MGMT 6916 - Ch 1 - Decision Making
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What are the 5 steps in the process of decision making?
- Identify and define the problem
- Determine the set of alternative solutions
- Determine the criteria for evaluating alternatives
- Evaluate the alternatives
- Choose an alternative (make a decision)
How many steps are there in the problem solving process?
What are the last 2 steps in the problem solving process?
- Implement the selected alternative
- Evaluate the results
The body of knowledge involving quantitative approaches to decision making is referred to as ...
- Management science
- Operations research
- Decision science
In the decision making process, what steps fall under structuring the problem?
- Define the problem
- Identify the alternatives
- Determine the criteria
In the decision making process, what steps fall under analyzing the problem?
- Identify the alternatives
- Choose an alternative
What are single criterion decision problems?
Problems in which the objective is to find the best solution with respect to one criterion.
What are multicriteria decision problems?
Problems that involve more than one criterion
What is qualitative analysis?
- Unreliable analysis based on manager's judgement and experience
- Is more of an art than a science
What is quantitative analysis?
- When analysts concentrate on the quantitative facts or data associated with the problem
- Using mathematical expressions that describe the objectives, constraints , and other relationships that exist in the problem
What are the potential reasons for a quantitative analysis approach to decision making?
- The problem is complex
- The problem is very important (irreversible investments)
- The problem is new
- The problem is repetitive
What are models representative of?
Real objects or situations
What are the three forms of models?
- Iconic models
- Analog models
- Mathematical models
What are iconic models?
Physical replicas (scalar representations) of real objects (smaller version)
What are analog models?
Physical in form, but do not physically resemble the object being modeled
What are mathematical models?
Represent real world problems through a system of mathematical formulas and expressions based on key assumptions, estimates, or statistical anlysises
Why do people experiment with models?
- Requires less time
- Is less expensive
- Involves less risk
What happens the more closely the model represents the real situation?
The more accurate the conclusions and predictions will be
What is the objective function?
A mathematical expression that describes the problem's objective, such as maximizing profit or minimizing cost
What are constraints?
A set of restrictions or limitations, such as production capacities
What are uncontrollable inputs?
- Environmental factors that are not under the control of the decision maker
- Consumers determine the market
What are decision variables?
Controllable inputs; decision alternatives specified by the decision maker, such as the number of units of a product to produce
What is a deterministic model?
If all uncontrollable inputs to the model are known and cannot vary
What is the stochastic (or probabilistic model)?
- If any uncontrollable are uncertain and subject to variation
- These models are often more difficult to analyze
What are cost/benefit considerations?
They must be made in selecting an appropriate mathematical model
What is the optimal solution?
The alternatives the provide the best output
What is an infeasible solution?
When an alternative does not satisfy all of the model constraints
What is a feasible solution?
When an alternative satisfies all of the model constraints
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