Chapter 9—Managerial Decision Making
TRUE/FALSE
1. Making a choice is the most significant part of the decision-making process.
2. A decision is a choice made from available alternatives.
3. 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.
4. 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.
5. Gerald’s Groceries and Marty’s Market decided to merge their operations, something neither company
has tried before. This would be considered a nonprogrammed decision.
6. In the real world, few decisions are certain.
7. The main difference between risk and uncertainty is that with risk you know the probabilities of the
outcomes.
8. 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.
9. .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.
10. The classical decision making model assumes that the decision-maker is rational, and makes the
optimal decision each time.
11. 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.
12. The growth of quantitative decision techniques that use computers has reduced the use of the classical
approach.
13. The administrative model of decision making describes how managers actually make decisions in
difficult situations.
14. Normative decision theory recognizes that managers have only limited time and cognitive ability and
therefore their decisions are characterized by bounded rationality.
15. The classical model of decision-making works best in organizations that are made up of groups with
diverse interests, goals, and values.
16. According to the classical model of decision making, managers’ searches for alternatives are limited
because of human, information, and resource constraints.
17. According to the administrative model of decision making, managers’ searches for alternatives are
limited because of human, information, and resource constraints.
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. Intuition is a quick apprehension of a decision situation based on past experience but without
conscious thought.
20. According to both research and managerial experience, intuitive decisions are best and always work
out.
21. The process of forming alliances among managers is called coalition building.
22. 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.
23. Good intuitive decision making is based on an ability to recognize patterns at lightning speed.
24. 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.
25. Managers confront a decision requirement in the form of either a problem or an opportunity.
26. Nonprogrammed decisions require six steps, however, programmed decisions being structured and
well understood require only one step.
27. Step one in the managerial decision-making process is recognition of decision requirement.
28. For a non-programmed decision, feasible alternatives are hard to identify and in fact are already
available within the organization’s rules and procedures.
29. 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.
30. The formulation stage involves the use of managerial, administrative, and persuasive abilities to ensure
that the chosen alternative is carried out.
31. Risk propensity refers to the willingness to undertake risk with the opportunity of gaining an increased
payoff.
32. 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.
33. Feedback is the part of monitoring that assesses whether a new decision needs to made.
34. People who prefer simple, clear-cut solutions to problems use the directive style.
35. Managers with an analytical decision style like to consider complex solutions based on as much data
as they can gather.
36. The behavioral style is often adopted by managers who like to consider complex solutions based on as
much data as they can gather.
37. Individuals with a conceptual decision-making style are more socially oriented than those with an
analytical style.
38. The most effective managers are consistent in using their own decision style rather than shifting
among styles.
39. Most bad decisions are errors in judgment that originate in the human mind’s limited capacity and in
the natural biases of the manager.
40. Justifying past decisions is a common bias of managers.
41. Managers will frequently look for new information that contradicts their instincts or original point of
view.
42. Most people underestimate their ability to predict uncertain outcomes.
43. Brainstorming uses a face-to-face interactive group to spontaneously suggest a wide range of
alternatives for decision making.
44. Brainwriting refers to the tendency of people in groups to suppress contrary opinions.
45. Groupthink refers to the tendency of people in groups to suppress contrary opinions.
46. Devil’s advocate technique is similar to brainstorming in that both techniques prevent individuals from
challenging other group member’s assumptions.
47. Point-counterpoint is a decision-making technique in which people are assigned to express competing
points of view.
MULTIPLE CHOICE
1. Managers are often referred to as:
a.
decision makers.
b.
peace makers.
c.
conflict creators.
d.
an 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. 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
5. _____ refers to the process of identifying problems and then resolving them.
a.
Organizing
b.
Controlling
c.
Decision-making
d.
Planning
e.
Leading
6. _____ decisions are associated with decision rules.
a.
Nonprogrammed
b.
Unique
c.
Programmed
d.
Ill-structured
e.
Novel
7. Programmed decisions are made in response to _____ organizational problems.
a.
unusual
b.
recurring
c.
significant
d.
minor
e.
unique
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. Good examples of _____ decisions are strategic decisions.
a.
nonprogrammed
b.
programmed
c.
insignificant
d.
recurring
e.
structured
14. 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.
15. 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.
16. At the start of every shift, Carl, a delivery truck driver, plans out his route based on the addresses that
he will be visiting to drop off packages. This can best be described as what kind of decision?
a.
Programmed
b.
Nonprogrammed
c.
Wicked
d.
Administrative
e.
Intuitive
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. 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
20. Under conditions of _____, statistical analyses are useful.
a.
certainty
b.
ambiguity
c.
risk
d.
uncertainty
e.
conflict
21. 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
22. _____ 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
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.
problematic
24. Which of the following 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. The four positions on the possibility of failure scale include certainty, risk, ambiguity, and _____.
a.
uncertainty
b.
conflict
c.
necessity
d.
indecision
e.
possibility
26. _____ is by far the most difficult situation for a decision-maker.
a.
Certainty
b.
Risk
c.
Uncertainty
d.
Ambiguity
e.
Brainstorming
27. 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
28. 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.
29. _____ decisions are associated with conflicts over goals and decision alternatives, rapidly changing
circumstances, fuzzy information, and unclear links among decision elements.
a.
Nonprogrammed
b.
Programmed
c.
Wicked
d.
Conventional
e.
Irrational
30. During the fallout of the global financial crisis of the late 2000s, finance companies had to make
important decisions in a highly ambiguous environment. The decision to buyout failed banks could
best be described as what type of decision?
a.
Bounded
b.
Programmed
c.
Conventional
d.
Wicked decision problem
e.
Irrational decision
31. The classical model of decision making is based on _____ assumptions.
a.
philosophical
b.
irrational
c.
economic
d.
uncertainty
e.
technological
32. 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
33. 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.
34. Which approach defines how a decision-maker should make decisions?
a.
Normative
b.
Scientific
c.
Descriptive
d.
Reflective
e.
Humanistic
35. _____ 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
36. 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.
37. 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
38. _____ approach describes how managers actually make decisions, whereas _____ approach defines
how a decision-maker should make decisions.
a.
Normative; descriptive
b.
Normative; classical
c.
Descriptive; normative
d.
Descriptive; administrative
e.
Normative; administrative
39. Which model of decision making is associated with satisficing, bounded rationality, and uncertainty?
a.
Classical
b.
Administrative
c.
Quantitative
d.
Rational
e.
Political
40. The growth of quantitative decision techniques that use computers has expanded the use of which
decision-making approach?
a.
Administrative
b.
Classical
c.
Intuitive
d.
Political
e.
Bureaucratic
41. The _____ model of decision making describes how managers actually makes decisions in situations
characterized by nonprogrammed decisions, uncertainty, and ambiguity.
a.
normative
b.
classical
c.
administrative
d.
scientific management
e.
objective
42. 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.
43. 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
44. 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
45. Rodney doesn’t always realize that within his role as an air traffic controller, he must continuously
perceive and process information based on knowledge and experience that he is not consciously aware
of. This describes what type of decision-making?
a.
Administrative
b.
Right-brained
c.
Satisficing
d.
Rational
e.
Intuitive
46. 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
47. Most managers settle for a _____ rather than a _____ solution.
a.
minimizing; maximizing
b.
satisficing; maximizing
c.
top-level; bottomline
d.
maximizing; satisficing
e.
challenging; simple
48. 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.
satisfying choice.
e.
all of these are characteristics of administrative decision making model.
49. 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
50. The _____ model of decision-making is useful for making nonprogrammed decisions when conditions
are uncertain, information is limited, and there are managerial conflicts about what goals to pursue or
what course of action to take.
a.
classical
b.
functional
c.
bureaucratic
d.
political
e.
administrative
51. 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
52. Jefferson Inc. is an information technology consulting firm located in Washington D.C. Decisions at
Jefferson are complex and involve many people, with a significant amount of disagreement and
conflict. Which decision-making model fits best for this organization?
a.
Political
b.
Functional
c.
Classical
d.
Administrative
e.
Bureaucratic