Question 1

Refer to the scenario below to answer the following questions.
Decision-making Biases (Scenario)
Frank is president of Mega Manufacturing, a Canadian company that makes automobile parts. Sales and profits are down sharply this quarter, and Frank needs to analyze the series of events that have led to the poor performance. Frank begins by reviewing his recent interactions with Mike, the vice-president of sales.
-Last week when Frank asked Mike how his presentation to a large Japanese car maker went, Mike replied, "My presentation was brilliant! They loved me! I am positive we will get the contract!" Mike's overly positive view of his performance demonstrates which of the following?

Accepted Answer

A)   confirmation bias
B)   hindsight bias
C)   overconfidence bias
D)   sunk costs error
E)   escalation of commitment C

Question 2

In the purchase of a car, the assessment of factors such as speed, fuel efficiency, and price occurs at which step of the decision-making process?

Accepted Answer

A)   identify a problem
B)   analyze alternatives
C)   identify decision criteria
D)   evaluate decision effectiveness
E)   develop alternatives C

Question 3

Refer to the scenario below to answer the following questions.
Decision-making Biases (Scenario)
Frank is president of Mega Manufacturing, a Canadian company that makes automobile parts. Sales and profits are down sharply this quarter, and Frank needs to analyze the series of events that have led to the poor performance. Frank begins by reviewing his recent interactions with Mike, the vice-president of sales.
-Mike advised Frank that he would be taking his newest sales executive, Eric, along on the trip to the Japanese auto maker's headquarters in Tokyo. When Frank asked how Eric was hired, Mike said, "Eric went to the same university as me, so I knew he had to be good!" Mike's comment demonstrates which of the following?

Accepted Answer

A)   selective perception bias
B)   hindsight bias
C)   self-serving bias
D)   sunk costs error
E)   escalation of commitment A

Question 4

Highly reliable organizations (HROs) are easily tricked by their success.

Accepted Answer

A) True 
 B)False

Question 5

The decision-making process begins by identifying decision criteria.

Accepted Answer

A) True 
 B)False

Question 6

A customer gives Jan a request that she has never heard before in her 15 years of experience at the hardware store. Since the request involves the application of a new technology, Jan is not sure what to do. This is an example of a(n) __________ problem that requires a(n) _____________ solution.

Accepted Answer

A)   nonprogrammed, satisficing
B)   programmed, rule based
C)   technical, nonprogrammed
D)   structured, programmed
E)   unstructured, nonprogrammed

Question 7

Refer to the scenario below to answer the following questions.
Types of Problems and Decisions (Scenario)
It seems Dave spends most of his day making decisions. Every time he turns around, someone wants him to make a decision about something. This morning, the office assistant came in and asked if she could reorder paper for the fax machine. That seemed like a routine decision that he should not have to deal with. If Dave could avoid those types of decisions, then he could focus more time and attention on the more complicated issues, such as the one presented to him by the production supervisor this afternoon. According to the supervisor, a major piece of equipment urgently needs repairs, and the repair bill could cost almost as much as a new machine!
-The problem of whether to repair a piece of equipment or to purchase a new machine is an example of a(n) __________ problem.

Accepted Answer

A)   programmed
B)   nonprogrammed
C)   structured
D)   unstructured
E)   technical

Question 8

Nonprogrammed decisions are best described as __________.

Accepted Answer

A)   recurring but difficult to make
B)   very similar to problems in other areas of the organization
C)   requiring more aggressive action on the decision maker's thought processes
D)   unique and nonrecurring
E)   routine and straightforward

Question 9

An optimistic manager will follow a maximin approach.

Accepted Answer

A) True 
 B)False

Question 10

Because managers can't possibly analyze all information on all alternatives, they accept solutions that __________ rather than __________ payoff.

Accepted Answer

A)   maximize; satisfice
B)   maximize; minimize
C)   satisfice; minimize
D)   satisfice; maximize
E)   minimize; maximize

Question 11

It is possible that at the end of the decision-making process you may be required to start the decision process over again before making the final decision.

Accepted Answer

A) True 
 B)False

Question 12

When problems are __________, managers must rely on __________ in order to develop unique solutions.

Accepted Answer

A)   structured; nonprogrammed decision-making
B)   structured; intuition
C)   unstructured; nonprogrammed decision-making
D)   structured; programmed decision-making
E)   technical; programmed decision-making

Question 13

Most managerial decisions in the real world are nonprogrammed.

Accepted Answer

A) True 
 B)False

Question 14

A procedure is an explicit statement that tells a manager what he or she can or cannot do.

Accepted Answer

A) True 
 B)False

Question 15

Refer to the scenario below to answer the following questions.
Management Decisions : Declining Income (Scenario)
Net income has fallen for the second consecutive quarter, and Amanda is understandably worried. She knows there will be a lot of questions for her at the board of directors meeting Wednesday, and she will be expected to reveal her plan to avoid any third-quarter losses. Amanda begins to analyze the company's financial reports to try to determine the cause of the loss. 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. Next morning, the first option presented at the meeting is to downsize the research and development department, since it is not essential to current operations. Several managers believe the plan will help stem the losses and immediately move to approve it. However, Amanda suggests that they need to look further at the issue and explore other potential solutions. Several suggestions are made, many of which appear to be viable. Amanda wonders what to do next.
-Amanda's group has proposed a solution that does not have much data or evidence to support it. However, based on Amanda's 20 years of experience, the solution just feels right, and so she proposes it to the board of directors. Amanda has made her decision based on __________.

Accepted Answer

A)   heuristics
B)   intuition
C)   hindsight bias
D)   overconfidence bias
E)   availability bias

Question 16

Which of the following decisions involves the management function of controlling?

Accepted Answer

A)   How should jobs be designed?
B)   How difficult should individual goals be?
C)   How do I handle employees who appear to be low in motivation?
D)   When is the right time to stimulate conflict?
E)   When is a performance deviation significant?

Question 17

Rules and policies are essentially the same.

Accepted Answer

A) True 
 B)False

Question 18

A business school's statement that it "strives for productive relationships with local organizations" is an example of a __________.

Accepted Answer

A)   rule
B)   precedent
C)   procedure
D)   policy
E)   mission

Question 19

In order to make effective decisions in today's fast-moving world, managers need to ________.

Accepted Answer

A)   build organizations that shun complexity
B)   know when it is time to call it quits
C)   ignore cultural differences
D)   build organizations that rely on their past successes
E)   always use the rational decision-making process

Question 20

Nonprogrammed decision-making relies on procedures, rules, and policies.

Accepted Answer

A) True 
 B)False

Exam 7: Decision Making

In the purchase of a car, the assessment of factors such as speed, fuel efficiency, and price occurs at which step of the decision-making process?

Highly reliable organizations (HROs) are easily tricked by their success.

The decision-making process begins by identifying decision criteria.

A customer gives Jan a request that she has never heard before in her 15 years of experience at the hardware store. Since the request involves the application of a new technology, Jan is not sure what to do. This is an example of a(n) problem that requires a(n) ___ solution.

Nonprogrammed decisions are best described as __________.

An optimistic manager will follow a maximin approach.

Because managers can't possibly analyze all information on all alternatives, they accept solutions that rather than payoff.

It is possible that at the end of the decision-making process you may be required to start the decision process over again before making the final decision.

When problems are , managers must rely on in order to develop unique solutions.

Most managerial decisions in the real world are nonprogrammed.

A procedure is an explicit statement that tells a manager what he or she can or cannot do.

Which of the following decisions involves the management function of controlling?

Rules and policies are essentially the same.

A business school's statement that it "strives for productive relationships with local organizations" is an example of a __________.

In order to make effective decisions in today's fast-moving world, managers need to ________.

Nonprogrammed decision-making relies on procedures, rules, and policies.