CME Problem Solving & Decision Making 3 — Questions and Answers
Question 1: A manager uses 'satisficing' when making a decision. What does this mean?
- Selecting the solution that maximizes all outcomes simultaneously
- Choosing the first option that meets a minimum acceptable threshold (Correct answer)
- Delaying the decision until all stakeholders agree
- Using a satisfaction survey to rank options
Correct answer: Choosing the first option that meets a minimum acceptable threshold
Satisficing, coined by Herbert Simon, means selecting the first solution that is 'good enough' rather than searching for the optimal one.
Question 2: Which analytical tool maps the probability and financial impact of different decision outcomes in a tree-like structure?
- Force field analysis
- SWOT matrix
- Decision tree (Correct answer)
- Pareto chart
Correct answer: Decision tree
A decision tree visually represents choices, chance events, and their associated probabilities and payoffs to guide complex decisions.
Question 3: A cross-functional team consistently avoids challenging the group's consensus to maintain harmony. This is an example of:
- Delphi technique
- Groupthink (Correct answer)
- Devil's advocacy
- Nominal group technique
Correct answer: Groupthink
Groupthink occurs when the desire for cohesion overrides critical evaluation, leading to poor decision quality.
Question 4: In force field analysis, 'restraining forces' are best described as:
- Factors that drive the need for change
- Internal resources supporting the decision
- Barriers that resist or hinder change (Correct answer)
- External market forces favoring the status quo
Correct answer: Barriers that resist or hinder change
Restraining forces in Lewin's force field analysis are the obstacles and resistances that work against a proposed change.
Question 5: Which problem-solving approach involves generating a large number of ideas without immediate judgment or criticism?
- Devil's advocacy
- Brainstorming (Correct answer)
- Cost-benefit analysis
- Critical path method
Correct answer: Brainstorming
Brainstorming defers judgment to maximize the quantity and diversity of ideas generated before evaluation begins.
Question 6: A company continues investing in a failing project because of money already spent. This is an example of:
- Opportunity cost fallacy
- Sunk cost fallacy (Correct answer)
- Risk aversion bias
- Overconfidence bias
Correct answer: Sunk cost fallacy
The sunk cost fallacy causes decision-makers to irrationally factor in past unrecoverable costs when evaluating future actions.
Question 7: What is the primary purpose of conducting a post-decision audit in management?
- To assign accountability for poor outcomes
- To evaluate decision quality and learn for future improvement (Correct answer)
- To reverse the decision if outcomes are negative
- To satisfy regulatory reporting requirements
Correct answer: To evaluate decision quality and learn for future improvement
Post-decision audits compare actual outcomes to expected results, enabling organizational learning and improved future decision-making.
CME Problem Solving & Decision Making 3
A manager uses 'satisficing' when making a decision.
What does this mean?