Mid Term Exam
1. (TCO A) Your small services company has outgrown the current facility after the first two years of a three-year lease. As the operations manager, you are being held accountable for cancelling orders, and you are beginning to lose market share due to late deliveries. The goal is to determine what action to take in the future to improve the situation and restore sales.
i. What criteria should have been used in the decision-making process that could have avoided the current situation?
ii. Describe the eight elements for effective decision making used in a rational decision-making approach, and describe how it could have been applied seeing this potential crisis in advance.

Ans:

  1. i) The criteria that could have been used in the decision-making process that could have avoided the current situation is following the rational decision making process. Clearly, the operation manager or owner of the services company have not made the correct decision related to the size of the operation required in the future to clearly determine the space required in their current facility. If they had identified the decision criteria to determine the size of the facility required over a span of next 5-10 years, they wouldn’t have got into this situation. What they lacked was to estimate the growth of their services business and order size over the next 5 years while making the decision of their facility.
  2. ii) Eight elements for effective decision making are:

1) Identification of the Problem

2) Identification of decision criteria

3) Allocation of weights to criteria

4) Development of Alternatives

5) Analysis of Alternatives

6) Selection of Alternatives

7) Implementation of the Alternatives

8) Evaluation of the Decision Effectiveness

The rational decision making approach could have been applied while coming up with decision criteria’s. The decision criteria’s in this case should have been:

1) Nos. of employees and hardware requirements in the facility and their growth over the next 5 years

2) Estimation of the growth of their services business and order size over the next 5 years

3) What was their company’s vision and goals in terms of market size and order size/value over the next 5-10 years?

4) Cost of renting or taking lease of the current facility /sq ft

They should have assigned weights to these different criteria’s. Based on these different criteria’s they could have looked at various alternatives available to them e.g. 10000 sq ft of facility space, 15000 sq ft of facility space, 20,000 sq ft of facility space etc. Based on the decision criteria’s they should have scored each of these alternatives on a score of 0-100 scale. Based on the weights and individual score, they should have arrived at the final score to arrive at the correct decision. If the operation manager or the owner of the company had followed this, this current situation could have been averted. As they, would have had enough ample space to run their business and they wouldn’t have got into the situation where they have to cancel their orders.

2. TCO A) Understanding fundamental and means objectives are important to decision analysis and decision making. As your business has grown, you are evaluating moving your company to a larger office closer to several of your key customers and are looking at several different alternatives.
i. Identify your fundamental objectives.

ii. How would those objectives be used in the decision-making process?

iii. Identify your means objectives.

iv. How would the means objectives be used in the decision-making process

3. (TCO A) Robin Griffith, Business Manager for Clark Investments, is considering three new office locations. In trying to decide which location is the best overall for the company, Robin has concluded that three criteria are important in this decision. First, of course, is to have a location in close proximity to key corporate customers. This objective is most important, twice as important as each of the other two criteria. The second criterion is to have a location with excellent tenant satisfaction. The third criterion is for the facility to have additional space to expand into. The second and third criteria are equally important.
Here is a summary of each of the locations:
1) Shady Pines: 7 corporate accounts within five miles; scored an 80 satisfied/highly satisfied in recent tenant satisfaction poll; 1,000 additional square feet available in the event of a need to expand further.
2) Via Angelina: 5 corporate accounts within five miles; scored an 85 satisfied/highly satisfied in recent tenant satisfaction poll; 2,000 additional square feet available in the event of a need to expand further.
3) The Mercado: 4 corporate accounts within five miles; scored a 75 satisfied/highly satisfied in recent tenant satisfaction poll; no additional space available.
(a) What is Robin’s problem or opportunity in this situation?

(b) What is the overall objective for Robin’s decision? What are the fundamental objectives that support the overall objective?

(c) What are Robin’s alternatives for this decision situation?

(d) Evaluate this decision situation using tradeoffs or a weighted scoring model. Based on that analysis, to which location should Robin select?

4. TCO B) Utilizing intuitive thinking in today’s business environment is a must according to research and practical experience.
i. Why is intuition important to managers today, and how reliable is it in decision making?
ii. Develop three approaches for improving one’s intuition to enable better decision making.

 

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MGMT 530 Managerial Decision Making Mid Term Exam Solution