Part II - Planning
Chapter Four: Foundations of Decision Making
True/False
1.
Heuristics or “rules of thumb” improve the accuracy of a decision maker's judgment.
(False; Moderate; p. 128)
2.
The decision-making process is a set of eight steps that begins with an analysis of the
feasibility of alternatives.
(False; Challenging; p. 120)
3.
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
uncertainty exists.
(True; Easy; p. 124)
4.
During the identification of alternatives step in the decision-making process, the
strengths and weaknesses of each alternative are evaluated.
(False; Moderate; p. 122)
5.
The concept of bounded rationality differs from the rational decision-making model in
that decision makers tend to select the first reasonable choices that are available or
are easy to find.
(True; Moderate; p. 127)
6.
Bounded rationality refers to the fact that most managers make consistent, valuemaximizing choices within specified constraints.
(False; Moderate; p. 127)
7.
A problem is a discrepancy or conflict between an existing and a desired state of
affairs.
(True; Easy; p. 120)
8.
Satisficing is the tendency for managers to seek solutions that are satisfactory and
sufficient.
(True; Easy; p. 127)
9.
According to the economist Herbert Simon, satisficing is the most effective approach to
management decision-making.
(False; Moderate; p. 127)
10.
An assumption of the rational decision-making model is that the problem that is being
solved is clear and unambiguous.
(True; Easy; p. 124; Ex. 4-6)
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Chapter 4 – Foundations of Decision Making
11.
Escalation of commitment is the tendency for people to base judgments of probability
on things with which they have had experience with in the past.
(False; Moderate; p. 129)
12.
In the rational decision making process, a manager evaluates each alternative by
appraising it against what he or she expects to gain from the situation.
(False; Moderate; p. 122)
13.
Intrinsic task motivation is the desire to work on a task or problem because it is
interesting, challenging stimulating, and financially rewarding.
(False; Challenging; p. 126)
14.
In many cases, managers engage in escalation of commitment in order to show that
their initial decision was correct even though they did not get the outcome they
expected.
(True; Challenging; p. 129)
15.
An assumption of rational decision-making is that all alternatives and consequences
can be clearly assessed by the decision-maker.
(True; Challenging; p. 124)
16
Escalation of commitment occurs when decisions must be made with limited
information because decision makers do not have full knowledge and cannot
determine even a reasonable probability of alternative outcomes.
(False; Challenging; p. 129)
17.
The rational decision-making process is the basis for all creative work.
(False; Easy; p. 125)
18.
The decision-making process begins with identification of decision criteria.
(False; Challenging; p. 120)
19.
A decision is a discrepancy between an existing and a desired state of affairs.
(False; Moderate; p. 120)
20.
Problem identification is a key component of effective decision making.
(True; Moderate; p. 120)
21.
The manager who mistakenly solves the wrong problem perfectly is as likely to
perform just as poorly as the manager who fails to identify the right problem and does
nothing.
(True; Moderate; p. 121)
22.
Decision criteria indicate the important factors in making a decision.
(True; Easy; pp. 121-122)
23.
The decision maker evaluates each alternative by appraising it against the criteria.
(True; Moderate; p. 122)
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Part II - Planning
24.
Most decisions involve judgments that are reflected in the criteria, the weighting of the
criteria, and the evaluation of the alternatives.
(True; Challenging; p. 122)
25.
To choose the correct alternative, we should determine all pertinent factors in the
decision, weigh the important ones, and then identify the viable alternatives to find the
one with the highest score.
(False; Challenging; p. 1024)
26.
Decision implementation is conveying the decision to upper management.
(False; Easy; p. 124)
27.
A rational decision maker makes consistent, value-maximizing choices within specified
constraints.
(True; Moderate; p. 124)
28.
One assumption of the rational decision-making model is that time and cost constraints
are known.
(False; Challenging; p. 125; Ex. 46)
29
When managers assign probabilities to outcomes that may result, they are dealing with
risk.
(True; Moderate; p. 124)
30.
Most individuals make decisions based upon incomplete information.
(True; Moderate; p. 126)
31.
Few people actually behave rationally.
(True; Moderate; p. 127)
32.
Herbert Simon found that decision makers will often focus on easy-to-find choices—
ones that tend to be highly visible.
(True; Moderate; p. 127)
33.
Representative heuristic is the tendency for people to base their judgments on
information that is readily available to them.
(False; Moderate; p. 128)
34.
John invested in Dig, Inc. stock at $14 per share. The price has fallen to $6 per share,
but John is sure he was right and buys additional shares. John is guilty of availability
heuristic.
(False; Moderate; pp. 128-129)
35.
When a Little League baseball player dreams of becoming a professional baseball
player, he is using a representative heuristic.
(True; Moderate; p. 129)
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Chapter 4 – Foundations of Decision Making
36.
Well-structured problems align closely with the assumptions underlying perfect
rationality.
(True; Moderate; p. 130)
37.
A policy is a series of interrelated sequential steps that a manager can use for
responding to a well-structured problem.
(False; Moderate; p. 130)
38.
Mavis Barton Enterprises is in the process of deciding which one of two small
successful companies to buy out. This acquisition will increase its number of
employees by 22% and its sales revenue by 38%. Mavis Barton is making a
programmed decision.
(False; Easy; pp. 130-131)
39.
Organizational efficiency is facilitated by the use of programmed decision making.
(True; Easy; p. 132)
40.
The decision-making model assumes individuals differ along two dimensions: the way
they think and their tolerance for ambiguity.
(True; Moderate; p. 134)
41.
The analytic decision-making style is characterized by low tolerance for ambiguity and
a rational way of thinking.
(False; Challenging; p. 134; Ex. 49)
42.
Most managers possess only the characteristics of one decision-making style.
(False; Challenging; p. 134)
43.
Group decisions provide more complete information than individual decisions.
(True; Moderate; p. 136)
44.
Groupthink explains why groups make more accurate decisions than individuals.
(False; Moderate; p. 137)
45.
James and Lucy are coworkers at Eccentron Methodologies. They are trying to assign
decisions to some groups and some individuals. They have reached the conclusion
that whether groups are more effective than individuals depends on the criteria you
use for defining effectiveness—such as accuracy, speed, creativity, and acceptance.
(True; Challenging; pp. 136-137)
46.
Nominal group technique allows individuals to operate independently.
(True; Challenging; p. 138)
47.
The major advantages of electronic meetings are anonymity, honesty, and exchange
of information.
(False; Moderate; p. 138)
48.
When decisions must be made with limited information because decision makers do
not have full knowledge and cannot determine even a reasonable probability of
alternative outcomes, they must make their decisions under a condition of risk.
(False; Challenging; p. 124)
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Part II - Planning
Multiple Choice Questions
49.
Re-ordering inventory from the same supplier in the first week of every month is an
example of
a. failing to consider decision alternatives.
b. a programmed decision.
c. a non-programmed decision.
d. risk.
(b; Moderate; p. 120; Ex. 41)
50.
When the outcome of a management decision is uncertain, the decision
involves_______.
a. bounded rationality
b. uncertain outcomes
c. risk
d. fewer feasible solutions
(c; Moderate; p. 124)
51.
In general, the greater the risk in making a decision, the greater the
a. outcomes.
b. information available.
c. rewards.
d. uncertainty.
(d; Easy; p. 124)
52.
Harvey Jones made a decision when he was uncertain of the outcome. The decision
he made is likely to be
a. of poor quality.
b. unacceptable.
c. successful.
d. risky.
(d; Moderate; p. 124)
53.
_________ is the final step in the decision-making process.
a. Implementing the decision
b. Evaluating the decision
c. Recognizing the decision
d. Evaluating the alternatives
(b; Easy; p. 124)
54.
__________ is not one of the eight steps in the decision making process.
a. Identifying the problem
b. Analyzing alternative solutions
c. Implementing the decision
d. Delegating the decision making
(d; Challenging; p. 121; Ex. 4-2)
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Chapter 4 – Foundations of Decision Making
55.
__________ is the aspect of decision making that is based on such facts as costs,
revenues, and product design specifications.
a. Decision quality
b. Escalation of commitment
c. Optimizing
d. Satisficing
(a; Moderate; p. 1020)
56
_________ is when an alternative is chosen because the manager believes it is "good
enough," to solve his or her problem.
a. Optimizing
b. Satisficing
c. Incomplete
d. Maximizing
(b; Moderate; p. 127)
57.
_____________ is used when managers make every decision, from the alternatives,
based on a philosophy that you do you make the best decision, no matter how long it
takes.
a. Optimizing
b. Satisficing
c. Sub-optimizing
d. Escalation of commitment
(a; Easy; p. 127)
58.
____________ requires managers to select the best alternative from among multiple
criteria or alternative solutions.
a. Programmed decision-making
b. Optimizing
c. Satisfying
d. Bounded rationality
(b; Moderate; p. 127)
59.
___________ is a term used to describe a home owner who is selling her house, when
she makes a decision to sell her house to the first person who comes along, after
getting the initial offer.
a. Bounding rationality
b. Satisficing
c. Competitive
d. Optimizing
(b; Moderate; p. 127)
60.
Creativity refers to
a. uncovering what is already there.
b. creating something new.
c. organizing already discovered items.
d. criticizing the discovered items
(a; Moderate; p. 125)
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Part II - Planning
61.
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. Identify the problem.
b. Evaluate the decision criteria.
c. Analyze the alternatives.
d. Evaluate the results.
(d; Challenging; p. 124)
62.
According to the concept of bounded rationality, decision makers are limited by
_______.
a. less than complete information
b. their habits
c. time
d. All of the above.
(d; Moderate; p. 127)
63.
__________ is selecting the first minimally acceptable alternative.
a. Bounded rationality
b. Unbounded rationality
c. Satisficing
d. Rational decision-making
(c; Moderate; p. 127)
64.
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. Escalation of commitment
d. Rational decision-making
(a; Moderate; p. 127)
65.
________ 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. Bounded Rationality
d. Rational decision-making
(b; Moderate; p. 127)
66.
______________ occurs when a manager purchases stock in a company and refuses
to sell it even after it has dropped 40 percent in value over the past 6 months.
a. Optimizing
b. Satisficing
c. Bounded Rationality
d. Escalation of Commitment
(d; Moderate; p. 129)
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Chapter 4 – Foundations of Decision Making
67.
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. Bounded rationality
b. Escalation of commitment
c. Intuition
d. Satisficing
(c; Moderate; p. 124)
68.
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. bounded rationality.
b. satisficing.
c. escalation of commitment.
d. poor use of rational making process.
(c; Challenging; p. 125; Ex. 46)
69.
____________ is one of the disadvantages of group decisions that typically results in
groups that are very cohesive.
a. Conflict
b. Groupthink
c. Domination
d. Compromise
(b; Moderate; p. 137)
70.
Which of the following is an advantage of group decision-making when compared to
individual decision-making?
a. The group process takes less time.
b. Groupthink may occur.
c. More decision alternatives are generated.
d. One person can dominate the group.
(c; Easy; pp. 136-138)
71.
___________ occurred when Georgia-Pacific made a decision to spin off its holdings
in Texas and Louisiana into the Louisiana-Pacific Corporation.
a. Satisficing
b. Programmed decision-making
c. Representative heuristics
d. Escalation of commitment
(b; Easy; pp. 130-131)
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Part II - Planning
72.
_________ decisions deal with situations where the factors are fairly structured and
occur with some frequency.
a. Satisficing
b. Programmed
c. Non-programmed
d. Heuristic
(c; Easy; pp. 130-131)
73.
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. satisficing
b. programmed
c. non-programmed
d. heuristic
(c; Moderate; pp. 130-131)
“Decision making under risk” means ____________.
a. the decision has no data on which to base his or her decision
b. the decision maker is used to dealing with high-risk situations
c. the decision maker knows all of the risks involved in the situation
d. the decision maker can estimate the risk involved in making a decision
(d; Challenging; p. 124)
74.
75.
____________ 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. Certainty
b. Uncertainty
c. Risk
d. Optimal decision-making
(b; Moderate; p. 124)
76.
All of the following are examples of planning-function decisions except
a. Does the human resource evaluation process comply with federal laws?
b. How difficult should individual goals be?
c. What are the organization's long-term objectives?
d. What might the competition be considering?
(a; Moderate; p. 120; Ex. 41)
77.
The first step in the decision-making process is which of the following?
a. Develop the alternatives.
b. Analyze alternatives.
c. Identify decision criteria.
d. Identify the problem.
(d; Moderate; p. 121;Ex 4-2)
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Chapter 4 – Foundations of Decision Making
78.
The decision-making process concludes with
a. analysis of alternatives.
b. identification of a problem.
c. identification of decision criteria.
d. evaluation of decision effectiveness.
(d; Moderate; p. 121; Ex. 4-2)
79.
How do managers know when they have a disparity or discrepancy in the decisionmaking 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. past performance
c. the performance of some unit in or out of the organization
d. use future projections
(d; Challenging; pp. 120-121)
80.
Once a manager has identified a problem, the _____ that will be important in solving
the problem must be identified.
a. discrepancies
b. decision criteria
c. scenarios
d. factor weights
(b; Moderate; p. 121)
81.
Price, size, gas mileage, color, options, and repair records are examples of which of
the following when purchasing a new car?
a. problems
b. decision criteria
c. scenarios
d. factor weights
(b; Moderate; p. 121)
82.
The strengths and weaknesses of each alternative become obvious in which step of
the decision making-process?
a. Identify the problem.
b. Identify the decision criteria.
c. Analyze the alternatives.
d. Implement the alternative.
(c; Moderate; p. 122)
83.
Choosing the best alternative is a relatively simple matter if we have done a good job
in assigning _____ in step five.
a. the highest weighted score
b. the weighted criteria correctly
c. the right decision maker
d. None of the above.
(a; Moderate; p. 124)
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Part II - Planning
84.
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. identify the decision criteria.
c. analyze the alternatives.
d. implement the alternative.
(d; Moderate; p. 124)
85.
Putting a decision into action and conveying the decision to the persons who will be
affected by it is known as
a. problem identification.
b. decision implementation.
c. rational decision making.
d. irrational decision making.
(b; Moderate; p. 124)
86.
The last step in the decision-making process is to
a. evaluate the decision effectiveness.
b. identify the decision criteria.
c. analyze the alternatives.
d. implement the alternative.
(a; Moderate; p. 124)
87.
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. decision implementation
c. rational decision making
d. irrational decision making
(c; Moderate; p. 124)
88.
_____ implies that the outcome of every alternative is known.
a. Bounded rationality
b. Unbounded rationality
c. Certainty
d. Uncertainty
(c; Moderate; p. 124)
89.
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. uncertainty
b. certainty
c. risk
d. bounded rationality
(a; Moderate; p. 124)
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Chapter 4 – Foundations of Decision Making
90.
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. uncertainty
b. certainty
c. risk
d. optimal decision making
(a; Moderate; p. 124)
91.
Which of the following is not an assumption of the rational decision-making model?
a. The problem is clear and unambiguous.
b. A single well-defined goal is to be achieved.
c. Preferences change slowly.
d. Final choice will maximize economic payoff.
(c; Challenging; p. 125; Ex. 46)
92.
Creativity is formed when the elements of creative skills, expertise, and _____
intersect.
a. personality
b. experience
c. task motivation
d. None of the above.
(c; Moderate; p. 120; Ex. 47)
93.
Managers often seek solutions that are satisfactory and sufficient. This is known as
which of the following?
a. satisfactory decision making
b. satisficing
c. risk
d. optimal decision making
(b; Moderate; p. 127)
94.
The strap of John's backpack tears off as he starts to throw it over his shoulder. On the
way to school, he stops at the first store that carries backpacks, walks in, and
purchases one off the front rack. John has just made what type of a decision?
a. satisfactory decision
b. satisficing decision
c. risky decision
d. optimal decision
(b; Challenging; p. 127)
95.
"Good" decisions are expected to
a. produce "good" results.
b. earn promotions for decision makers.
c. be made quickly.
d. appear to follow the rational process.
(d; Challenging; p. 127)
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Part II - Planning
96.
When decision makers construct simplified models that extract the essential features
from a problem without capturing all the complexities of a problem, they are acting
under which of the following?
a. bounded rationality
b. unbounded rationality
c. uncertainty
d. heuristics
(a; Moderate; p. 127)
97.
Herbert Simon, an economist and management scholar, found that within certain
constraints, managers
a. act rationally.
b. engage in irrational decisions.
c. act in their own self-interest.
d. behave illegally.
(a; Easy; p. 1127)
98.
In the decision-making process known as bounded rationality,
a. the final choice maximizes economic payoff.
b. the final choice minimizes economic payoff.
c. the first choice that is "good enough" is chosen.
d. all "good enough" choices are selected.
(c; Moderate; p. 1127)
99.
Because bounded rationality affects most managers, decisions made are strongly
influenced by all of the following except
a. self-interest.
b. organizational culture.
c. power considerations.
d. known outcomes.
(d; Challenging; p. 128)
100.
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. bounded rationality.
b. unbounded rationality.
c. uncertainty.
d. heuristics.
(d; Moderate; p. 128)
101.
The tendency for people to base their judgments on information that is readily
available is known as
a. availability heuristic.
b. representative heuristic.
c. escalation of commitment.
d. optimal decision making.
(a; Moderate; p. 128)
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Chapter 4 – Foundations of Decision Making
102.
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. availability heuristic.
b. representative heuristic.
c. escalation of commitment.
d. optimal decision making.
(a; Challenging; p. 1128)
103.
Kay based the forecasted sales figure of the new product on last year's sales figures
from a previous product. Kay is engaging in which of the following?
a. availability heuristic
b. representative heuristic
c. escalation of commitment
d. optimal decision making
(b; Challenging; p. 129)
104.
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. availability heuristic
b. representative heuristic
c. escalation of commitment
d. optimal decision making
(c; Moderate; p. 129)
105.
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. availability heuristic.
b. representative heuristic.
c. escalation of commitment.
d. optimal decision making.
(c; Easy; p. 129)
106.
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. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(a; Moderate; p. 130)
107.
Problems where information is ambiguous or incomplete are which type of problem?
a. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(b; Moderate; p. 130)
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Part II - Planning
108.
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. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(c; Moderate; p. 130)
109.
Before being reimbursed for traveling expenses, the employee must file the following
forms in the following order. This is an example of a
a. rule.
b. procedure.
c. policy.
d. nonprogrammed decision.
(b; Moderate; pp. 130-131)
110.
"No smoking allowed" is an example of which of the following?
a. rule
b. procedure
c. policy
d. nonprogrammed decision
(a; Moderate; p. 131)
111.
"Whenever possible, we promote from within" is an example of which of the following?
a. rule
b. procedure
c. policy
d. nonprogrammed decision
(c; Easy; p. 131)
112.
"Only employees with top-secret clearance may enter the sealed room," is an example
of a
a. rule.
b. procedure.
c. policy.
d. nonprogrammed decision.
(a; Moderate; p. 131)
113.
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. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(d; Moderate; p. 1130)
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Chapter 4 – Foundations of Decision Making
114.
Rules, procedures, and policies are most suitable for _____ problems.
a. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(a; Easy; pp. 130-131)
115.
As managers move up the organizational hierarchy, problems are more likely to
become
a. well-structured.
b. ill-structured.
c. programmed.
d. nonprogrammed.
(b; Moderate; p. 131)
116.
Programmed decisions minimize the need for managers to _____.
a. act alone
b. make the same decision under similar circumstances
c. exercise discretion
d. None of the above.
(c; Moderate; p. 133)
117.
_____ 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. Stand alones
b. Networks
c. Microsoft
d. Expert systems
(d; Easy; p. 133)
118.
The next step beyond expert systems is _____, which use computer software to
imitate the structure of brain cells and connections among them. An example is
sophisticated robots being used for their intelligence.
a. organic networks
b. neural networks
c. cellular networks
d. interfaced networks
(b; Moderate; p. 133)
119.
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. management experts
b. college professors
c. consultants
d. senior managers
(d; Challenging; p. 133)
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Part II - Planning
120.
The decision-making model consists of four styles: directive, analytic, behavioral, and
_____.
a. conceptual
b. intuitive
c. group interaction
d. laggard
(a; Moderate; p. 134; Ex. 49)
121.
Peggy Juarez uses a decision-making style characterized by low tolerance for
ambiguity and a rational way of thinking. They generally turn out to be fast decisions of
a short run nature. What style does Peggy use?
a. analytic
b. conceptual
c. directive
d. behavioral
(c; Moderate; p. 134; Ex. 49)
122.
The basic premise for the decision-making model is that individuals differ along two
dimensions
a. degree of risk preference and position within the organizational hierarchy.
b. experience and communication skills.
c. way they think and tolerance for ambiguity.
d. personality and attention to detail.
(c; Challenging; p. 134; Ex. 49)
123.
Which of the following styles of decision making is characterized by individuals who
prefer complete information and consider several alternatives?
a. analytic
b. conceptual
c. directive
d. behavioral
(a; Moderate; p. 134; Ex. 49)
124.
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. analytic
b. conceptual
c. directive
d. behavioral
(b; Moderate; p. 134; Ex. 49)
125.
Group decisions provide _____ information than do individual ones.
a. more current
b. more complete
c. more relevant
d. more consistent
(b; Challenging; p. 136)
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Chapter 4 – Foundations of Decision Making
126.
Many decisions fail after the final choice has been made because which of the
following occurs?
a. It was the wrong choice.
b. The decision criteria weights were incorrect.
c. People affected failed to accept the solution.
d. Satisficing occurred.
(c; Challenging; p. 136)
127.
Which of the following is not a disadvantage of group decision making?
a. more time taken to reach a solution
b. minority domination
c. more alternatives
d. groupthink
(c; Moderate; p. 136-137)
128.
Which of the following is not an advantage of group decision making over individual
decision making?
a. increased legitimacy
b. more complete information
c. fewer alternatives due to groupthink
d. increased acceptance of the decision
(c; Easy; p. 136)
129.
A problem with groupthink is that no one is actually in charge of making the final
decision or outcome, which results in _____.
a. ambiguous responsibility
b. role incoherence
c. role ambiguity
d. ambiguous delegation
(a; Moderate; p. 137)
130.
Which of the following is not true about group decisions?
a. Group decisions are faster.
b. Group decisions tend to be more accurate.
c. Group decisions are more creative.
d. Group decisions are more widely accepted.
(a; Moderate; pp. 137-138)
131.
Which of the following is the most effective number of people to have in a group?
a. 57
b. 210
c. 37
d. 312
(a; Challenging; p. 137)
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Part II - Planning
132.
A method that can be used to overcome the tendency toward conformity in group
decision making is which of the following?
a. brainstorming
b. nominal group technique
c. groupthink
d. electronic meetings
(a; Moderate; p. 138)
133.
Which of the following is not allowed in a brainstorming session?
a. clear definition of the problem
b. criticism of poor ideas
c. large number of alternatives
d. recording of all alternatives
(b; Easy; p. 138)
134.
Which of the following group techniques allows group members to meet together, but
allows independent thinking?
a. brainstorming
b. nominal group technique
c. groupthink
d. electronic meetings
(b; Moderate; p. 138)
135.
The _____ is the most recent approach to group decision making that blends the
nominal group technique with sophisticated computer technology.
a. nominal group technique
b. electronic meeting
c. groupthink process
d. Delphi technique
(b; Moderate; p. 138)
136.
A variation of the electronic meeting that links together media from different locations
is
a. e-commerce.
b. the Delphi technique.
c. video conference.
d. e-conference.
(c; Easy; p. 138)
137.
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. Managers are very likely to make safe decisions.
c. Power distance is low.
d. Uncertainty avoidance is high.
(c; Challenging; p. 139)
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Chapter 4 – Foundations of Decision Making
138.
The cultural environment affects decisions made by managers. Which of the following
is not correct?
a. In Egypt, time pressures are low.
b. In Italy, managers rely on tried or proven alternatives.
c. In India, very senior managers make decisions.
d. In Germany, organizations are flexible and organic.
(d; Challenging; p. 139)
Scenario-Based Questions
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.
139.
What is the first step in the decision-making process facing Amanda?
a. Identification of the decision criteria.
b. Assignment of weights to the decision criteria.
c. Identification of the real problem.
d. Selection of an alternative that will solve the problem.
(c; Moderate; p. 120)
140.
What should Amanda do after the problem is defined?
a. Identify the decision criteria.
b. Assign weights to the decision criteria.
c. Identify the real problem.
d. Select an alternative that will solve the problem.
(a; Moderate; p. 120; Ex. 41)
141.
Which of the following would help Amanda develop a thorough list of alternative
solutions to the problem?
a. groupthink
b. brainstorming
c. strategic planning
d. escalation of commitment
(b; Moderate; p. 138)
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Part II - Planning
142.
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. potentials; costs
b. costs; effects
c. strengths; weaknesses
d. images; profits
(c; Moderate; p. 122)
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.
143.
Dave relies on rules of thumb or past experience to make decisions. Based on this
tendency, he will most likely
a. conduct extensive to find the best alternative solution.
b. seek a creative solution.
c. select the first solution that works.
d. None of the above.
(d; Moderate; pp. 128-129)
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. ineffective decision-making
c. escalation of commitment
d. a programmed decision
(c; Moderate; p. 129)
144.
145.
The decision by the secretary to re-order paper from the same supplier first week of
every month is an example of
a. suboptimization.
b. a programmed decision.
c. a non-programmed decision.
d. a risk.
(b; Moderate; p. 130)
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Chapter 4 – Foundations of Decision Making
146.
If Dave were to use the eight steps in the decision making process to decided on
whether to repair or replace the fax machine he would be
a. using a rule.
b. using a procedure.
c. using a policy.
d. making a rational decision.
(d; Easy; p. 127)
147.
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 well-structured decision.
b. suboptimization.
c. a policy.
d. a nonprogrammed decision.
(b; Moderate; p. 127)
148.
The problem of whether or not to order more fax paper is
a. well-structured.
b. ill-structured.
c. programmed.
d. nonprogrammed.
(a; Moderate; p. 130)
149.
The problem of whether to repair the piece of equipment or to purchase a new
machine is an example of a(n) _____ problem.
a. well-structured
b. ill-structured
c. programmed
d. nonprogrammed
(b; Moderate; p. 130)
150.
Situations that are well-structured problems align closely with the assumptions
underlying _____.
a. perfect rationality
b. escalation of commitment
c. representative heuristic
d. available heuristic
(a; Challenging; p. 130)
151.
The decision as to when to order fax paper could be determined by a
a. rule.
b. procedure.
c. policy.
d. nonprogrammed decision.
(a; Easy; p. 131)
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Part II - Planning
152.
The decision about how to handle the equipment repair/replacement is
a. well-structured.
b. ill-structured.
c. programmed.
d. nonprogrammed.
(d; Moderate; p. 131)
153.
Dave should be spending more time making _____ decisions and less time making
_____ decisions.
a. nonprogrammed; programmed
b. programmed; nonprogrammed
c. rule; policy
d. programmed; policy
(a; Challenging; p. 131)
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. brain patterns
b. experiences
c. preconceived notions
d. personal characteristics
(d; Moderate; p. 134)
154.
155.
Jeremy's decision-making style can be characterized as
a. directive.
b. analytic.
c. conceptual.
d. behavioral.
(b; Moderate; p. 134)
156.
The directive style of decision making is used by
a. Jeremy.
b. Jackie.
c. Alexandra.
d. Andy.
(b; Moderate; p. 134)
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Chapter 4 – Foundations of Decision Making
157.
The conceptual style of decision making is preferred by
a. Jeremy.
b. Jackie.
c. Alexandra.
d. Andy.
(d; Moderate; p. 134)
158.
Alexandra seems to prefer the _____ decision-making style.
a. directive
b. analytic
c. conceptual
d. behavioral
(d; Moderate; p. 134)
159.
The four decision-making styles seen in this question can be diagrammed as having
two dimensions: way of thinking and
a. tolerance for ambiguity.
b. time frame.
c. way of living.
d. tolerance for intuition.
(a; Moderate; p. 134; Ex. 49)
Short Discussion Questions
160.
Distinguish between programmed and nonprogrammed decisions, and describe when
managers in organizations can most appropriately use each type of decision.
(Moderate; pp. 130-132)
Programmed decision is a repetitive decision that can be handled by a routine approach
Nonprogrammed decisions are decisions that must be custom-made to solve unique and
nonrecurring problems.
161. Describe the first step in the decision-making process.
(Moderate; pp. 120)
Step One - The decision-making process begins with the identification of a problem, a
discrepancy between an existing and a desired state of affairs.
162. Discuss the concepts of bounded rationality and satisficing and how they differ.
(Easy; pp. 127-128)
Bounded Rationality is behavior that is rational within the parameters of a simplified model
that captures the essential features of a problem.
Satisficing is making a good enough decision. Managers seek solutions that are satisfactory
and sufficient—or just good enough.
Numerous studies have added to our understanding of managerial decision making. These
studies often challenge one or more of the assumptions of rationality. They suggest that
decision making often veers from the logical, consistent, and systematic process that
rationality implies. Despite the limits to perfect rationality, managers are expected to appear to
follow the rational process (bounded rationality).
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Part II - Planning
163.
Explain the difference between certainty, risk, and uncertainty.
Certainty—the decision maker knows the outcome of every possible alternative.
Risk—the probability that a particular outcome will result from a given decision.
Uncertainty—a condition in which managers do not have full knowledge of the problem and
cannot determine even a reasonable probability of alternative outcomes.
(Easy; p. 124)
164. Compare and contrast the biases of availability heuristics, representative heuristics,
and escalation of commitment in the decision-making process.
Availability heuristic—the tendency to base judgments on information that is readily available.
Representative heuristic—the tendency to base judgments on things that are familiar.
Escalation of commitment—an increased commitment to a decision despite negative
information.
(Moderate; pp. 128-129)
165.
Discuss how rules, procedures, and policies differ.
Rules—explicit statements that leave no room for interpretation.
Procedures—a series of interrelated sequential steps that must be used to address a problem.
Policy—a general guide that establishes parameters for a decision, but leaves room for
interpretation.
(Easy; pp. 130-131)
166.
Compare and contrast the types of problems and the differing types of decisions that
are required at the three levels of management.
Lower management—well-structured problems and programmed decision making.
Middle management—less well-structured problems and less programmed decision making.
Top management—ill-structured problems and nonprogrammed decision making.
(Moderate; p. 132; Ex. 4-8)
167.
Explain groupthink.
A form of conformity in which group members withhold deviant, minority, or unpopular views in
an attempt to give the appearance of agreement; undermines critical thinking and harms the
final decision.
(Easy; p. 137)
168.
What is an electronic meeting?
The most recent approach to group decision making blends the nominal group technique with
sophisticated computer technology to product anonymity, honesty, and speed.
(Easy; p. 138)
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Chapter 4 – Foundations of Decision Making
Medium-Length Discussion Questions
169.
Explain the relationship between groupthink and (1) group cohesiveness, (2)
escalation of commitment, and (3) conformity.
(Moderate; pp. 129 and 137)
Groupthink is a form of conformity in which group members withhold deviant, minority, or
unpopular views in order to give the appearance of agreement. As a result, groupthink
undermines critical thinking in the group and eventually harms the quality of the final decision.
Several research studies have found that groupthink symptoms were associated with poorer
quality decision outcomes. But groupthink can be minimized if the group is cohesive, fosters
open discussion, and has an impartial leader who seeks input from all members. Groupthink
can lead to escalation of commitment, which is an increased commitment to a previous
decision despite negative information.
170.
Compare and contrast well-structured problems, ill-structured problems, programmed
decision, and nonprogrammed decision.
Well-structured problems—straightforward, familiar, easily defined problems where a
programmed decision can easily be made since it is a repetitive decision that can be handled
routinely.
Ill-structured problems—New, unique problems that are ambiguous, where information is
incomplete and requires nonprogrammed decision making that is custom-made for that
problem.
Programmed decision—a repetitive decision that can be handled by a routine approach.
Nonprogrammed decision—must be custom-made to solve unique and nonrecurring
problems.
(Moderate; pp. 130131)
171.
When are groups more effective for making decisions?
Whether groups are more effective depends on the criteria for judging effectiveness. Group
decisions are more accurate, better, more creative, and more easily accepted. Individual
decisions are faster.
(Easy; pp. 137-138)
172.
Explain the group decision-making techniques of brainstorming, nominal group
technique, and electronic meetings.
Brainstorming—idea-generating process that encourages alternatives; no criticism is allowed.
Nominal group technique—group members are physically present, but operate independently
by secretly writing a list of their suggestions.
Electronic meeting—a type of nominal group technique; participants are linked by computer.
(Challenging; pp. 137138)
173.
Explain how decision-making in Japan is different from American decision making.
Japanese decision- making is more group oriented because they value conformity and
cooperation. Management collects large amounts of information to be use in consensusforming decisions called ringi. Managerial decisions focus on the long-term rather than on
short-term profits, as is often the case in the US. Japanese employees tend to have higher job
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Part II - Planning
security.
(Moderate; p. 139)
Comprehensive Essays
174.
Describe advantages and disadvantage of groups compared to individuals when
making decisions.
The group can gain increased acceptance for the choice, generate more and higherquality solutions, have a greater pool of knowledge, and can integrate different
perspectives, but individuals take less time to decide, have less conflict, and are not
susceptible to groupthink or dominance.
(Moderate; pp. 136-137)
175.
List the steps in the decision-making process.
 Identification of a problem.
 Identification of decision criteria.
 Allocation of weights to criteria.
 Development of alternatives.
 Analysis of alternatives.
 Selection of an alternative.
 Implementation of the alternative.
 Evaluation of decision effectiveness.
(Challenging; p. 1021; Ex. 42)
176.
Explain the components of creative work.
Expertise is the foundation of all creative work. The potential is enhanced when people have
abilities, knowledge, proficiencies, and similar expertise in their fields of endeavor. Creativethinking skills encompass personality traits associated with creativity, the ability to use
analogies, as well as the talent to see the familiar in a different light. Intrinsic task motivation
must be present. It is the desire to work on something because it is interesting, involving,
exciting, satisfying, or personally challenging. True creativity is found where they intersect.
(Challenging; pp. 125-126)
177.
Diagram and discuss the four decision-making styles based upon the dimensions of
tolerance for ambiguity and way of thinking. See Exhibit 4-9 for diagram.


Directive—logical and efficient; make decisions that focus on the short term.
Analytic—prefer to have complete information before making a decision; consider
many alternatives.
 Conceptual—very broad in outlook; tend to focus on the long run and often look for
creative solutions.
 Behavioral—think intuitively; work well with others; open to suggestions.
(Challenging; p. 134; Ex.49)
112