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Analytical Decision Frameworks Flashcards

7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Analytical Decision Frameworks flashcards as text

  1. A manager uses a PEST analysis before entering a new market. Which category would 'rising interest rates' fall under?

    Answer: Economic

    Rising interest rates are an economic factor that affects borrowing costs, consumer spending, and investment decisions in a new market.

  2. In decision tree analysis, an 'expected value' node (circle) differs from a 'decision' node (square) in that it:

    Answer: Represents a chance event with probabilistic outcomes

    Circle nodes in decision trees represent chance events where outcomes occur with assigned probabilities, unlike square nodes which represent deliberate choices.

  3. A manager applies the Kepner-Tregoe (KT) decision analysis framework. Which step comes IMMEDIATELY after defining the decision statement?

    Answer: Establishing objectives (musts and wants)

    In KT decision analysis, defining the decision statement is followed by establishing objectives, which are classified as mandatory 'musts' and desirable 'wants.'

  4. Which cognitive bias causes managers to overweight the first piece of information received when making subsequent judgments?

    Answer: Anchoring bias

    Anchoring bias occurs when the initial data point (the 'anchor') disproportionately influences all subsequent estimates or decisions.

  5. A manager conducting a break-even analysis determines that fixed costs are $120,000, selling price per unit is $40, and variable cost per unit is $25. What is the break-even quantity?

    Answer: 8,000 units

    Break-even quantity = Fixed Costs ÷ (Price − Variable Cost) = $120,000 ÷ ($40 − $25) = $120,000 ÷ $15 = 8,000 units.

  6. In the context of analytical decision-making, 'satisficing' differs from 'optimizing' in that satisficing:

    Answer: Selects the first option that meets minimum acceptable criteria

    Satisficing, coined by Herbert Simon, means selecting the first adequate option rather than exhaustively searching for the best possible solution.

  7. A manager uses scenario planning as part of strategic analysis. The PRIMARY purpose of developing multiple scenarios is to:

    Answer: Prepare the organization to respond flexibly to a range of possible futures

    Scenario planning helps organizations build strategic flexibility by preparing responses for several plausible futures rather than betting on one predicted outcome.