test_2-1 - EXAM#2 DECISION-MAKING 1 Is decision-making a...

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Unformatted text preview: EXAM #2 DECISION-MAKING 1. Is decision-making a function of management?- No, it’s a part of all functions-Most closely associated w/ planning 2. Why do we make decisions as managers?- To accomplish goals efficiently 3. What’s the difference b/c programmed & non-programmed decisions?- P -- specific procedures developed 4 repetitive & routine problems; 1 st-line; rule or standard operating procedure used in making the decision; different; complex-N -- specific to mgt problems that are novel (new) & unique [different] and complex (hard to understand; top managers; if you have to think about it 4. Do managers make more programmed or non-programmed decisions, in general?- Programmed makes us more efficient – most things we’ve faced before-top management makes most non-programmed decisions 5. What is decision-making under conditions of certainty?-Managers know all available alternatives & the outcomes associated w/ each; 100% probability that alternative A will lead to outcome 1 6. What is decision-making under conditions of risk?-Lack of certainty regarding outcomes of various alternatives, but an awareness of probabilities associated w/ their occurrence; alternatives are known, but outcomes are in doubt - probabilities of 0-100% 7. What is decision-making under conditions of uncertainty?-Don’t know alternatives, their potential outcomes, or the probability of the outcomes occurrence – NO probabilities 8. Which decision-making condition is most common? Least common? Most difficult?- Most common = risk...probabilities 0-100%-Least common = certainty…100% probabilities-Most difficult = uncertainty…no probabilities-Easiest = certainty If you play the odds well with risk, you will still lose 9. What is the key to making good decisions under risk?- Accurately determining the probabilities associated w/ each alternative 10. How do programmed/non-programmed decisions & the different decision- making conditions relate?- Programmed = certainty & risk-Non-programmed = risk & uncertainty ** Every programmed decision was at one point or another & non-programmed decision! 11. What does the traditional economic model assume about decision-makers? (2 assumptions)- Decisions are made under conditions of certainty (a) Managers seek to maximize benefits {or minimize costs} (b) Managers are completely rational-You always select the best alternative-A prescriptive model b/c it’s what you should do ! 12. Under what decision-making condition do decisions get made in the traditional economic model?- Certainty 13. What does the behavioral model assume about decision-makers?-Decisions are made under “bounded rationality ” rather than complete… satisficing rather than maximizing-How decisions are actually made 14. What is bounded rationality? What 3 things bound one’s rationality?...
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This document was uploaded on 10/27/2011 for the course MGT 3200 at LSU.

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test_2-1 - EXAM#2 DECISION-MAKING 1 Is decision-making a...

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