Enhancing Management Decision Making for the Digital Firm

Chapter 12Enhancing Management Decision Making for the Digital Firm12-1

Chapter 12

Enhancing Management Decision Making for the Digital Firm

True-False Questions

DSS are a special category of information systems explicitly designed to enhance managerial decision making.
Answer: TrueDifficulty:EasyReference: p. 414
Many managers use the new capabilities in DSS and ESS to obtain the same information as before.
Answer: TrueDifficulty:MediumReference: p. 414
MIS reports are usually unstructured and unscheduled.
Answer: FalseDifficulty:EasyReference: p. 415
DSS give new capabilities for nonroutine decisions and user control.
Answer: TrueDifficulty:EasyReference: p. 415
With a DSS there is more of an effort to link users to structured information flows and less of an emphasis on models, assumptions, ad hoc queries, and display graphics.
Answer: FalseDifficulty:MediumReference: p. 415
DSS are primarily designed to support structured and semistructured problems.
Answer: FalseDifficulty:MediumReference: p. 416
Simon’s model of decision making includes intelligence, design, choice, and implementation stages.
Answer: TrueDifficulty:MediumReference: p. 416
The textbook categorized Continental Airlines Inc.’s system for cargo revenue optimization as a data-driven DSS.
Answer: FalseDifficulty:MediumReference: p. 416
The four types of decision support systems are DSS, MIS, ESS, and GDSS.
Answer: FalseDifficulty:HardReference: p. 416
Data-driven DSS are primarily stand-alone systems using a what-if model.
Answer: FalseDifficulty:MediumReference: p. 416
Unstructured problems have no algorithms for their solution.
Answer: TrueDifficulty:EasyReference: p. 416
There are five basic types of DSS.
Answer: FalseDifficulty:EasyReference: p. 416
Data-driven DSS use TPS data and OLAP.
Answer: TrueDifficulty:MediumReference: p. 416
Datamining is less insightful than OLAP.
Answer: FalseDifficulty:MediumReference: p. 417
With OLAP and query-oriented data analysis, users do not need a good idea about the information for which they are looking.
Answer: FalseDifficulty:MediumReference: p. 417
Associations are patterns linked over several events.
Answer: FalseDifficulty:MediumReference: p. 418
Datamining uses statistical analysis tools as well as the tools of artificial intelligence.
Answer: TrueDifficulty:MediumReference: p. 419
Forecasting recognizes patterns that describe the group to which an item might belong.
Answer: FalseDifficulty:MediumReference: p. 419
In large organizations, individuals normally make all the decisions.
Answer: FalseDifficulty:EasyReference: p. 419
The data in DSS databases are generally extracts or copies of production databases so that using the DSS does not interfere with critical operational systems.
Answer: TrueDifficulty:MediumReference: p. 419
A classic use of sensitivity analysis is to determine the proper mix of products within a given market to maximize profits.
Answer: FalseDifficulty:MediumReference: p. 420
A model can be physical, mathematical, or verbal.
Answer: TrueDifficulty:EasyReference: p. 420
Each DSS is built for a specific set of purposes and will make different collections of models available depending on those purposes.
Answer: TrueDifficulty:MediumReference: p. 420
DSS users can be managers with neither the time nor the patience to learn a complex tool, so the DSS interface must be relatively intuitive.
Answer: TrueDifficulty:MediumReference: p. 420
A DSS for customer analysis and segmentation allows companies to segment their customer base with a high-enough level of precision to drive a marketing campaign.
Answer: TrueDifficulty:HardReference: p. 424
All DSS support management decisions.
Answer: FalseDifficulty:MediumReference: p. 425
Some DSS for customer relationship management use data gathered from the Web.
Answer: TrueDifficulty:MediumReference: p. 425
A popular use of GIS is to decide where to open new branch offices and stores.
Answer: TrueDifficulty:MediumReference: p. 425
Early DSS focused largely on supporting individual decision making.
Answer: TrueDifficulty:MediumReference: p. 427
Groupware and Web-based tools for videoconferencing are highly satisfactory for supporting group decision processes.
Answer: FalseDifficulty:MediumReference: p. 427
GDSS cannot be used for networked meetings.
Answer: FalseDifficulty:MediumReference: p. 428
GDSS meeting outcomes are always better than the outcomes of face-to-face meetings because they keep better records.
Answer: FalseDifficulty:MediumReference: p. 429
A problem common to paper reports is data overload.
Answer: TrueDifficulty:EasyReference: p. 430
Executive support systems based on the data from properly-configured enterprise systems can be considered logical extensions of enterprise system functionality.
Answer: TrueDifficulty:MediumReference: p. 430
Unlike DSS, ESS are not flexible.
Answer: FalseDifficulty:EasyReference: p. 431
The most visible benefit of ESS is their ability to work with trends.
Answer: TrueDifficulty:EasyReference: p. 431
Today, the business landscape changes so rapidly that managers need special capabilities to gather and analyze competitive information.
Answer: TrueDifficulty:MediumReference: p. 431
ROI is a traditional measure of financial value, but the balanced scorecard model provides many additional perspectives that are ultimately more useful.
Answer: TrueDifficulty:MediumReference: p. 433
Activity-based costing is the outcome of the balanced scorecard.
Answer: FalseDifficulty:MediumReference: p. 433
Activity-based costing is a model for identifying all the company activities that cause costs to occur while producing a specific product or service so that managers can see which products or services are profitable or losing money and make changes to maximize firm profitability.
Answer: TrueDifficulty:HardReference: p. 434

Multiple- Choice Questions

______will be required to get managers to ask better questions of the data.
a.A neural network
b.An OLAP
c.Major changes in management thinking
d.Better data
e.Vast educational changes
Answer: cDifficulty:EasyReference: p. 414
DSS, GDSS, and ESS are part of a special category of information systems that are explicitly designed to:
a.make decisions for managers.
b.enhance Web performance.
c.gather data and build data warehouses.
d.enhance managerial decision making.
e.interpret data for management.
Answer: dDifficulty:MediumReference: p. 414
Applications and technologies that focus on gathering, storing, analyzing, and providing access to data from many different sources to help users make better business decisions best describes:
a.data warehouse.
b.teamware.
c.groupware.
d.organizational memory.
e.business intelligence.
Answer: eDifficulty:MediumReference: p. 414
DSS assist management by combining ______into a single powerful system to support unstructured decision making.
a.hardware and the Internet
b.data, analytical models and tools, and user-friendly software
c.analytical models and tools and data from the Internet
d.group decision processes and electronics
e.data and people
Answer: bDifficulty:MediumReference: p. 415
The earliest DSS tended to:
a.rely on Internet data.
b.draw on small subsets of corporate data.
c.be heavily model-driven.
d.Both b and c
e.All of the above
Answer: dDifficulty:MediumReference: p. 416
Data-driven DSS:
a.begin with a given group of data and change variables.
b.allow users to extract useful information formerly buried in vast quantities of data.
c.rely heavily on data captured by model-driven DSS.
d.use traditional database queries.
e.use links to a single event.
Answer: bDifficulty:MediumReference: p. 416
The types of information that are garnered from datamining include:
a.sequences, classifications, and clusters.
b.model-driven and data-driven.
c.associations and forecasts.
d.Both a and c
e.All of the above
Answer: dDifficulty:EasyReference: p. 417
The term “associations” is associated with:
a.occurrences linked to a single event.
b.classifications when no groups have been defined.
c.pattern recognition describing the group to which an item belongs.
d.a series of existing values used to predict other values.
e.events linked over time.
Answer: aDifficulty:MediumReference: p. 418
The term “sequences” is associated with:
a.occurrences linked to a single event.
b.classifications when no groups have been defined.
c.pattern recognition describing the group to which an item belongs.
d.a series of existing values used to predict other values.
e.events linked over time.
Answer: eDifficulty:MediumReference: p. 418
The term “forecasting” is associated with:
a.occurrences linked to a single event.
b.classifications when no groups have been defined.
c.pattern recognition describing the group to which an item belongs.
d.a series of existing values used to predict other values.
e.events linked over time.
Answer: dDifficulty:EasyReference: p. 419
The term “classifications” is associated with:
a.occurrences linked to a single event.
b.classifications when no groups have been defined.
c.pattern recognition describing the group to which an item belongs.
d.a series of existing values used to predict other values.
e.events linked over time.
Answer: cDifficulty:MediumReference: p. 419
The term “clusters” is associated with:
a.occurrences linked to a single event.
b.classifications when no groups have been defined.
c.pattern recognition describing the group to which an item belongs.
d.a series of existing values used to predict other values.
e.events linked over time.
Answer: bDifficulty:MediumReference: p. 419
It may be that the most common models are:
a.historical databases.
b.competitive predictions.
c.sensitivity models used to forecast sales.
d.libraries of statistical models.
e.GDSS.
Answer: dDifficulty:MediumReference: p. 420
Backward sensitivity analysis software is used for:
a.goal seeking.
b.user interfaces.
c.forecasting.
d.competitive predictions.
e.historical databases.
Answer: aDifficulty:HardReference: p. 420
A graphic, easy-to-use interface supports:
a.the database to which it is attached.
b.the DSS software.
c.senior management.
d.the interconnection between the DSS hardware and software.
e.the dialogue between the user and the DSS.
Answer: eDifficulty:EasyReference: p. 420
DSS are helpful in supply chain decisions because they can:
a.combine data from many sources.
b.enable managers to reduce inventory levels.
c.examine a huge number of alternatives to determine the best combination of choices.
d.trim labor costs.
e.determine markdown points.
Answer: cDifficulty:MediumReference: p. 422
DSS for customer relationship management use datamining to guide decisions about:
a.pricing.
b.customer retention.
c.market share.
d.new revenue streams.
e.all of the above.
Answer: eDifficulty:EasyReference: p. 424
Some DSS for customer relationship management:
a.are used for Human Resources guidelines.
b.can identify all the management variables.
c.use digital mapping.
d.combine Web site transaction data with data from enterprise systems.
e.All of the above
Answer: dDifficulty:MediumReference: p. 425
GIS tools have become:
a.useable on the Web.
b.affordable for small business.
c.tools mainly used by financial managers.
d.Both a and b
e.Both b and c
Answer: dDifficulty:MediumReference: p. 425
GIS:
a.help determine where to put new businesses.
b.determine population flows.
c.tie data to points, lines and areas on a map.
d.are linked to satellites.
e.Both a and c
Answer: eDifficulty:MediumReference: p. 425
Before they interact with sales staff, customers are now:
a.getting more information from multiple sources.
b.checking out the company’s reputation.
c.required to have loans pre-approved for large items.
d.interacting with online management.
e.All of the above
Answer: aDifficulty:MediumReference: p. 426
Early DSS focused largely on:
a.individual decision making.
b.statistical modeling.
c.documents.
d.spreadsheets and graphs.
e.system development.
Answer: aDifficulty:MediumReference: p. 427
The underlying problem(s) in group decision-making is/are:
a.too many meetings.
b.the increased length of meetings.
c.the increased number of people attending meetings.
d.All of the above
e.None of the above
Answer: dDifficulty:MediumReference: p. 427
A GDSS requires:
a.hardware, software tools, and people.
b.software, a meeting place, and individual computers.
c.individual computers, people, and time.
d.a steep learning curve and specialized hardware.
e.a long learning curve and specialized software.
Answer: aDifficulty:MediumReference: p. 428
In a GDSS, idea organizers:
a.facilitate organized integration and synthesis of ideas generated during brainstorming.
b.use structured approaches to evaluate the impact of an emerging proposal and determine those who will be affected by it.
c.structure support for developing agreement on the wording of policy statements.
d.allow simultaneous and anonymous contributions to the meeting.
e.aid in pre-meeting planning by identifying issues of concern.
Answer: aDifficulty:MediumReference: p. 428
In a GDSS, stakeholder identification and analysis tools:
a.facilitate organized integration and synthesis of ideas generated during brainstorming.
b.use structured approaches to evaluate the impact of an emerging proposal and determine those who will be affected by it.
c.structure support for developing agreement on the wording of policy statements.
d.allow simultaneous and anonymous contributions to the meeting.
e.aid in pre-meeting planning by identifying issues of concern.
Answer: bDifficulty:MediumReference: p. 428
In a GDSS, electronic brainstorming tools:
a.facilitate organized integration and synthesis of ideas generated during brainstorming.
b.use structured approaches to evaluate the impact of an emerging proposal and determine those who will be affected by it.
c.structure support for developing agreement on the wording of policy statements.
d.allow simultaneous and anonymous contributions to the meeting.
e.aid in pre-meeting planning by identifying issues of concern.
Answer: dDifficulty:MediumReference: p. 428
In a GDSS, electronic questionnaires:
a.facilitate organized integration and synthesis of ideas generated during brainstorming.
b.use structured approaches to evaluate the impact of an emerging proposal and determine those who will be affected by it.
c.structure support for developing agreement on the wording of policy statements.
d.allow simultaneous and anonymous contributions to the meeting.
e.aid in pre-meeting planning by identifying issues of concern.
Answer: eDifficulty:MediumReference: p. 428
In a GDSS, policy formation tools:
a.facilitate organized integration and synthesis of ideas generated during brainstorming.
b.use structured approaches to evaluate the impact of an emerging proposal and determine those who will be affected by it.
c.structure support for developing agreement on the wording of policy statements.
d.allow simultaneous and anonymous contributions to the meeting.
e.aid in pre-meeting planning by identifying issues of concern.
Answer: cDifficulty:MediumReference: p. 428
When a group interacts using a GDSS, organizational memory uses the following tools:
a.policy formation, stakeholder identification.
b.enterprise analyzer, graphical browser, group dictionary.
c.idea organizer, issue analyzer, group writer.
d.brainstorming, topic commenter, group outliner.
e.vote selection, alternative evaluation questionnaire, group matrix.
Answer: bDifficulty:MediumReference: p. 429
When a group interacts using a GDSS, idea generation uses the following tools:
a.policy formation, stakeholder identification.
b.enterprise analyzer, graphical browser, group dictionary.
c.idea organizer, issue analyzer, group writer.
d.brainstorming, topic commenter, group outliner.
e.vote selection, alternative evaluation questionnaire, group matrix.
Answer: dDifficulty:MediumReference: p. 429
When a group interacts using a GDSS, prioritizing uses the following tools:
a.policy formation, stakeholder identification.
b.enterprise analyzer, graphical browser, group dictionary.
c.idea organizer, issue analyzer, group writer.
d.brainstorming, topic commenter, group outliner.
e.vote selection, alternative evaluation, questionnaire, group matrix.
Answer: eDifficulty:MediumReference: p. 429
When a group interacts using a GDSS, policy development uses the following tools:
a.policy formation, stakeholder identification.
b.enterprise analyzer, graphical browser, group dictionary.
c.idea organizer, issue analyzer, group writer.
d.brainstorming, topic commenter, group outliner.
e.vote selection, alternative evaluation questionnaire, group matrix.
Answer: a Difficulty: MediumReference: p. 429
The stored learning from an organization’s history that can be used for decision making and other purposes best describes:
a.groupware.
b.organizational memory.
c.group think.
d.corporate database.
e.enterprise system.
Answer: bDifficulty:MediumReference: p. 429
When using a GDSS, the effectiveness of the tools will partially depend upon:
a.the facilitator’s effectiveness.
b.the quality of the planning.
c.the appropriateness of the tools selected for application in the meeting.
d.the cooperation of the attendees.
e.All of the above
Answer: eDifficulty:EasyReference: p. 430
ESS:
a.help managers with unstructured problems.
b.combine data from internal and external sources.
c.help senior executives monitor organizational performance.
d.help senior executives forecast trends.
e.All of the above
Answer: eDifficulty:MediumReference: p. 430
The most visible benefit(s) of ESS is/are:
a.their ability to develop a “sense and define” strategy for an organization.
b.their ability to analyze, compare, and highlight trends.
c.their ability to make decisions.
d.their swift access to data warehouses.
e.All of the above
Answer: bDifficulty:MediumReference: p. 431
Which of the following is a model for analyzing firm performance that supplements traditional financial measures with measurements from additional business perspectives, such as customers internal business processes, and learning and growth?
a.Total cost of ownership
b.Balanced scorecard
c.Internal rate of return
d.Return on investment
e.Activity-based costing
Answer: bDifficulty:MediumReference: p. 433
The new enterprise reporting capabilities allow companies to:
a.increase management span of control.
b.downsize their sales forces.
c.develop cross-functional steering teams.
d.create measures of company performance that were not previously available.
e.find cyclical trends in their business dealings.
Answer: d Difficulty: EasyReference: p. 434
Which of the following is a model for identifying all the company activities that cause costs to occur while producing a specific product or service so that managers can see which products or services are profitable or losing money and make changes to maximize firm profitability?
a.Total cost of ownership
b.Balanced scorecard
c.Internal rate of return
d.Return on investment
e.Activity-based costing
Answer: e Difficulty:MediumReference: p. 434

Fill In the Blanks

Business intelligence refers to the applications and technologies that focus on gathering, storing, analyzing, and providing access to data from many different sources to help users make better business decisions.
Difficulty: MediumReference: p. 414
Senior management may not fully understand its actual information needs.
Difficulty: MediumReference: p. 414
Simon’s description of decision making consists of four stages: intelligence, design, choice, and implementation.
Difficulty: MediumReference: p. 414
Structured problems are repetitive and routine, for which known algorithms provide solutions.
Difficulty: MediumReference: p. 416
A(n) model-driven DSS is a primarily stand-alone system that uses some type of model to perform “what if” and other kinds of analyses.
Difficulty: MediumReference: p. 416
A(n) data-driven DSS is a system that supports decision-making by allowing users to extract and analyze useful information that was previously buried in large databases.
Difficulty: EasyReference: p. 416
A(n) association is an occurrence linked to a single event.
Difficulty: HardReference: p. 418
Events are linked over time in sequences.
Difficulty: EasyReference: p. 418