Chapter 5. Managerial Decision Making — Review

Which of the following refers to the process of selecting a specific course of action from various possible options?

• A diagnosis

• A decision

• An opportunity

• A problem

Answer explanation

The process of selecting a specific course of action from various options is known as a decision. A diagnosis identifies a problem, while an opportunity refers to a favorable situation, making 'a decision' the correct choice.

Decisions that occur with enough frequency to allow for the creation of specific response rules are known as:

• Programmed decisions

• Nonprogrammed decisions

• Ambiguous decisions

• Unique decisions

Answer explanation

Programmed decisions are made frequently enough to establish specific rules for responses, making them systematic and predictable. This distinguishes them from nonprogrammed, ambiguous, or unique decisions, which lack such regularity.

What type of decisions are required for situations that are unstructured, poorly defined, and have significant organizational effects?

• Routine decisions

• Nonprogrammed decisions

• Simple decisions

• Programmed decisions

Answer explanation

Nonprogrammed decisions are needed for unstructured and poorly defined situations, as they require unique solutions and have significant organizational impacts, unlike routine or programmed decisions.

When a decision-maker has access to all necessary information regarding costs, constraints, and outcomes, the condition is one of:

• Certainty

• Ambiguity

• Risk

• Uncertainty

Answer explanation

When a decision-maker has all necessary information about costs, constraints, and outcomes, they operate under certainty. This means they can predict outcomes accurately, making 'Certainty' the correct choice.

In which condition does a manager have clear goals and good information, but the outcomes of alternatives are still subject to some chance of failure?

• Ambiguity

• Risk

• Certainty

• Uncertainty

Answer explanation

In the context of decision-making, 'Risk' refers to situations where a manager has clear goals and good information, but the outcomes still involve uncertainty and potential failure. This distinguishes it from certainty and ambiguity.

Uncertainty is a situation where managers know their objectives but:

• Information about alternatives and future events is incomplete

• Information about the past is missing

• All possible outcomes are 100% predictable

• The problem is already solved by rules

Answer explanation

Uncertainty arises when managers know their objectives but lack complete information about alternatives and future events. This makes it difficult to predict outcomes, unlike the other options which imply certainty or clarity.

Which decision-making condition is considered the most difficult because goals or problems are unclear and information about outcomes is unavailable?

• Risk

• Programming

• Certainty

• Ambiguity

Answer explanation

The most difficult decision-making condition is ambiguity, where goals or problems are unclear and information about outcomes is unavailable. This makes it challenging to make informed choices.

A "wicked decision problem" is most closely associated with which condition?

• Low-risk environments

• High ambiguity and conflict

• Certainty

• Programmed rules

Answer explanation

A 'wicked decision problem' involves high ambiguity and conflict, making it difficult to find clear solutions. This contrasts with low-risk environments, certainty, and programmed rules, which are more straightforward.

The decision-making model based on the belief that managers should make logically sound and economically sensible choices is the:

• Intuitive model

• Political model

• Classical model

• Administrative model

Answer explanation

The classical model emphasizes rational decision-making, focusing on logical and economically sound choices. This model assumes that managers will make optimal decisions based on available information, making it the correct choice.

The classical model of decision making is described as "normative," which means it:

• Defines how a manager should ideally make decisions

• Focuses only on social needs

• Describes how managers actually behave

• Relies solely on personal emotions

Answer explanation

The classical model of decision making is termed "normative" because it outlines the ideal process a manager should follow when making decisions, rather than describing actual behaviors or emotional influences.