Management Canadian 11th Edition

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 Management, 11ce
Chapter 7: Decision Making

Chapter 7 Decision Making

Question ID: 7-1

Question Type: TF
Question: Decision-making is considered a process rather than an act of choosing among
alternatives.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 163
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-2

Question Type: TF
Question: A decision is a discrepancy between an existing and a desired state of affairs.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 163
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-3

Question Type: TF
Question: The decision-making process begins by identifying decision criteria.
A) True
B) False
Answer: FALSE
Diff: 1 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-4

Question Type: TF
Question: The final step in the decision-making process is to implement the chosen
alternative.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-1

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-5

Question Type: TF
Question: 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.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 167
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-6

Question Type: TF
Question: A decision criterion defines what is important or relevant to resolving a
problem.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-7

Question Type: TF
Question: All relevant criteria are equally important in decision-making.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-8

Question Type: TF
Question: Once the alternatives to solving a problem have been identified, the next step
in the decision-making process is selecting one of these alternatives.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 165
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-2

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-9

Question Type: TF
Question: Managerial decision-making is assumed to be rational.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-10

Question Type: TF
Question: One assumption of rational decision making is that the decision maker is not
aware of all possible alternatives and consequences.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-11

Question Type: TF
Question: One assumption of rationality is that time and cost constraints exist.
A) True
B) False
Answer: FALSE
Diff: 3 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-12

Question Type: TF
Question: The phenomenon of escalation of commitment refers to an increased
commitment to a previous decision despite evidence that it may have been wrong.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Copyright © 2016 Pearson Canada Inc. 7-3

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-13

Question Type: TF
Question: According to the concept of bounded rationality, managers make decisions
rationally but are limited by their ability to process information.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-14

Question Type: TF
Question: A satisficing decision is one that is satisfactory and sufficient in the situation,
and meets an acceptable level of performance.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-15

Question Type: TF
Question: Managers regularly use their intuition in decision-making.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-16

Question Type: TF
Question: Intuitive decision making is based on values and past experiences.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Copyright © 2016 Pearson Canada Inc. 7-4

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-17

Question Type: TF
Question: Intuitive decision making complements rational decision making but not
bounded rational decision making.
A) True
B) False
Answer: FALSE
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-18

Question Type: TF
Question: Evidence-based management relies heavily on the decision maker’s intuition.
A) True
B) False
Answer: FALSE
Diff: 1 Page Ref: 170
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-19

Question Type: TF
Question: Opinions, preferences, and values of decision-makers are an essential element
of evidence-based management.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 170
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-20

Question Type: TF
Question: A procedure is an explicit statement that tells a manager what he or she can or
cannot do.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Copyright © 2016 Pearson Canada Inc. 7-5

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-21

Question Type: TF
Question: A policy is a series of interrelated sequential steps that a manager can use for
responding to a structured problem.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 172
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-22

Question Type: TF
Question: A programmed decision is a repetitive decision that can be handled by a
routine approach.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-23

Question Type: TF
Question: Rules and policies are essentially the same.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 171-172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-24

Question Type: TF
Question: Nonprogrammed decision-making relies on procedures, rules, and policies.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 172
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-25

Question Type: TF
Question: Most managerial decisions in the real world are nonprogrammed.
A) True
B) False
Answer: FALSE
Diff: 1 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-26

Question Type: TF
Question: Unstructured problems require custom-made responses through programmed
decision-making.
A) True
B) False
Answer: FALSE
Diff: 3 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-27

Question Type: TF
Question: Risk is a condition in which a decision maker has neither certainty nor
reasonable probability estimates.
A) True
B) False
Answer: FALSE
Diff: 3 Page Ref: 173
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-28

Question Type: TF
Question: An optimistic manager will follow a maximin approach.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Copyright © 2016 Pearson Canada Inc. 7-7

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-29

Question Type: TF
Question: A manager who desires to minimize his maximum "regret" will opt for a
minimax choice.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-30

Question Type: TF
Question: Nonlinear thinking style is characterized by feelings, hunches and internal
insights to guide decisions.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 176
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-31

Question Type: TF
Question: Linear thinking style ignores external data and facts and relies directly on the
decision maker’s internal information processing.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 176
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-32

Question Type: TF
Question: Heuristics are "rules of thumb" that managers use to simplify decision-making.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 177
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Copyright © 2016 Pearson Canada Inc. 7-8

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-33

Question Type: TF
Question: The confirmation bias occurs when decision makers tend to think they know
more than they actually do and hold unrealistically positive views of themselves.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-34

Question Type: TF
Question: A hindsight bias occurs when decision makers increase their commitment to a
previous decision despite evidence that it may have been wrong.
A) True
B) False
Answer: FALSE
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-35

Question Type: TF
Question: The self-serving bias occurs when decision makers take credit for their
successes and blame failure on outside factors.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-36

Question Type: TF
Question: Availability bias distorts the decision maker’s ability to recall events in an
objective manner and focus on events that are most recent and vivid in their memory.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of biases.

Copyright © 2016 Pearson Canada Inc. 7-9

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-37

Question Type: TF
Question: Highly reliable organizations (HROs) tap into their complexity to help them
adapt more effectively.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-38

Question Type: TF
Question: Highly reliable organizations (HROs) make decisions at the executive level.
Answer: FALSE
Diff: 3 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-39

Question Type: TF
Question: Managers need to understand cultural differences to make effective decisions
in today's fast-moving world.
A) True
B) False
Answer: TRUE
Diff: 1 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-40

Question Type: TF
Question: Highly reliable organizations (HROs) are easily tricked by their success.
A) True
B) False
Answer: FALSE
Diff: 1 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Copyright © 2016 Pearson Canada Inc. 7-10

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-41

Question Type: TF
Question: Design thinking is an interesting new line of thinking with broad implications
for making effective business decisions by integrating emotional elements into the
process.
A) True
B) False
Answer: TRUE
Diff: 2 Page Ref: 181
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-42

Question Type: MC
Question: A __________ is a discrepancy between an existing and a desired state of
affairs.
A) process
B) problem
C) scenario
D) criterion
E) decision
Answer: B
Diff: 1 Page Ref: 163
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-43

Question Type: MC
Question: When a manager finds a disparity between their current situation and a desired
situation, they are at which step of the decision-making process?
A) develop alternatives
B) identify decision criteria
C) analyze alternatives
D) identify a problem
E) allocate weights to criteria
Answer: D
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-11

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-44

Question Type: MC
Question: After identifying a problem, the next step in the decision-making process is
________.
A) identifying decision criteria
B) allocating weights to decision criteria
C) analyzing alternatives
D) developing alternatives
E) implementing alternatives
Answer: A
Diff:1 Page Ref: 151644
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-45

Question Type: MC
Question: Which of the following statements is true concerning problem identification?
A) Problems are generally obvious.
B) A symptom and a problem are basically the same.
C) Well-trained managers generally agree on what is considered a problem.
D) The problem must exert some pressure on the manager to act.
E) To be considered a problem, managers must be aware of the discrepancy but
not have sufficient resources to take action.
Answer: D
Diff: 2 Page Ref: 163
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-46

Question Type: MC
Question: The process of selecting decision criteria is accomplished by __________.
A) massaging the data that will support a given decision
B) flipping a coin to produce a 50-50 chance of being right
C) determining what is relevant in making the decision
D) examining the differences between potential opportunities
E) identifying a discrepancy between an existing and a desired state of affairs
Answer: C
Diff: 3 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-12

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-47

Question Type: MC
Question: If all the decision criteria are equally important, weighting the criteria
__________.
A) is exceptionally important
B) is not necessary
C) produces excellent decisions
D) improves the criteria
E) results in more alternatives
Answer: B
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-48

Question Type: MC
Question: The final step in the decision-making process is to __________.
A) select the best alternative
B) reevaluate the weightings of the criteria until they indicate the correct outcome
C) evaluate the outcome of the decision
D) reassign the ratings on the criteria to find different outcomes
E) implement the alternative to solve the problem
Answer: C
Diff: 1 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-49

Question Type: MC
Question: Which of the following must be present in order to initiate the decision-making
process?
A) plenty of time
B) established criteria
C) implementation procedures
D) viable alternatives
E) pressure to act
Answer: E
Diff: 3 Page Ref: 163
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-13

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-50

Question Type: MC
Question: To determine the __________, a manager must identify the factors that are
relevant to resolving the problem.
A) effectiveness of the decision
B) number of feasible alternatives
C) desired outcomes
D) decision criteria
E) implementation procedures
Answer: D
Diff: 3 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-51

Question Type: MC
Question: 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?
A) identify a problem
B) analyze alternatives
C) identify decision criteria
D) evaluate decision effectiveness
E) develop alternatives
Answer: C
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-52

Question Type: MC
Question: Which of the following steps in the decision-making process occurs before
developing alternatives?
A) allocate weights to criteria
B) analyze alternatives
C) select an alternative
D) implement the alternative
E) evaluate decision effectiveness
Answer: A
Diff: 1 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Copyright © 2016 Pearson Canada Inc. 7-14

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-53

Question Type: MC
Question: In allocating weights to the decision criteria, which of the following is helpful
to remember?
A) All weights must be the same.
B) Assign a weight to the most important criterion, and then assign weights to the
rest against that standard.
C) Every criterion considered, regardless of its importance, must receive some
weighting.
D) The most important and least important criteria should be inversely weighted.
E) The total of the weights should sum to 1.0.
Answer: B
Diff: 3 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-54

Question Type: MC
Question: Amanda, a single parent, is looking for a new job. Considering that she has two
school-age children, she is particularly keen on finding an employer who can provide her
with alternative work arrangements such as flexible work hours and telecommuting. In
terms of the decision-making process, these represent Amanda's ________.
A) criteria
B) problems
C) alternatives
D) guidelines
E) perceptions
Answer: A
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-55

Question Type: MC
Question: Max is planning on going away to college next year and is currently trying to
figure out which colleges he should apply to. He would like to major in English
Literature at an accredited liberal arts college but is also looking for a university that
offers financial aid and student housing. In terms of the decision-making process, these
represent Max's ________.
A) criteria
B) problems
C) alternatives
D) guidelines
E) perceptions
Answer: A
Diff: 2 Page Ref: 164

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 Management, 11ce
Chapter 7: Decision Making

Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-56

Question Type: MC
Question: Which step in the decision-making process involves conveying the decision to
those affected by it and getting their commitment to it?
A) allocating weights to criteria
B) analyzing alternatives
C) selecting an alternative
D) implementing the alternative
E) evaluating the decision effectiveness
Answer: D
Diff: 2 Page Ref: 166
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-57

Question Type: MC
Question: Which of the following is important in effectively implementing the chosen
alternative in the decision-making process?
A) getting upper management support
B) double checking your analysis for potential errors
C) implementing the decision quickly through power and persuasion
D) ignoring criticism concerning the chosen alternative
E) allowing those impacted by the outcome to participate in the process
Answer: E
Diff: 2 Page Ref: 166
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-58

Question Type: MC
Question: Which of the following is important to remember in evaluating decision
effectiveness?
A) Ignore criticism concerning the decision-making process.
B) You may have to start the whole decision-making process over again.
C) You should restart the decision-making process only if the decision is less than
50 percent effective.
D) 90 percent of problems with decision-making occur in the implementation
step.
E) The initial problem may still exist despite the implementation of an effective
decision.
Answer: B
Diff: 3 Page Ref: 167
Skill: Applied

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 Management, 11ce
Chapter 7: Decision Making

Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-59

Question Type: MC
Question: Which of the following decisions involves the management function of
planning?
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?
Answer: B
Diff: 3 Page Ref: 167
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-60

Question Type: MC
Question: Which of the following decisions involves the management function of
organizing?
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?
Answer: A
Diff: 3 Page Ref: 167
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-61

Question Type: MC
Question: Which of the following decisions involves the management function of
controlling?
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?
Answer: E
Diff: 3 Page Ref: 167
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Copyright © 2016 Pearson Canada Inc. 7-17

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-62

Question Type: MC
Question: The assumption that managers make consistent, value-maximizing choices
within specified constraints is known as which of the following?
A) rational decision-making
B) unbounded rationality
C) organized decision-making
D) optimal decision-making
E) objective rationality
Answer: A
Diff: 1 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-63

Question Type: MC
Question: A perfectly rational decision maker would __________.
A) have changing preferences
B) not consider profit maximization as an objective
C) offer inconsistent decisions
D) be objective and logical
E) have to overcome time and cost constraints
Answer: D
Diff: 2 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-64

Question Type: MC
Question: Which of the following is an assumption of rationality?
A) The problem is ambiguous.
B) Multiple goals are to be achieved.
C) Time and cost constraints are known.
D) Preferences change quickly.
E) All alternatives and consequences are known.
Answer: E
Diff: 2 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-65

Question Type: MC
Question: When managers make decisions that are rational but limited by their ability to
process the information, they are exhibiting the concept of ________.
A) cognitive decision-making
B) bounded rationality
C) escalation of commitment
D) intuitive decision-making
E) objective rationality
Answer: B
Diff: 3 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-66

Question Type: MC
Question: An increased commitment to a previous decision despite evidence that it may
have been wrong is a phenomenon called __________.
A) confirmation bias
B) intuition
C) overconfidence bias
D) hindsight bias
E) escalation of commitment
Answer: E
Diff: 2 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-67

Question Type: MC
Question: Arthur authorizes the expenditure of an additional $100,000 for the production
of a new product despite mounting concerns that it will be unprofitable. The cost of the
new product has already increased far beyond the initial plans and projections. Arthur's
continuing support for this project illustrates the phenomenon of __________.
A) confirmation bias
B) escalation of commitment
C) overconfidence bias
D) hindsight bias
E) intuition
Answer: B
Diff: 3 Page Ref: 169
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-68

Question Type: MC
Question: Escalation of commitment refers to ________.
A) commitment to a bad decision due to an unwillingness to go against the
opinion of the majority
B) an increased commitment to a previous decision despite evidence that it may
have been wrong
C) the strengthening of commitment to a particular course of action due to greater
motivation by others
D) greater commitment to a decision because of one’s belief that it is "the right
thing to do"
E) a decision based on external evidence that has been evaluated by experts.
Answer: B
Diff: 2 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-69

Question Type: MC
Question: Because managers can't possibly analyze all information on all alternatives,
they accept solutions that __________ rather than __________ payoff.
A) maximize; satisfice
B) maximize; minimize
C) satisfice; minimize
D) satisfice; maximize
E) minimize; maximize
Answer: D
Diff: 3 Page Ref: 174-175
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-70

Question Type: MC
Question: The type of decision-making in which the solution is considered "good
enough" is known as which of the following?
A) minimizing
B) rationalizing
C) maximizing
D) satisficing
E) optimizing
Answer: D
Diff: 2 Page Ref: 174-175
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Copyright © 2016 Pearson Canada Inc. 7-20

 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-71

Question Type: MC
Question: The strap on Brad's backpack broke as he lifted it. On the way to class, he
stopped at the first store that carries backpacks and although it was not exactly what he
wanted, he purchased a new one from the front counter because it would do the job. Brad
has made a(n) __________ decision.
A) satisficing
B) irrational
C) escalating
D) optimizing
E) perfectly rational
Answer: A
Diff: 3 Page Ref: 169
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-72

Question Type: MC
Question: Relying on "gut feeling" over cognitive problem solving in decision-making is
a phenomenon called __________.
A) sunk costs error
B) intuition
C) overconfidence bias
D) hindsight bias
E) escalation of commitment
Answer: B
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-73

Question Type: MC
Question: Toby is hunting for a new apartment. He is specifically looking for one that is
located in the heart of the city and should be available for $600 per month. However,
Toby is also willing to pay up to $850 per month for a place situated slightly away from
the city centre. According to him, the second option "will also do." This is an example of
________.
A) experience-based decision-making
B) rational decision-making
C) bounded rationality
D) intuitive decision-making
E) non linear thinking
Answer: C
Diff: 3 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

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Chapter 7: Decision Making

Question ID: 7-74

Question Type: MC
Question: Intuitive decision-making ________.
A) is the systematic use of the best available evidence to improve decision-
making practice
B) generally results in poor decisions, and hence managers should learn to ignore
their gut feelings
C) is only appropriate for simple problems
D) complements rational decision-making but not bounded rational decision-
making
E) is the process of making decisions based on experience, feelings, and
accumulated judgment
Answer: E
Diff: 2 Page Ref: 169
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-75

Question Type: MC
Question: In intuitive decision making, managers ________.
A) often tend to ignore their feelings or emotions
B) use data from their subconscious mind to help make their decisions
C) use available evidence to improve their decision-making skills
D) do not depend on their past experiences to make decisions
E) ask for opinions and values of other stakeholders
Answer: B
Diff: 1 Page Ref: 169
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-76

Question Type: MC
Question: Decision-making where managers recognize and understand that the systematic
use of the best available data will improve their management practices and decision-
making is called ______________.
A) intuitive decision making
B) rational management
C) satisficing decision making
D) evidence based management
E) innovative management
Answer: D
Diff: 3 Page Ref: 170
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

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Chapter 7: Decision Making

Question ID: 7-77

Question Type: MC
Question: An important element in making decisions using evidence-based management
(EBMgt) is to consider ______________.
A) using the rational decision making process
B) applying design thinking to problems
C) opinions, preferences and values of all stakeholders
D) alternatives that are good enough for the situation
E) using linear thinking style
Answer: C
Diff: 2 Page Ref:170
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-78

Question Type: MC
Question: Problems that are straightforward, familiar, and easily defined are called
__________ problems.
A) opportunity
B) structured
C) unique
D) nonprogrammed
E) technical
Answer: B
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-79

Question Type: MC
Question: The most efficient way to handle a structured problem is through __________
decision-making.
A) linear
B) unique
C) focused
D) programmed
E) technical
Answer: D
Diff: 2 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-80

Question Type: MC
Question: A __________ decision is repetitive and can be handled by a routine approach.
A) nonprogrammed
B) linear
C) satisficing
D) programmed
E) technical
Answer: D
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-81

Question Type: MC
Question: The inflight service manager for National Airlines is authorized to distribute
drycleaning vouchers to customers who complain about spilled drinks and food on their
clothes during turbulent flights. This is an example of a(n) __________ decision to a
__________ problem.
A) nonprogrammed; routine
B) programmed; unique
C) nonprogrammed; technical
D) programmed; structured
E) nonprogrammed; unstructured
Answer: D
Diff: 3 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-82

Question Type: MC
Question: 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.
A) nonprogrammed, satisficing
B) programmed, rule based
C) technical, nonprogrammed
D) structured, programmed
E) unstructured, nonprogrammed
Answer: E
Diff: 3 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-83

Question Type: MC
Question: 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 up to $100. This is an example of a(n)
__________ decision.
A) nonprogrammed
B) programmed
C) technical
D) structured
E) unstructured
Answer: B
Diff: 3 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-84

Question Type: MC
Question: A procedure __________.
A) is an explicit statement detailing exactly how to deal with a decision
B) is a series of interrelated sequential steps to respond to a structured problem
C) is a set of guidelines that channel a manager's thinking in dealing with a
problem
D) allows a manager to use broad decision-making authority
E) is a series of steps designed to implement decisions for unique and
nonrecurring problems
Answer: B
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-85

Question Type: MC
Question: A __________ is an explicit statement that tells a manager what he or she can
or cannot do.
A) procedure
B) policy
C) precedent
D) heuristic
E) rule
Answer: E
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-86

Question Type: MC
Question: A __________ is series of interrelated sequential steps that a manager can use
for responding to a structured problem.
A) procedure
B) policy
C) precedent
D) heuristic
E) rule
Answer: A
Diff: 1 Page Ref: 171
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-87

Question Type: MC
Question: A policy __________.
A) typically contains an ambiguous term that leaves room for interpretation
B) is frequently used when a manager faces an unstructured problem
C) allows little discretion on the part of the manager
D) offers strict rules as to how a problem should be solved
E) is a type of nonprogrammed decision
Answer: A
Diff: 2 Page Ref: 172
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-88

Question Type: MC
Question: A business school's statement that it "strives for productive relationships with
local organizations" is an example of a __________.
A) rule
B) precedent
C) procedure
D) policy
E) mission
Answer: D
Diff: 2 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-89

Question Type: MC
Question: To receive reimbursement for their travel expenses, managers at ABC
Company must first list each item in chronological order on an expense form, then attach
all receipts to the upper-left corner, then obtain their supervisor's authorizing signature,
and, finally, forward the form to the finance department. This is an example of a
__________.
A) rule
B) precedent
C) procedure
D) policy
E) heuristic
Answer: C
Diff: 3 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-90

Question Type: MC
Question: “No smoking allowed” is an example of a __________.
A) rule
B) precedent
C) procedure
D) policy
E) guideline
Answer: A
Diff: 1 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-91

Question Type: MC
Question: Whenever possible, managers at ABC Company try to promote employees
from within the organization before recruiting from external sources. This is an example
of a __________.
A) rule
B) precedent
C) procedure
D) policy
E) guideline
Answer: D
Diff: 3 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-92

Question Type: MC
Question: “We strive to use environmentally safe materials” is an example of a
__________.
A) rule
B) policy
C) procedure
D) precedent
E) guideline
Answer: B
Diff: 2 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-93

Question Type: MC
Question: "Before a health claim may be paid, the following steps must be taken" is an
example of a __________.
A) rule
B) precedent
C) procedure
D) policy
E) guideline
Answer: C
Diff: 2 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-94

Question Type: MC
Question: Which of the following is an example of a procedure?
A) Without exception, all employees in customer-facing roles must be formally
attired at all times.
B) Before going on a leave of absence, fill up the application form available on
the company's online leave management system. All applications will be
approved/rejected within two days by the employee's immediate supervisor.
C) We promote from within, whenever possible. If qualified applicants are
available internally, a job posting will be issued by the HR department
providing the necessary details about all vacancies.
D) Employees working with power tools must wear safety glasses at all times.
E) All new employees are required to attend orientation and familiarization
training during their first week of employment.
Answer: B
Diff: 2 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-95

Question Type: MC
Question: Which of the following is an example of a policy?
A) Before going on a leave of absence, fill up the application form available on
the company's online leave management system. All applications will be
approved/rejected within two days by the employee's immediate supervisor.
B) Employees working with power tools must wear safety glasses at all times.
C) Smoking and the consumption of alcohol are strictly prohibited inside the work
premises.
D) We are an equal opportunity employer with a diverse workforce. We do not
discriminate against employees and applicants on the basis of sex, race, color,
religion, national origin, age, disability, marital status, sexual orientation or
veteran status.
E) In order to attend company paid training, employees must first contact the HR
department for approval, then fill out an application form, and finally get
permission from their immediate supervisor for leave from their daily duties.
Answer: D
Diff: 3 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-96

Question Type: MC
Question: Alanna has just been given the assignment of developing the marketing
strategy for the company's new product to be released in November. What type of
decision-making will be required of Alanna?
A) structured
B) unstructured
C) technical
D) programmed
E) nonprogrammed
Answer: E
Diff: 2 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-97

Question Type: MC
Question: Nonprogrammed decisions are best described as __________.
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
Answer: D
Diff: 1 Page Ref: 172
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-98

Question Type: MC
Question: When problems are __________, managers must rely on __________ in order
to develop unique solutions.
A) structured; nonprogrammed decision-making
B) structured; intuition
C) unstructured; nonprogrammed decision-making
D) structured; programmed decision-making
E) technical; programmed decision-making
Answer: C
Diff: 3 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-99

Question Type: MC
Question: If an individual knows the price of three similar cars at different dealerships, he
or she is operating under what type of decision-making condition?
A) risk
B) uncertainty
C) certainty
D) factual
E) nonprogrammed
Answer: C
Diff: 1 Page Ref: 173
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-100

Question Type: MC
Question: Nonprogrammed decisions are typically made under a condition of ______.
A) certainty
B) low levels of risk
C) uncertainty
D) reliability
E) rationality
Answer: C
Diff: 2 Page Ref: 174
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-101

Question Type: MC
Question: A retail clothing store manager who estimates how much to order for the
current spring season based on last spring's outcomes is operating under what kind of
decision-making condition?
A) reliability
B) risk
C) uncertainty
D) certainty
E) rationality
Answer: B
Diff: 3 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-102

Question Type: MC
Question: A person at a horse racetrack who bets all of his or her money on the odds-
based long shot to "win" (rather than "place" or "show") is making what kind of
choice?
A) maximax
B) maximin
C) multimax
D) minimin
E) minimax
Answer: A
Diff: 3 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-103

Question Type: MC
Question: Which of the following best describes "maximizing the minimum possible
payoff"?
A) maximax
B) maximin
C) multimax
D) minimin
E) minimax
Answer: B
Diff: 3 Page Ref: 174
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-104

Question Type: MC
Question: An individual making a "maximin" choice has what type of psychological
orientation toward uncertain decision-making?
A) optimist
B) realist
C) pessimist
D) opportunist
E) rationalist
Answer: C
Diff: 2 Page Ref: 174
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-105

Question Type: MC
Question: Optimistic managers typically select the alternative designed to __________.
A) maximize the maximum payoff
B) maximize the minimum payoff
C) minimize the maximum regret
D) minimize the minimum payoff
E) maximize the minimum regret
Answer: A
Diff: 2 Page Ref: 174
Skill: Recall
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-106

Question Type: MC
Question: A manager who desires to minimize his or her maximim "regret" will opt for a
__________ choice.
A) maximax
B) maximum
C) multimax
D) minimin
E) minimax
Answer: E
Diff: 2 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-107

Question Type: MC
Question: Rules of thumb that managers use to simplify decision-making are called
__________.
A) intuition
B) heuristics
C) rules
D) policies
E) procedures
Answer: B
Diff: 1 Page Ref: 177
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-108

Question Type: MC
Question: A(n) __________ occurs when decision makers think they know more than
they do or hold unrealistically positive views of themselves and their performance.
A) hindsight bias
B) confirmation bias
C) overconfidence bias
D) sunk costs error
E) self-serving bias
Answer: C
Diff: 2 Page Ref: 177
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

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Chapter 7: Decision Making

Question ID: 7-109

Question Type: MC
Question: A(n) __________ occurs when decision makers incorrectly fixate on past
expenditures of time, money, or effort in assessing choices rather than focusing on future
consequences.
A) hindsight bias
B) confirmation bias
C) overconfidence bias
D) sunk costs error
E) self-serving bias
Answer: D
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-110

Question Type: MC
Question: A(n) __________ occurs when decision makers seek out information that
reaffirms their past choices and discount information that contradicts past judgments.
A) hindsight bias
B) confirmation bias
C) overconfidence bias
D) sunk costs error
E) self-serving bias
Answer: B
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-111

Question Type: MC
Question: A(n) __________ occurs when decision makers take credit for their successes
and blame failures on outside factors.
A) escalation of commitment
B) confirmation bias
C) overconfidence bias
D) sunk costs error
E) self-serving bias
Answer: E
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

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Chapter 7: Decision Making

Question ID: 7-112

Question Type: MC
Question: Sophie is in charge of recruitment at her company. During a particular
interview, the first thing Sophie noticed about the applicant was that he was improperly
attired. Though the candidate possessed the necessary qualifications and effectively
answered all her questions, Sophie rejected him. This is an example of the ________.
A) randomness bias
B) self-serving bias
C) selective perception bias
D) representation bias
E) hindsight bias
Answer: C
Diff: 2 Page Ref: 178
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-113

Question Type: MC
Question: Which of the following is a habit of successful highly reliable organizations
(HROs)?
A) They are preoccupied with their successes.
B) They defer decisions to the experts in upper management.
C) They let unexpected circumstances provide the solution.
D) They embrace simplicity.
E) They do not anticipate their limits.
Answer: C
Diff: 2 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-114

Question Type: MC
Question: In order to make effective decisions in today's fast-moving world, managers
need to ________.
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
Answer: B
Diff: 1 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

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Chapter 7: Decision Making

Question ID: 7-115

Question Type: MC
Question: _________________ means that managers focus on opening up perspective
and gaining insights by using observation and inquiry skills and not relying simply on
rational analysis.
A) Intuitive decision making
B) Escalation of commitment
C) Design thinking
D) Nonlinear thinking
E) Evidence-based management
Answer: C
Diff: 3 Page Ref: 181
Skill: Applied
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-116

Question Type: MC
Question: Design thinking suggests that managers should look at problem identification
collaboratively and integratively with the goal of ________.
A) unveiling a rational approach to address the situation
B) analyzing the situation with deductive reasoning
C) developing solutions which somehow seem inevitable
D) gaining a deep understanding of the situation
E) using intuition and creativity
Answer: D
Diff: 3 Page Ref: 181
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

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

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Chapter 7: Decision Making

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.

Question ID: 7-117

Question Type: MC
Question: What is the first step in the decision-making process facing Amanda?
A) analyze alternatives
B) identify decision criteria
C) evaluate decision effectiveness
D) identify the problem
E) develop alternatives
Answer: D
Diff: 1 Page Ref: 163
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-118

Question Type: MC
Question: According to the decision-making process, the second step Amanda should
take is to __________.
A) analyze alternatives
B) identify decision criteria
C) evaluate decision effectiveness
D) allocate weights to criteria
E) develop alternatives
Answer: B
Diff: 2 Page Ref: 164
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-119

Question Type: MC
Question: When several managers move to approve the plan to downsize the research and
development department without first exploring other options, they are engaging in a type
of decision-making called __________.
A) maximizing
B) optimizing
C) rationalizing
D) minimizing
E) satisficing
Answer: E
Diff: 2 Page Ref: 169
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

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Chapter 7: Decision Making

Question ID: 7-120

Question Type: MC
Question: Amanda's group does not have complete information and must try to make a
decision rationally within the limits of their ability to process the available information.
They will make their decision under which assumptions?
A) certainty
B) rationality
C) bounded rationality
D) escalation of commitment
E) programmed
Answer: C
Diff: 2 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-121

Question Type: MC
Question: 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 __________.
A) heuristics
B) intuition
C) hindsight bias
D) overconfidence bias
E) availability bias
Answer: B
Diff: 2 Page Ref: 169
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

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 Management, 11ce
Chapter 7: Decision Making

Refer to the scenario below to answer the following questions.

The Loaned Car (Scenario)

Colleen is a student, and her older brother has loaned her an old car. The car is in need of
several repairs before she will feel comfortable driving it.

Question ID: 7-122

Question Type: MC
Question: Colleen needs a vehicle, but she has to decide if the loaned car is worth
repairing. She is facing a(n) __________, a discrepancy between an existing and a
desired state of affairs.
A) alternative
B) criterion
C) problem
D) crisis
E) decision
Answer: C
Diff: 1 Page Ref: 163
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-123

Question Type: MC
Question: Before talking with an automotive repair person, Colleen needs to assess which
factors are relevant to her decision. The car needs new brakes, tires, a muffler, a tune-up,
and could also use some bodywork to repair dents and scratches. After consideration,
Colleen decides that safety and reliability are relevant. This is which step in the decision-
making process?
A) weigh the decision criteria
B) analyze alternatives
C) identify decision criteria
D) develop alternatives
E) select an alternative
Answer: C
Diff: 2 Page Ref: 164
Skill: Applied
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-124

Question Type: MC
Question: Colleen decides to have all of the mechanical problems fixed on the car. She
assumes that the mechanic has found all the relevant problems and that he will be able to
perform all the required repairs within the estimated quote he provided. Colleen decides
to proceed with the repairs under which set of assumptions?
A) intuition
B) irrationality
C) escalation of commitment
D) rationality
E) uncertainty
Answer: D
Diff: 2 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-125

Question Type: MC
Question: Colleen's brother has a different view of the repairs. He assumes that the
mechanic is using the best information available, but there may be other unexpected
repairs that surface once he begins the work. He warns Colleen not to be too surprised if
the final bill exceeds the mechanic's original estimate. Her brother's observations are
based on which assumptions?
A) rationality
B) certainty
C) bounded rationality
D) escalation of commitment
E) heuristics
Answer: C
Diff: 2 Page Ref: 168
Skill: Applied
Learning Objective: 7-2 Explain the four ways managers make decisions.

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 Management, 11ce
Chapter 7: Decision Making

Question ID: 7-126

Question Type: MC
Question: Colleen's brother feels that the car is worth repairing because he has owned
several cars made by the same manufacturer, and he has driven this particular car for
several years. He also points out that he has invested hundreds of dollars in maintenance
and repairs over the years, so it is obviously worth investing in new repairs to keep it
running. Colleen's brother appears to be basing his decision on __________ but may also
be making an error known as __________.
A) intuition; confirmation bias
B) escalation of commitment; hindsight bias
C) satisficing; hindsight bias
D) framing bias; overconfidence bias
E) intuition; sunk costs error
Answer: E
Diff: 3 Page Ref: 169, 178
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

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!

Question ID: 7-127

Question Type: MC
Question: The problem of whether to order more fax paper is __________.
A) programmed
B) nonprogrammed
C) structured
D) unstructured
E) technical
Answer: C
Diff: 1 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-128

Question Type: MC
Question: The problem of whether to repair a piece of equipment or to purchase a new
machine is an example of a(n) __________ problem.
A) programmed
B) nonprogrammed
C) structured
D) unstructured
E) technical
Answer: D
Diff: 2 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-129

Question Type: MC
Question: Dave tells his office assistant that in future, she is authorized to order 10 boxes
of fax paper whenever they are down to their last box. To handle this problem, Dave has
used a type of decision called a __________.
A) heuristic
B) policy
C) rule
D) procedure
E) criterion
Answer: C
Diff: 3 Page Ref: 171
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-130

Question Type: MC
Question: The decision about how to handle the equipment repair or replacement is
__________.
A) programmed
B) nonprogrammed
C) structured
D) unstructured
E) technical
Answer: B
Diff: 2 Page Ref: 172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-131

Question Type: MC
Question: Dave believes he should be spending more time making __________ decisions
and less time making __________ decisions.
A) nonprogrammed; programmed
B) programmed; technical
C) technical; unstructured
D) unstructured; structured
E) programmed; nonprogrammed
Answer: A
Diff: 3 Page Ref: 171-172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Refer to the scenario below to answer the following questions.

Decision-Making Conditions: Keep on Truckin' (Scenario)

Fiona Lui is general manager of Westcoast Trucks, a medium-sized hauling service

located in Vancouver, B.C. She is responsible for scheduling trucks, initiating new
routes, and staffing both existing and new routes. She is currently struggling to find more
information about the profitability of existing and future truck routes.

Question ID: 7-132

Question Type: MC
Question: Willy, Fiona's best driver, estimates that there is a 75 percent probability that
they can get the business of Northern Timbers Forest Products if they initiate a truck
route through the remote areas of northern B.C. Willy is operating under a condition of
__________.
A) certainty
B) risk
C) uncertainty
D) maximax
E) maximin
Answer: B
Diff: 3 Page Ref: 173
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-133

Question Type: MC
Question: Fiona can make accurate decisions if she is willing to pay $5,000 for research
about the profitability of various truck routes. If she pays for the research, she believes
that she will be operating under a condition of __________.
A) certainty
B) risk
C) uncertainty
D) maximax
E) maximin
Answer: A
Diff: 2 Page Ref: 173
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-134

Question Type: MC
Question: Fiona knows that she is operating in an uncertain environment, but she is an
optimist and will most likely follow a __________ strategy.
A) multimax
B) minimin
C) minimax
D) maximax
E) maximin
Answer: D
Diff: 2 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

Question ID: 7-135

Question Type: MC
Question: Sylvia, Fiona's scheduling assistant, is pessimistic about the company's ability
to earn a profit from the proposed new truck route. Sylvia will most likely follow a
__________ strategy.
A) multimax
B) minimin
C) minimax
D) maximax
E) maximin
Answer: E
Diff: 2 Page Ref: 174
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-136

Question Type: MC
Question: If Fiona wishes to minimize her regret about the truck route decision, she
should follow a __________ strategy.
A) multimax
B) minimin
C) minimax
D) maximax
E) maximin
Answer: C
Diff: 2 Page Ref: 175
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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.

Question ID: 7-137

Question Type: MC
Question: 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?
A) confirmation bias
B) hindsight bias
C) overconfidence bias
D) sunk costs error
E) escalation of commitment
Answer: C
Diff: 2 Page Ref: 177
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

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Chapter 7: Decision Making

Question ID: 7-138

Question Type: MC
Question: Unfortunately, Frank learned yesterday that the Japanese car maker decided to
award the contract to a competing auto parts company. When Frank asked Mike why they
lost the sale, Mike blamed it on the high Canadian dollar and the rise in cheap offshore
auto parts suppliers. Mike is demonstrating which of the following?
A) confirmation bias
B) self-serving bias
C) overconfidence bias
D) sunk costs error
E) framing bias
Answer: B
Diff: 2 Page Ref: 178
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-139

Question Type: MC
Question: Mike asked Frank to authorize the expenditure of an additional $30,000 to
continue to pursue the contract with the Japanese car maker, even though there is no
indication that they will reconsider their decision. As Mike explained, "My sales team has
already spent close to $100,000 in time and effort trying to win that contract. What's
another $30,000 to try to convince them to switch to Mega?" Mike's fixation on past
expenditures demonstrates which of the following?
A) confirmation bias
B) hindsight bias
C) overconfidence bias
D) sunk costs error
E) anchoring effect
Answer: D
Diff: 2 Page Ref: 178
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

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Chapter 7: Decision Making

Question ID: 7-140

Question Type: MC
Question: Frank reluctantly agreed to authorize Mike's request for additional funds to
pursue the Japanese car maker, despite some ongoing concerns he has had about how this
contract could impact his current agreements with three U.S. car companies. If Mega
were to win the Japanese business, they would not have sufficient production capacity to
meet all their contract obligations. Frank's decision demonstrates which of the following?
A) confirmation bias
B) hindsight bias
C) overconfidence bias
D) self-serving bias
E) framing bias
Answer: A
Diff: 3 Page Ref: 178
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-141

Question Type: MC
Question: 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?
A) selective perception bias
B) hindsight bias
C) self-serving bias
D) sunk costs error
E) escalation of commitment
Answer: A
Diff: 2 Page Ref: 178
Skill: Applied
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-142

Question Type: ES
Question: In a short essay, describe and discuss the eight steps in the decision-making
process. Give a simple example of a decision to illustrate your answer.
Answer:
Step 1: Identify a problem—The decision-making process begins with the existence of a
problem or a discrepancy between an existing and a desired state of affairs. However, a
discrepancy without pressure to take action becomes a problem that can be postponed.

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Chapter 7: Decision Making

Step 2: Identify decision criteria—Once the manager has identified a problem that needs
attention, the decision criteria important to resolving the problem must be identified) That
is, managers must determine what's relevant in making a decision.
Step 3: Allocate weights to criteria—At this step, the decision maker must weigh the
items in order to give them the correct priority in the decision. A simple approach is to
give the most important criterion a weight of 10 and then assign weights to the rest
against that standard.
Step 4: Develop alternatives—The fourth step requires the decision maker to list the
viable alternatives that could resolve the problem. No attempt is made in this step to
evaluate the alternative, only to list them.
Step 5: Analyze alternatives—Once the alternatives have been identified, the decision
maker must critically analyze each one) From this comparison, the strengths and
weaknesses of each alternative become evident.
Step 6: Select an alternative—The sixth step is the important act of choosing the best
alternative from among those considered. All the pertinent criteria in the decision have
now been determined and weighted, and the alternatives have been identified and
analyzed.
Step 7: Implement the alternative—Implementation involves conveying the decision to
those affected by it and getting their commitment to it. If the people who must carry out a
decision participate in the process, they're more likely to enthusiastically support the
outcome than if they are just told what to do.
Step 8: Evaluate decision effectiveness—The last step in the decision-making process
involves appraising the outcome of the decision to see if the problem has been resolved.
Did the alternative chosen and implemented accomplish the desired result? If not, the
manager may consider returning to a previous step or may even consider starting the
whole decision process over.
Diff: 3 Page Ref: 163-167
Skill: Recall
Learning Objective: 7-1 Describe the eight steps in the decision-making process.

Question ID: 7-143

Question Type:
Question: In a short essay, discuss the assumptions of rationality, the validity of those
assumptions and the influence of bounded rationality in decision-making.
Answer:
A decision maker who was perfectly rational would be fully objective and logical. He or
she would carefully define a problem and would have a clear and specific goal.
Moreover, making decisions using rationality would consistently lead toward selecting
the alternative that maximizes the likelihood of achieving that goal. The assumptions of
rationality apply to any decision. Rational managerial decision-making assumes that
decisions are made in the best interests of the organization That is, the decision maker is
assumed to be maximizing the organization's interests, not his or her own interests.
Managerial decision-making can follow rational assumptions if the following conditions
are met: The manager is faced with a simple problem in which the goals are clear and the
alternatives limited, the time pressures are minimal, the cost of seeking out and

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Chapter 7: Decision Making

evaluating alternatives is low, the organizational culture supports innovation and risk
taking, and outcomes are relatively concrete and measurable However, most decisions
that managers face in the real world don't meet all those tests.
Bounded rationality injects limitations on a person’s ability to interpret, process, and act
on information. Because they cannot possibly analyze all the information on all
alternatives, managers often make decisions that are satisfactory and sufficient rather than
the best decision. They settle on an alternative that is good enough for the situation with
an acceptable level of performance.
Diff: 2 Page Ref: 168
Skill: Recall
Learning Objective: 7-2 Explain the four ways managers make decisions.

Question ID: 7-144

Question Type: ES
Question: In a short essay, discuss the difference between structured and unstructured
problems. Include specific examples of each type of problem to support your answer.
Next, discuss the type of decisions that would be used to address each of these problems.
Answer:
A) Structured problems—The goal of the decision maker is clear, the problem is familiar,
and information about the problem is easily defined and complete. Examples of these
types of problems might include a customer wanting to return a purchase to a retail store,
a supplier being late with an important delivery, a news team responding to an
unexpected and fast-breaking event, or a college's handling of a student wanting to drop a
class. Such situations are called structured problems because they are straightforward,
familiar, and easily defined problems. In handling these problem situations, the manager
uses a programmed decision. Decisions are programmed to the extent that they are
repetitive and routine and to the extent that a definite approach has been worked out for
handling them. Since the problem is structured, the manager doesn't have to go to the
trouble and expense of going through an involved decision progress. Programmed
decision-making is relatively simple and tends to rely heavily on previous solutions.
B) Unstructured problems—These problems are new or unusual, and information for
them is ambiguous or incomplete. For example, the selection of an architect to design a
new corporate manufacturing facility in Bangkok is an example of an unstructured
problem. When problems are unstructured, managers must rely on nonprogrammed
decision-making in order to develop unique solutions. Nonprogrammed decisions are
unique and nonrecurring. When a manager confronts an unstructured problem or one that
is unique, there is no cut-and-dry solution. It requires a custom-made response through
nonprogrammed decision-making.
Diff: 3 Page Ref: 171-172
Skill: Applied
Learning Objective: 7-3 Classify decisions and decision-making conditions.

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Chapter 7: Decision Making

Question ID: 7-145

Question Type: ES
Question: In a short essay, explain the decision errors and biases that managers make.
Give simple examples for each to illustrate your answers.
Answer: a. When decision makers tend to think they know more than they do or hold
unrealistically positive views of themselves and their performance, they are exhibiting the
overconfidence bias.
b. When decision makers selectively organize and interpret events based on their biased
perceptions, they are using the selective perception bias. This influences the information
they pay attention to, the problems they identify, and the alternatives they develop.
c. Decision makers who seek out information that reaffirms their past choices and
discount information that contradicts past judgments exhibit the confirmation bias. These
people tend to accept at face value information that confirms their preconceived views
and are critical and skeptical of information that challenges these views.
d. The availability bias is when decisions makers tend to remember events that are the
most recent and vivid in their memory. The result is that it distorts their ability to recall
events in an objective manner and results in distorted judgments and probability
estimates.
e. When decision makers assess the likelihood of an event based on how closely it
resembles other events or sets of events, they commit the representation bias. Managers
exhibiting this bias draw analogies and see identical situations where they do not exist.
f. The randomness bias describes the actions of decision makers who try to create
meaning out of random events. They do this because most decision makers have
difficulty dealing with chance even though random events happen to everyone and there
is nothing that can be done to predict them.
g. The sunk costs error occurs when decision makers forget that current choices cannot
correct the past. They incorrectly fixate on past expenditures of time, money, or effort in
assessing choices rather than on future consequences.
h. Decision makers who are quick to take credit for their successes and to blame failure
on outside factors are exhibiting the self-serving bias.
i. The hindsight bias is the tendency for decision makers to falsely believe that they
would have accurately predicted the outcome of an event once that outcome is actually
known.
Diff: 2 Page Ref: 178-179
Skill: Recall
Learning Objective: 7-4 Describe different decision-making styles and the impact of
biases.

Question ID: 7-146

Question Type: ES
Question: In a short essay, describe what a manager can do to make effective decisions in
today's fast-moving world. Give examples for each to illustrate your answers.
Answer: The following are a few guidelines that a manager can adhere to in order to
make effective decisions in today's fast-moving world:
– Understand cultural differences.
– Create standards for good decision making.

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Chapter 7: Decision Making

– Know when it is time to call it quits.

– Use an effective decision-making process.
– Build an organization that can spot the unexpected and quickly adapt to the
changed environment.
Diff: 2 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-147

Question Type: ES
Question: In a short essay, explain in detail the five habits of highly reliable
organizations. Give examples where possible to illustrate your answers.
Answer:
The HROs share five habits:
– They are not tricked by their success but are alert to the smallest deviations and
react early and quickly to anything that does not fit with expectations.
– They defer to the experts on the front line – those who interact day in and day out
with customers, products suppliers etc.
– They let unexpected circumstances provide the solutions.
– They embrace complexity. These organizations recognize that it takes complexity
to sense complexity. They aim for deeper understanding of the situation to help
them adapt more effectively.
– They anticipate, but also anticipate their limits as much as possible, but recognize
that they cannot anticipate everything.
Diff: 2 Page Ref: 180
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

Question ID: 7-148

Question Type: ES
Question: In a short essay, describe in detail, with examples, what is meant by design
thinking and nonlinear thinking; and how they relate to decision making.
Answer:
Design thinking approaches management problems as designers approach design
problems. Design thinking begins with the first step of identifying problems. This should
be done collaboratively and integratively with the goals of gaining a deep understanding
of the situation. Do not look at only the rational aspects, but also at the emotional
elements. Design thinking focuses on something completely new that might exist but
does not exist now. Design thinking asks you to open up new perspectives and gain
insights by using observation and inquiry skills and not rely simply on rational analysis.
Design thinking is closely related to intuition, innovation and creativity.
Nonlinear thinking style is characterized by preference for international sources of
information and processing this information with internal insights, feelings, and hunches.
Diff: 2 Page Ref: 181
Skill: Recall
Learning Objective: 7-5 Identify effective decision-making techniques.

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