Download Chapter 02 Strategic Decision Making

Chapter 02 - Strategic Decision Making
Chapter 02
Strategic Decision Making
Multiple Choice Questions
1. Which of the following is not a reason for the growth of decision-making information
systems?
A. People need to analyze large amounts of information
B. People must make decisions quickly
C. People must apply sophisticated analysis techniques to make good decisions
D. People no longer have to worry about protecting the corporate asset of organizational
information
People must protect the corporate asset of organizational information, it is one of their
competitive advantages.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
2. What are the most sought after traits in up-and-coming executives?
A. Decision-making and transactional skills
B. Problem-solving and flexibility
C. Decision-making and problem-solving
D. Problem-solving and transaction skills
The most sought after traits in up-and-coming executives are decision-making and problemsolving.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
2-1
Chapter 02 - Strategic Decision Making
3. What factor significantly contributed to people's needs to use information systems to make
decisions?
A. The amount of information people must understand to make good decisions is increasing
exponentially
B. The amount of information people must understand to make good decisions is decreasing
exponentially
C. The amount of information people must understand to make good decisions has remained
unchanged
D. Impossible to answer as it depends on the industry
The amount of information people must understand to make good decisions is increasing
exponentially
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
4. How do decision-making information systems work?
A. By building models out of organizational information to lend insight into important
business issues and opportunities
B. By building models out of transactional information only to lend insight into important
business issues and opportunities
C. By building models out of analytical information only to lend insight into important
business issues and opportunities
D. None of the above
Decision-making information systems work by building models out of organizational
information to lend insight into important business issues and opportunities
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
2-2
Chapter 02 - Strategic Decision Making
5. Which of the following is a not a type of organizational information system?
A. Executive information system
B. Decisions support system
C. Analysis processing system
D. Transactional processing system
Analysis processing system is not a type of organizational IS.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Medium
Taxonomy: Knowledge & Understanding
6. What can a model accomplish?
A. Calculate risks
B. Understand uncertainty
C. Manipulate time
D. All of the above
A model can do all of the above.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Medium
Taxonomy: Knowledge & Understanding
7. Which of the following is a quantitative model typically used by a DSS?
A. Sensitivity analysis
B. What-if analysis
C. Goal-seeking analysis
D. All of the above
A DSS can perform all of the above.
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Easy
Taxonomy: Knowledge & Understanding
2-3
Chapter 02 - Strategic Decision Making
8. What is the study of the impact that changes in one (or more) parts of the model have on
other parts of the model?
A. Drill-down
B. Sensitivity analysis
C. Statistical analysis
D. Goal-seeking analysis
This is the definition of sensitivity analysis.
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Easy
Taxonomy: Knowledge & Understanding
9. What finds the inputs necessary to achieve a goal, such as a desired level of output?
A. Drill-down
B. Sensitivity analysis
C. What-if analysis
D. Goal-seeking analysis
This is the definition of goal-seeking analysis.
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Easy
Taxonomy: Knowledge & Understanding
10. What is consolidation?
A. Involves the aggregation of information and features simple roll-ups to complex groupings
of interrelated information.
B. The ability to look at information from different perspectives
C. Enables users to get details, and details of details, of information
D. Finds the inputs necessary to achieve a goal such as a desired level of output
This is the definition of consolidation.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
2-4
Chapter 02 - Strategic Decision Making
11. What is drill-down capability?
A. Involves the aggregation of information and features simple roll-ups to complex groupings
of interrelated information.
B. The ability to look at information from different perspectives
C. Enables users to get details, and details of details, of information
D. Finds the inputs necessary to achieve a goal such as a desired level of output
This is the definition of drill-down.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
12. What is slice-and-dice capability?
A. Involves the aggregation of information and features simple roll-ups to complex groupings
of interrelated information.
B. The ability to look at information from different perspectives
C. Enables users to get details, and details of details, of information
D. Finds the inputs necessary to achieve a goal such as a desired level of output
This is the definition of slice-and-dice.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
13. What integrates information from multiple components and tailors the information to
individual preferences?
A. Drill-down
B. Sensitivity analysis
C. What-if analysis
D. Digital dashboard
This is the definition of digital dashboards.
AACSB: Use of Information Technology
Learning Outcome: 2.4
Level: Easy
Taxonomy: Knowledge & Understanding
2-5
Chapter 02 - Strategic Decision Making
14. What are various commercial applications of artificial intelligence?
A. Drill-down
B. Sensitivity analysis
C. Digital dashboard
D. Intelligent system
This is the definition of intelligent systems.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
15. What is a category of AI that attempts to emulate the way the human brain works?
A. Intelligent system
B. Artificial intelligence
C. Expert systems
D. Neural network
This is the definition of neural network.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
16. Which of the following is the most commonly used form of AI in the business arena?
A. Intelligent system
B. Artificial intelligence
C. Expert system
D. Neural network
Expert systems are the most common.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
2-6
Chapter 02 - Strategic Decision Making
17. What is a special-purpose knowledge-based information system that accomplishes specific
tasks on behalf of its users?
A. Intelligent system
B. Artificial intelligence
C. Neural network
D. Intelligent agent
This is the definition of intelligent agent.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
18. What is the ultimate goal of AI?
A. Perform advanced transactional processing
B. Mimic human intelligence
C. Build and execute models
D. All of the above
The ultimate goal of AI is to mimic human intelligence.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
19. Which of the following can an AI system perform?
A. Learn or understand from experience
B. Make sense of ambiguous or contradictory information
C. Use reasoning to solve problems and make decisions effectively
D. All of the above
AI systems can perform all of the above.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
2-7
Chapter 02 - Strategic Decision Making
20. What is an artificial intelligence system that mimics the evolutionary, survival-of-thefittest process to generate increasingly better solutions to a problem?
A. Intelligent system
B. Artificial intelligence
C. Neural network
D. Genetic algorithm
This is the definition of genetic algorithm.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
21. What can AI scientists learn by observing parts of the ecosystem, like ant or bee colonies,
and using hardware and software models that incorporate insect characteristics and behavior?
A. Learn how people-based systems behave
B. Predict how they will behave under a given set of circumstances
C. Improve human systems to make them more efficient and effective
D. All of the above
All of the above are learned by AI scientists.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
22. Which form of AI is widely used for environmental scanning and competitive
intelligence?
A. Genetic algorithms
B. Artificial intelligence
C. Neural network
D. Intelligent agents
Intelligent agents are widely used for environmental scanning and competitive intelligence.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
2-8
Chapter 02 - Strategic Decision Making
23. What do cargo transport systems, book distribution centers, the video game market, a flu
epidemic, and an ant colony have in common?
A. They are all expert systems and thus share some characteristics
B. They are all genetic algorithm systems and thus share some characteristics
C. They are all neural network systems and thus share some characteristics
D. They are all complex adaptive systems and thus share some characteristics
They are all complex adaptive systems and thus share some characteristics.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
24. Which of the following represents the top-down (executives to analysts) organizational
levels of information technology systems?
A. TPS, DSS, EIS
B. DSS, TPS, EIS
C. EIS, DSS, TPS
D. None of the above, it varies from organization to organization
Executive information systems, decision support systems, and transaction processing systems
is the top-down organizational levels of information technology systems.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
25. Which of the following is an incorrect enterprise view of information technology?
A. Processes are analytical for executives and transactional for analysts
B. Granularity is coarse for executives and fine for analysts
C. Processing is OLTP for executives and OLAP for analysts
D. None of the above
Processing is OLAP for executives and OLTP for analysts.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Medium
Taxonomy: Knowledge & Understanding
2-9
Chapter 02 - Strategic Decision Making
26. What type of AI system is best for making decisions including identifying patterns or
image recognition?
A. Genetic algorithms
B. Artificial intelligence
C. Neural network
D. Intelligent agents
Neural networks are best for identifying patters and image recognition
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Hard
Taxonomy: Knowledge & Understanding
27. Which industry has been relying on neural network technology for over two decades?
A. Food service
B. Hotels
C. Finance
D. Healthcare
Finance has been relying on neural network technology for over two decades.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Hard
Taxonomy: Knowledge & Understanding
28. Which type of AI system assigns values of 0 and 1 to vague or ambiguous information?
A. Genetic algorithms
B. Artificial intelligence
C. Fuzzy logic
D. Intelligent agents
Fuzzy logic systems assign values of 0 and 1 to vague and ambiguous information.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
2-10
Chapter 02 - Strategic Decision Making
29. Which system differentiates an executive information system from a decision support
system and a transaction processing system?
A. Order processing system
B. Manufacturing system
C. Stock market information system
D. Transportation system
A stock market information system is only found in an executive information system since it
is an external source of information, the rest are internal sources of information.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Hard
Taxonomy: Knowledge & Understanding
30. Which company has "The Wall of Shaygan", which is a digital dashboard that tracks 100plus IT systems on a single screen?
A. Burlington Northern and Santa Fe Railroad
B. BostonCoach
C. Verizon Communications
D. RivalWatch
Verizon Communications has The Wall of Shaygan.
AACSB: Use of Information Technology
Learning Outcome: 2.4
Level: Hard
Taxonomy: Knowledge & Understanding
2-11
Chapter 02 - Strategic Decision Making
31. Which company offers a strategic business information service using artificial intelligence
that enables organizations to track the product offering, pricing policies, and promotions of
online competitors?
A. Burlington Northern and Santa Fe Railroad
B. BostonCoach
C. Verizon Communications
D. RivalWatch
RivalWatch offers the above service.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
32. Which of the following represents a mathematical method of handling imprecise or
subjective information?
A. Genetic algorithm
B. Fuzzy logic
C. Market basket analysis
D. Statistical analysis
This is the definition of fuzzy logic.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
33. What is the process called when waiting in line at the grocery store?
A. Delivery of information
B. Order
C. Checkin
D. Checkout
Waiting in line at the grocery store is the process of checkout.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
2-12
Chapter 02 - Strategic Decision Making
34. Which of the following are types of environmental business processes?
A. Environmental protection
B. Hazardous waste management
C. Air/water/soil resource management
D. All of the above
These are all forms of environmental business processes.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
35. Which of the following are types of management information system business processes?
A. Disaster recovery procedures
B. Backup/recovery procedures
C. Service agreements
D. All of the above
These are all forms of MIS business processes.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
36. Which of the following should a business follow for success?
A. Technology choices should drive business processes
B. Business processes should drive technology choices
C. Technology choices should drive business strategies and goals
D. All of the above depending on the industry
Business processes should drive technology choices.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
2-13
Chapter 02 - Strategic Decision Making
37. What does BPR assume about the current process in the extreme?
A. Current process is irrelevant
B. Current process is broken
C. Current process must be overhauled from scratch
D. All of the above
BPR in the extreme assumes the current process is irrelevant, broken, or overhauled.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Medium
Taxonomy: Knowledge & Understanding
38. Which of the following is an example of a business process?
A. Ordering clothes from mail-order companies
B. Developing new products
C. Building a new home
D. All of the above
All of the above are examples of business processes.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
39. Examining business processes can help an organization achieve all of the following,
except:
A. Determine bottlenecks
B. Eliminate duplicate activities
C. Identify smooth running processes
D. Separate related activities
Examining business processes can help an organization combine related activities.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
2-14
Chapter 02 - Strategic Decision Making
40. Which type of model represents the current state of the operation that has been mapped,
without any specific improvements or changes to existing processes?
A. As-Is process model
B. To-Be process model
C. Continuous process model
D. Depends on the individual situation
This is the As-Is process model.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
41. Which type of model shows the results of applying change improvement opportunities to
the current process model?
A. As-Is process model
B. To-Be process model
C. Continuous process model
D. Depends on the individual situation
This is the To-Be process model.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
42. What encompasses all of the information contained within a single business process or
unit of work and its primary purpose is to support the performing of daily operational tasks?
A. Transactional information
B. Analytical information
C. Timeliness
D. Quality
This is the definition of transactional information.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
2-15
Chapter 02 - Strategic Decision Making
43. Which of the following is an example of transactional information?
A. Withdrawing cash from an ATM
B. Making an airline reservation
C. Purchasing stock
D. All of the above
All of the above are examples of transactional information
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
44. What encompasses all organizational information and its primary purpose is to support the
performing of managerial analysis tasks?
A. Transactional information
B. Analytical information
C. Timeliness
D. Quality
This is the definition of analytical information.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
45. Which of the following is an example of transactional information?
A. Trend projection
B. Sales projection
C. Purchasing stock
D. All of the above
Purchasing stock is an example of transactional information
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
2-16
Chapter 02 - Strategic Decision Making
46. Which of the following is an example of analytical information?
A. Trend projection
B. Sales projection
C. Product statistics
D. All of the above
All of the above are examples of analytical information.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Medium
Taxonomy: Knowledge & Understanding
47. What is a business process?
A. The analysis and redesign of workflow within and between enterprises
B. A standardized set of activities that accomplish as specific task, such as processing a
customer's order
C. Integrates all departments and functions throughout an organization into a single TI system
so that employees can make decisions by viewing enterprisewide information on all business
operations
D. None of the above
This is the definition of business process.
AACSB: Use of Information Technology
Learning Outcome: 2.6
Level: Easy
Taxonomy: Knowledge & Understanding
2-17
Chapter 02 - Strategic Decision Making
48. What is business process reengineering?
A. The analysis and redesign of workflow within and between enterprises
B. A standardized set of activities that accomplish as specific task, such as processing a
customer's order
C. Integrates all departments and functions throughout an organization into a single TI system
so that employees can make decisions by viewing enterprisewide information on all business
operations
D. None of the above
This is the definition of BPR.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
49. What is the purpose of business process reengineering?
A. To make all business processes best-in-class
B. To make all employees best-in-class
C. To make all business partners best-in-class
D. All of the above
The purpose of BPR is to make all business processes best-in-class.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
2-18
Chapter 02 - Strategic Decision Making
50. Which company used BPR to change its industry by implementing a mobile claims
process?
A. Saab
B. Progressive Insurance
C. Trek
D. Charles Schwab
Progressive Insurance used BPR to change its industry by implementing a mobile claims
process.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Medium
Taxonomy: Knowledge & Understanding
51. What is a business process?
A. A standardized set of activities that accomplish a specific task, such as processing a
customer's order
B. Result in a product or service that is received by an organization's external customer
C. Invisible to the external customer but essential to the effective management of the business
and include goal setting, day-to-day planning, performance feedback, rewards, and resource
allocation
D. Attempts to understand and measure the current process, and make performance
improvements accordingly.
This is the definition of business process.
AACSB: Use of Information Technology
Learning Outcome: 2.6
Level: Easy
Taxonomy: Knowledge & Understanding
2-19
Chapter 02 - Strategic Decision Making
52. What is a customer facing process?
A. A standardized set of activities that accomplish a specific task, such as processing a
customer's order
B. Result in a product or service that is received by an organization's external customer
C. Invisible to the external customer but essential to the effective management of the business
and include goal setting, day-to-day planning, performance feedback, rewards, and resource
allocation
D. Attempts to understand and measure the current process, and make performance
improvements accordingly.
This is the definition of customer facing process.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
53. What is a business facing process?
A. A standardized set of activities that accomplish a specific task, such as processing a
customer's order
B. Result in a product or service that is received by an organization's external customer
C. Invisible to the external customer but essential to the effective management of the business
and include goal setting, day-to-day planning, performance feedback, rewards, and resource
allocation
D. Attempts to understand and measure the current process, and make performance
improvements accordingly.
This is the definition of business facing process.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
2-20
Chapter 02 - Strategic Decision Making
54. What is the business process improvement model?
A. A standardized set of activities that accomplish a specific task, such as processing a
customer's order
B. Result in a product or service that is received by an organization's external customer
C. Invisible to the external customer but essential to the effective management of the business
and include goal setting, day-to-day planning, performance feedback, rewards, and resource
allocation
D. Attempts to understand and measure the current process, and make performance
improvements accordingly.
This is the definition of business process improvement model.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
55. Which of the following is a key step involved in the business process improvement
model?
A. Document As-Is process
B. Measure performance
C. Establish measures
D. All of the above
All of these are key steps involved in the business process improvement model.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
2-21
Chapter 02 - Strategic Decision Making
56. Which of the following is a business facing process?
A. Order processing
B. Sales processing
C. Billing processing
D. Budget forecasting
Budgeting is a business facing process.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
57. Which of the following is a customer facing process?
A. Sales planning
B. Order processing
C. Billing processing
D. All of the above
All of the above are customer facing processes.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
58. What is the analysis and redesign of workflow within and between enterprises?
A. Customer facing process
B. Business process reengineering
C. Business process improvement
D. Business process management
This is the definition of business process reengineering.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
2-22
Chapter 02 - Strategic Decision Making
59. What attempts to understand and measure the current process, and make performance
improvements accordingly?
A. Customer facing process
B. Business process reengineering
C. Business process improvement
D. Business process management
This is the definition of business process improvement.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
60. What is the activity of creating a detailed flow chart or process map of a work process
showing its inputs, tasks, and activities, in a structured sequence?
A. Business process modeling
B. Business process model
C. Business process management
D. Business process reengineering
This is the definition of business process modeling.
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Easy
Taxonomy: Knowledge & Understanding
61. What is a graphic description of a process, showing the sequence of process tasks, which
is developed for a specific purpose and from a selected viewpoint?
A. Business process modeling
B. Business process model
C. Business process management
D. Business process reengineering
This is the definition of business process model.
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Easy
Taxonomy: Knowledge & Understanding
2-23
Chapter 02 - Strategic Decision Making
62. Business process modeling (or mapping) is the activity of creating a detailed flow chart or
process map of a work process showing:
A. Inputs, tasks, and activities in a structured sequence
B. Resources, tasks, and inputs in a structured sequence
C. Resources, timeframes, and tasks in a structured sequence
D. Inputs, tasks, and costs in a structured sequence
Inputs, tasks, and activities in a structured sequence.
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Medium
Taxonomy: Knowledge & Understanding
63. What integrates all of an organization's business process to make individual processes
more efficient?
A. Business process modeling
B. Business process model
C. Business process management
D. Business process reengineering
This is the definition of BPM.
AACSB: Use of Information Technology
Learning Outcome: 2.10
Level: Easy
Taxonomy: Knowledge & Understanding
64. Which of the following is not a criteria to determine the importance of a process for
reengineering practitioners?
A. Is the process broken?
B. Is the process antiquated?
C. Does the process rate above best in class?
D. Is the process crucial for productivity improvement?
C should state does the process fall below best in class?
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Hard
Taxonomy: Knowledge & Understanding
2-24
Chapter 02 - Strategic Decision Making
True / False Questions
65. Purchasing stocks is an example of analytical information.
FALSE
Purchasing stocks is an example of transactional information.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
66. Transactional information is used when performing operational tasks and repetitive
decisions such as analyzing daily sales reports and production schedules to determine how
much inventory to carry.
TRUE
Transactional information is used to perform operational tasks.
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
67. A business process is the analysis and redesign of workflow within and between
enterprises.
FALSE
This is the definition for business process reengineering, not business process.
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Medium
Taxonomy: Knowledge & Understanding
2-25
Chapter 02 - Strategic Decision Making
68. A genetic algorithm is an artificial intelligence system that mimics the evolutionary,
survival-of-the-fittest process to generate increasingly better solutions to a problem.
TRUE
This is the definition of genetic algorithm.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
69. The ultimate goal of AI is the ability to build a system that can mimic human intelligence.
TRUE
This is the ultimate goal of AI.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
70. Sensitivity analysis, what-if analysis, and market basket analysis are the three quantitative
models typically used by a DSS.
FALSE
Sensitivity analysis, what-if analysis, and goal-seeking analysis are the three quantitative
models typically used by a DSS.
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Medium
Taxonomy: Knowledge & Understanding
2-26
Chapter 02 - Strategic Decision Making
71. Consolidation, drill-down, and slice-and-dice are the three most common capabilities
offered in an EIS.
TRUE
These are the three most common capabilities offered in an EIS.
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
72. A shopping bot is one of the simplest examples of an intelligent agent.
TRUE
A shopping bot is a simple example of an intelligent agent.
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
73. Business process management integrates all of an organization's business process to make
individual processes more efficient. BPM can be used to solve a single glitch or to create one
unifying system to consolidate a myriad of processes.
TRUE
This is the definition of business process management.
AACSB: Use of Information Technology
Learning Outcome: 2.10
Level: Easy
Taxonomy: Knowledge & Understanding
2-27
Chapter 02 - Strategic Decision Making
74. Strategic planning is a customer facing business process.
FALSE
Strategic planning is a business facing business process.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Medium
Taxonomy: Knowledge & Understanding
75. Product development is a customer facing business process.
TRUE
Product development is a customer facing business process.
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
76. Business process reengineering is the analysis and redesign of workflow within and
between enterprises.
TRUE
This is the definition of BPR.
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
2-28
Chapter 02 - Strategic Decision Making
Fill in the Blank Questions
77. ____________ information encompasses all of the information contained within a single
business process or unit of work and its primary purpose is to support the performing of daily
operational tasks.
Transactional
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
78. ____________ information encompasses all organizational information and its primary
purpose is to support the performing of managerial analysis tasks.
Analytical
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
79. Organizations use _______________ information to make repetitive decisions.
Transactional
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
80. Organizations use _________ information to make ad hoc decisions.
Analytical
AACSB: Use of Information Technology
Learning Outcome: 2.1
Level: Easy
Taxonomy: Knowledge & Understanding
2-29
Chapter 02 - Strategic Decision Making
81. Business process reengineering is the analysis and _________ of workflow within and
between enterprises.
Redesign
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Medium
Taxonomy: Knowledge & Understanding
82. A(n) ___________ is a simplified representation or abstraction of reality.
Model
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Easy
Taxonomy: Knowledge & Understanding
83. A decision support system models __________ to support managers and business
professionals during the decision-making process.
Information
AACSB: Use of Information Technology
Learning Outcome: 2.2
Level: Medium
Taxonomy: Knowledge & Understanding
84. ___________ analysis occurs when users change the value of one variable repeatedly and
observe the resulting changes in other variables.
Sensitivity
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Easy
Taxonomy: Knowledge & Understanding
2-30
Chapter 02 - Strategic Decision Making
85. What-if analysis checks the impact of a __________ in an assumption on the proposed
solution.
Change
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Medium
Taxonomy: Knowledge & Understanding
86. _________ seeking analysis could answer the question "How many customers are
required to purchase our new product line to increase gross profits to $5 million?"
Goal
AACSB: Use of Information Technology
Learning Outcome: 2.3
Level: Easy
Taxonomy: Knowledge & Understanding
87. __________ logic is a mathematical method of handling imprecise or subjective
information.
Fuzzy
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
88. _____________ systems are various commercial applications of artificial intelligence.
Intelligent
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
2-31
Chapter 02 - Strategic Decision Making
89. Artificial intelligence simulates ______________ intelligence such as the ability to reason
and learn.
Human
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
90. ______________ systems are computerized advisory programs that imitate the reasoning
processes of experts in solving difficult problems.
Expert
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
91. A(n) _________ agent is a special-purpose knowledge-based information system that
accomplishes specific tasks on behalf of its users.
Intelligent
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
92. A(n) _____________ bot is software that will search several retailer websites and provide
a comparison of each retailer's offerings including price and availability.
Shopping
AACSB: Use of Information Technology
Learning Outcome: 2.5
Level: Easy
Taxonomy: Knowledge & Understanding
2-32
Chapter 02 - Strategic Decision Making
93. Business process modeling (or __________) is the activity of creating a detailed flow
chart or process map of a work process showing its inputs, tasks, and activities, in a structured
sequence.
Mapping
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Easy
Taxonomy: Knowledge & Understanding
94. A business process model is a graphic description of a __________, showing the sequence
of process tasks, which is developed for a specific purpose and from a selected viewpoint.
Process
AACSB: Use of Information Technology
Learning Outcome: 2.9
Level: Easy
Taxonomy: Knowledge & Understanding
95. Business process improvement model attempts to understand and _________ the current
process, and make performance improvements accordingly.
Measure
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
96. Business process reengineering is the analysis and redesign of _________ within and
between enterprises.
Workflow
AACSB: Use of Information Technology
Learning Outcome: 2.8
Level: Easy
Taxonomy: Knowledge & Understanding
2-33
Chapter 02 - Strategic Decision Making
97. Customer facing processes result in a product or service that is received by an
organization's ___________ customer.
External
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
98. ________________ facing processes are invisible to the external customer but essential to
the effective management of the business and include goal setting, day-to-day planning,
performance feedback, rewards, and resource allocation.
Business
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
99. A business ____________ is a standardized set of activities that accomplish a specific
task, such as processing a customer's order.
Process
AACSB: Use of Information Technology
Learning Outcome: 2.6
Level: Easy
Taxonomy: Knowledge & Understanding
100. Business processes transform a set of inputs into a set of ___________ for another
person or process by using people and tools.
Outputs
AACSB: Use of Information Technology
Learning Outcome: 2.6
Level: Easy
Taxonomy: Knowledge & Understanding
2-34
Chapter 02 - Strategic Decision Making
101. Manufacturing is a ________ facing process.
Customer
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
102. Budgeting is a ___________ facing process.
Business
AACSB: Use of Information Technology
Learning Outcome: 2.7
Level: Easy
Taxonomy: Knowledge & Understanding
Essay Questions
103. Identify how an organization can use business process reengineering to improve its
business.
The purpose of BPR is to make all your processes the best-in-class. Companies frequently
strive to improve their business processes by performing tasks faster, cheaper, and better.
Companies often follow the same indirect path for doing business, not realizing there might
be a different, faster, and more direct way of doing business. BPR provides companies with a
way to find the different, more direct way of doing business, such as Progressive Insurance.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.9
Level: Hard
Taxonomy: Application and Analysis
2-35
Chapter 02 - Strategic Decision Making
104. List and define the four primary reasons for the growth of decision-making information
systems.
(1) People need to analyze large amounts of information. (2) People must make decisions
quickly. (3) People must apply sophisticated analysis techniques, such as modeling and
forecasting, to make good decisions. (4) People must protect the corporate asset of
organizational information.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.2
Level: Hard
Taxonomy: Application and Analysis
105. Describe the three capabilities commonly offered by an EIS.
(1) Consolidation involves the aggregation of information and features simple roll-ups to
complex groupings. (2) Drill-down enables users to get details, and details of details. (3)
Slice-and-dice looks at information from different perspectives.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.2
Level: Hard
Taxonomy: Application and Analysis
106. Define the ultimate goal of AI and describe a few current examples of how AI is being
used throughout industries.
At Manchester Airport in England the Hefner ASI Robot Cleaner alerts passengers to security
and nonsmoking rules while it scrubs up to 65,600 square feet of floor per day. A SmartPump
keeps drivers in their cars on cold, wet days. The SmartPump can service any automobile built
after 1987 that has been fitted with a special gas cap and a windshield-mounted transponder
that tells the robot where to insert the pump. The Miami Police Bomb squad's AI robot that is
used to locate and deactivate bombs. Matsushita's courier robot navigates hospital hallways,
delivering patient files, X-ray films, and medical supplies. FireFighter AI Robots can
extinguish flames at chemical plants and nuclear reactors with water, foam, powder, or inert
gas.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.5
Level: Hard
Taxonomy: Application and Analysis
2-36
Chapter 02 - Strategic Decision Making
107. List and define the four most common categories of AI.
(1) Expert systems are computerized advisory programs that imitate the reasoning processes
of experts in solving difficult problems. (2) Neural Networks attempt to emulate the way the
human brain works. (3) Genetic algorithm - system that mimics the evolutionary, survival-ofthe-fittest process to generate increasingly better solutions to a problem. (4) Intelligent agents
are special-purposed knowledge-based information system that accomplishes specific tasks on
behalf of its users.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.5
Level: Hard
Taxonomy: Application and Analysis
108. Describe business processes and their importance to an organization.
A business process is a standardized set of activities that accomplish a specific task, such as
processing a customer's order. Business processes transform a set of inputs into a set of
outputs (goods or services) for another person or process by using people and tools. Without
processes organizations would not be able to complete activities.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.6
Level: Hard
Taxonomy: Application and Analysis
109. Differentiate between customer facing processes and business facing processes.
Customer facing processes result in a product or service that is received by an organization's
external customer. Business facing processes are invisible to the external customer but
essential to the effective management of the business and include goal setting, day-to-day
planning, performance feedback, rewards, and resource allocation.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.7
Level: Hard
Taxonomy: Application and Analysis
2-37
Chapter 02 - Strategic Decision Making
110. Compare the business process improvement model and business process reengineering.
Many organizations began business process improvement with a business improvement
model. A business process improvement model attempts to understand and measure the
current process, and make performance improvements accordingly. Business process
reengineering (BPR) is the analysis and redesign of workflow within and between enterprises.
BPR relies on a different school of thought than business process improvement. In the
extreme, BPR assumes the current process is irrelevant, does not work, or is broken and must
be overhauled from scratch. Such a clean slate enables business process designers to
disassociate themselves from today's process and focus on a new process. It is like the
designers projecting themselves into the future and asking: What should the process look like?
What do customers want it to look like? What do other employees want it to look like? How
do best-in-class companies do it? How can new technology facilitate the process?
AACSB: Reflective Thinking Skills
Learning Outcome: 2.8
Level: Hard
Taxonomy: Application and Analysis
111. Describe the importance of business process modeling (or mapping) and business
process models.
Business process modeling (or mapping) is the activity of creating a detailed flow chart or
process map of a work process showing its inputs, tasks, and activities, in a structured
sequence. A business process model is a graphic description of a process, showing the
sequence of process tasks, which is developed for a specific purpose and from a selected
viewpoint. A set of one or more process models details the many functions of a system or
subject area with graphics and text and its purpose is to: expose process detail gradually and
in a controlled manner; encourage conciseness and accuracy in describing the process model;
focus attention on the process model interfaces; provide a powerful process analysis and
consistent design vocabulary.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.9
Level: Hard
Taxonomy: Application and Analysis
2-38
Chapter 02 - Strategic Decision Making
112. Explain business process management along with the reason for its importance to an
organization.
The latest area to discover the power of technology in automating and reengineering business
process is business process management. Business process management (BPM) integrates all
of an organization's business process to make individual processes more efficient. BPM can
be used to solve a single glitch or to create one unifying system to consolidate a myriad of
processes. Many organizations are unhappy with their current mix of software applications
and dealing with business processes that are subject to constant change. These organizations
are turning to BPM systems that can flexibly automate their processes and glue their
enterprise applications together.
AACSB: Reflective Thinking Skills
Learning Outcome: 2.10
Level: Hard
Taxonomy: Application and Analysis
2-39