ____ exists.
a.
risk
b.
uncertainty
c.
ambiguity
d.
certainty
e.
problem
24. ____ has the highest possibility of failure.
a.
The condition of certainty
b.
The condition of ambiguity
c.
The condition of uncertainty
d.
The condition of risk
e.
All of these
25. ____ is by far the most difficult situation for a decision-maker.
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
Brainstorming
26. Which of the following means that the goals to be achieved or the problem to be solved is unclear,
alternatives are difficult to define, and information about outcomes is unavailable?
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
Brainstorming
27. The condition under which ambiguity occurs is when:
a.
alternatives are difficult to define.
b.
objectives are well defined.
c.
information about outcomes is readily available.
d.
all the alternatives are known.
e.
decisions are already made.
28. The classical model of decision making is based on ____ assumptions.
a.
philosophical
b.
irrational
c.
economic
d.
uncertainty
e.
technological
29. Riley is a manager at the Tinker Tools. She is expected to make decisions that are in the organization’s
best economic interests. Her decisions should be based on which of the following models?
a.
The administrative model of decision making
b.
The garbage can model of decision making
c.
The scientific management model of decision making
d.
The classical model of decision making
e.
The humanistic model of decision making
30. Which of these assumptions are included in the classical model of decision making?
a.
Problems are unstructured and ill defined.
b.
The decision-maker strives for conditions of certainty.
c.
Criteria for evaluating alternatives are unknown.
d.
The decision-maker selects the alternatives that will minimize the economic return to the
organization.
e.
The situation is always uncertain.
31. Which approach defines how a decision-maker should make decisions?
a.
normative
b.
scientific
c.
descriptive
d.
reflective
e.
humanistic
32. ____ is the approach that defines how a decision maker should make decisions and provides guidelines
for reaching an ideal outcome for the organization.
a.
Administrative
b.
Descriptive
c.
Normative
d.
Bounded rationality
e.
None of these
33. The ____ model of decision making is most valuable when applied to ____.
a.
administrative, programmed decisions
b.
classical, nonprogrammed decisions
c.
classical, programmed decisions
d.
classical, ambiguous decisions
e.
administrative, structured decisions
34. ____ approach describes how managers actually make decisions, where as ____ approach defines how
a decision-maker should make decisions.
a.
Normative, descriptive
b.
Normative, classical
c.
Descriptive, normative
d.
Descriptive, administrative
e.
Normative, administrative
35. Which model of decision making is associated with satisficing, bounded rationality, and uncertainty?
a.
classical
b.
administrative
c.
quantitative
d.
rational
e.
political
36. The ____ model of decision making describes how managers actually make decisions in situations
characterized by nonprogrammed decisions, uncertainty, and ambiguity.
a.
normative
b.
classical
c.
administrative
d.
scientific management
e.
objective
37. The concept that people have the time and cognitive ability to process only a limited amount of
information on which to base decisions is known as
a.
satisficing.
b.
bounded rationality.
c.
classical model of decision making.
d.
normative approach.
e.
scientific approach.
38. The essence of ____ is to choose the first solution available.
a.
bounded rationality
b.
creativity
c.
decision maximization
d.
satisficing
e.
the classical model of decision making
39. Melissa is a manager at InStylez Clothing. Her job is very complex and she feels that she does not
have enough time to identify and/or process all the information she needs to make decisions. Melissa’s
situation is most consistent with which of the following concepts?
a.
Bounded rationality
b.
The classical model of decision making
c.
Satisficing
d.
Brainstorming
e.
Scientific management
40. Intuition is based on ____, but lacking in ____.
a.
conscious thought, practicality
b.
experience, applicability
c.
a solid analysis, applicability
d.
experience, conscious thought
e.
thought-process, guts
41. Most managers settle for a ____ rather than a(n) ____ solution.
a.
minimizing; maximizing
b.
satisficing; maximizing
c.
top-level; bottomline
d.
maximizing; satisficing
e.
challenging; simple
42. Which of the following is the process of forming alliances among managers during the decision
making process?
a.
Networking
b.
Socializing
c.
Coalition building
d.
Satisficing
e.
Passing the buck
43. The ____ model closely resembles the real environment in which most managers and decision-makers
operate.
a.
normative
b.
administrative
c.
descriptive
d.
classical
e.
political
44. All of these are basic assumptions of the political model EXCEPT
a.
organizations are made up of groups with diverse interests, goals, and values.
b.
information is clear and complete.
c.
managers do not have the time, resources, or mental capacity to identify all dimensions of
the problem.
d.
managers engage in the push and pull of debate to decide goals and discuss alternatives.
e.
all of these are basic assumptions of the political model.
45. All of the following are characteristics of the classical decision making model EXCEPT
a.
clear-cut problems and goals.
b.
conditions of certainty.
c.
rational choice by individual for maximizing outcomes.
d.
limited information about alternatives and their outcomes.
e.
all of these are characteristics of classical decision making model.
46. All of the following are characteristics of the administrative decision making model EXCEPT
a.
vague problem and goals.
b.
conditions of certainty.
c.
limited information about alternatives and their outcomes.
d.
satisficing choice.
e.
all of these are characteristics of administrative decision making model.