CPM Analytical Decision Frameworks 3

Question 1

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

Accepted Answer

Economic

Answer

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

Question 2

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

Accepted Answer

Represents a chance event with probabilistic outcomes

Answer

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

Question 3

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

Accepted Answer

Establishing objectives (musts and wants)

Answer

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

Question 4

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

Accepted Answer

Anchoring bias

Answer

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

Question 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?

Accepted Answer

8,000 units

Answer

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

(CPM) Certified Professional Manager Practice Test

(CPM) Certified Professional Manager Practice Test

CPM Analytical Decision Frameworks 3