Question 1

1.Definition of short-term decision making.

Short-term decision making refers to the process of selecting an option between future and
uncertain alternatives.There are at least two options to choose when making a decision.
The costs and advantages of each possibility must be weighed against each other before
choosing one.

2.Process of the decision making

1. Clarify the problem

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2. Specify the criterion

7. Evaluate decision effectiveness

3. Identify the alternatives

6. Select the course of action

4. Collect the information about relevant

costs and benefits

5. Compare the costs and benefits

3. The criteria for relevant costs are:

 Future-oriented: Relevant costs are those that will be affected by a decision in the
future.
 Different between alternatives: Relevant costs are those that differ between the
alternatives being considered.
 Incremental: Relevant costs are incremental costs, which means they are costs that
will be incurred as a direct result of the decision being made.
 Avoidable: Relevant costs are avoidable costs, which means they can be eliminated
if a particular alternative is chosen.