Making Hard Decisions Questions Essay

Respond to the following questions from chapter 1 on pp12-13. Use this document to respond to the following question using MS Word. Type your responses below each question shown below and use as much blank shell as you need for your response.1.2 Explain how modeling is apply in conclusiveness depth psychology. What is meant by the term necessary finis model? Ans exemplar is used in decision digest in several tracks. Models allay gaining insights of a decision problem that may not be evident or obvious on the surface. For example, influence diagrams and decision trees atomic number 18 used to represent the decision problem. Hierarchical and network models are used to picture the relationships among different aspects or objectives. Utility functions are used to model the way in which decision- shapers value different outcomes and trade off competing objectives. A needed decision model is a model that back end be considered requisite only when no new intuitions emerge virtually the problem. In childlike words, a requisite decision model is a model whose figure of speech and content are sufficient to solve a particular problem. Everything necessary to solve the problem is represented in the model or can be simulated by it (Phillips, 1987, p.37).1.3 What role do subjective judgments exemplify in decision digest? Ans Subjective judgments are most-valuable ingredients in decision analysis. Discovering and developing these judgments involves cogitateing hard and taxonomically about important aspects of a decision, which forms an demand part of decision analysis. However, it should also be kept in mind that personal insights might be restrain and misleading as pitying beings are imperfect information processors. Thus, it is essential that personal judgments are don into consideration, and at the same time human cognitive limitations are to a lower placestood for improved decisions.1.4 At a dinner party party, an acquaintance asks whether y ou drive canvass anything interesting lately, and you mention that you have begun to read a text on decision analysis. Your friend asks what decision analysis is and why anyone would want to read a book about it, permit alone write one How would you answer? Ans close analysis consists of a framework and a tool kit for dealing with hard decisions. It is used to help a decision gainr think systematically about complex problems and to improve the quality of resulting decisions. Decision analysis offers focal point to normal people working on hard decisions using vestigial principles such as tools to understand the structure of the problem, uncertainties involved and the trade-offs inherent in alternative outcomes.1.5 Your friend in Question 1.4, upon hearing your answer, is delighted This is marvelous, she exclaims. I have this very difficult choice to make at work. Ill tell you the facts, and you can tell me what I should do Explain to her why you cannot do the analysis for h er. Ans Although decision analysis detachs guidance for systematic thinking in hard decisions, it does not mean that it provides an alternative that must(prenominal) be blindly accepted. The decision maker should understand the problem thoroughly. Decision analysis does not relieve the decision maker from the obligations in veneering the problem, or replace his or her intuition. Instead of providing firmnesss, it merely augments the decision makers thought process by providing insights into the objectives, trade-offs and uncertainties. Thus, the friend must go through the process of decision analysis to understand the problem which ordain help in better decisions.1.10 Socially responsible investing depression became fashionable in the 1980s. Such investing involves consideration of the kinds of businesses that a unassailableengages in and selection of investments that are as consistent as attainable with the investors sense of ethical and moral business activity. What trade -offs must the socially responsible investor makes? How are these trade-offs more(prenominal) mingled than those that we normally consider in making investment decisions? Recall, from ISEN 667 the financial objective of the firm (maximize the future riches of the owners of the firm.) Ans The key question here is can good environmental doing can be associated with good financial performance? Since socially responsible investing firms do not invest in a broad immingle of stocks, one will expect their performance to backwardness behind other firms in the market.Expenses are higher and management is big as socially conscious portfolios require increased managerial heedlessness and research. However, the market performance of these firms tends to be stable in the long hang as they do not invest in volatile ventures. Thus, the decision makers must consider the short-term as well as the long terms deeds of the decision in their analysis. The trade-offs are more complicated than those that we normally consider in making investment decisions. This is because financial performances are well-defined, whereas there are no clear definitions for environmental performance indicators. Firms thus, denudation it difficult to measure their financial performance relative to environmental performance.1.11 many a(prenominal) decisions are simple, preprogrammed, or already solved. For example, retailers do not have to think long to decide how to deal with a new customer. Some operations-research models provide ready-made decisions, such as finding an optimal inventory aim using an order-quantity formula or determining an optimal production mix using linear programming. Contrast these decisions with unstructured or strategic decisions, such as choosing a career or locating a atomic power plant.Ans Structured decisions are programmable, preplanned decisions which are made under the established situations that are fully understood. There are limited trade-offs and object ives much are not conflicting with other secondary objectives. Unstructured or strategic decisions are very much made under situations that are unclear or uncertain. There are multiple trade-offs and objectives to consider which are often conflicting in nature. There is no one particular solution for a strategic decision. Multiple alternatives must be evaluated and the decision chosen might not necessarily produce the best result.What kinds of decisions are appropriate for a decision-analysis approach? Ans Unstructured decisions are appropriate for a decision-analysis approach as there is no need for decision analysis when the decision is simple or programmable. Complex, hard decisions require systematic thinking, discretion of the problem and awareness of the uncertainties and trades-offs, and thus, are appropriate for decision-analysis approach.Case Situation extend to to the DuPont and Chlorofluorocarbons case on page 15 and respond to the following questions.1. What issues would you take into account and why?I would take into account the following issues(i) Stakeholders unavoidably Stakeholders are of paramount importance. The conflicting issue is that without pleasing customers it is difficult to maximize shareholder returns, while without regulatory support shareholder returns cannot be assured. (ii) righteousness and public perception Should the firm accept the scientific evidence and make it public? What will be the public re achievement? (iii) Environmental province A complete ban on CFCs would cause severe frugal and health problems because of the loss of refrigeration and air-conditioning. The firm is responsible for developing a substitute before a complete ban is implemented.2. What major sources of suspicion do you face?(i) Uncertainty of Science The scientific evidence that CFCs have a detrimental effect on the ozone layer might subscribe from certain setbacks. I would assign scientists to focus more on the connective between CFCs an d ozone layer. (ii) Development of substitute It is not certain that the substitute develop for CFCs would be as marketable as CFCs, and would be as high-octane as CFCs. This can have direct effects on the performance of the firm. Also, it is uncertain if they will also have a harmful effect on the ozone. (iii) International cooperation Development of the substitute and subsequent ban of CFCs requires internationalist cooperation which is uncertain.3. What bodied objectives would be important for you to consider? Do you think that DuPonts corporate objectives and the way the company views the problem might have evolved since the mid-1970s when CFCs were provided beginning to become an issue? Ans Taking the course of action that maximizes the firms profit would be the most important corporate objective of the firm. However, there is also an environmental aspect involved. Thus, we should search for solutions where the inescapably of both can be satisfied simultaneously. I think the way the company views the problem might have evolved since the mid-1970s from being profit-oriented to a more environmentally sensitive perspective.ReferencesRobert. T. Clemen , Terrence Reilly, Making Hard Decisions with Decision Tools, Duxbury Press 1 edition, Jun 2000