1. Axioms-formalization of common sense
if the Decision -maker accepts the axioms => result of the analysis - how
she/he should behave if the decision is to be made in a rational way
The analysis is normative or perspective (which alternative should be
chosen if the d-m acts consistently with his/her stated preferences
the main role of analysis is to enable the d-m to gain an incased
understanding of his/her d-problem. Analysis can't be worthless, because
d-m.s with experience they gain can suggest other approaches to the
problem; lead to a greater common understanding; lead to complete
reappraisal of the nature of the problem => reduce alternatives. The
method -series of stages: d-m always can return to an earlier stage/change
the definition of the pr.
objective - indication of the preferred direction of movement (maximise the
exposure of a tv advertisement)
attribute is used to measure performance in relation to an objective.
(number of people who was asked who recall seeing the advertisement)
proxy attribute - not directly related to the objective (staff turnover-obj.:
pr.attr.-how well they are achieving their objective of maximising job
satisfaction for their staff)
valueof the course of action– whendecision involves no element of risk and
unsertainty

2. utility – where the decision involves risk and unsertainty
SMART method (office location problem): simple, transparency, d-m can
easyly apply the method and understand its recommendations. (-) not
always capture all details and complexities;
SMART (Specific, measurable,attainable,relevant, time-bound)– excellent
method for illuminating the important aspects of the problem and how
they relate to each other.

3. What are the main stages in the SMART analysis? Describe at lease two
stages.
1.Identify the d-m/d-ms (ex-busin.owner)
2.Identify the alternative courses of action (ex-diff.offices the owner can
chose)
3.Identify the attributes that are relevant to the d-problem (ex-
rent,size,quality).value tree cn be useful here.There is no restriction on the
number of attributes that he d-m can initially specify
4.For each attribute, assign values to measure the performance of the
alternatives on that attribute (ex- how well do the offices compare when
considering the quality of the working conditions they offer?). we have to
trade off the cost agains the benefits (the least secure and most
uncomfortable to make). We need to ignore the costs untill the endof our
analysis and for the moment, simply concentrate on the benefit attributes.
5.Determine a weight for each attribute – how important the atribute is to
the d-m
6.for each alternative, take a weighted average(средн.взвеш) of the values
assigned to that alternative (ex-how well an office performs over all the
attributes)
7.make a providional (предвар.условн) decision
8.Perform sensitivity analysis – to see how robust(тверд,крепк) the
decision is to changes in the figures supplied by the d-m
What are the criteria, suggested by Keeney and Raiffa to judge whether a
value tree is accurate and useful representation if the decision maker's
concern? Describle al least two criteria.

4. 1.Completeness – all the attributes that are of concern to the d-m will have
been included
2.operationality – all of the lowest-level attributes in the tree are specific
for the d-m to evaluate and compare them for the diff.options(if
necess.ude the proxy attribute)
3.decomposability(разложимость)-attractiveness of an option in one
attribute can be assessed independently of its attractiveness on other
attributes. Dec..means that d-m can focus on how well the options perform
on each attribute separately, unencumbered by the need to thing at the
same time about their performance on other attributes.
4.Absence of redundancy(избыточность) – no duplicated attributes
5. minimum size – otherwise any meaningful analysis may be impossible.
Attributes should not be decomposed beyond the level where they can be
evaluated
smtms it is necessary to find compromises! to make the tree operational
you should increase its size
What are the conditions under which decisions are made?
a. Certainty is the condition under which individuals are fully informed
about a problem, alternative solutions are obvious, and the likely results of
each solution are clear. The condition of certainty at least allows
anticipation (if not control) of events and their outcomes. This condition
means that both the problem and alternative solutions are known and well
defined.

5. b. Uncertainty is the condition under which an individual doesn’t have the
necessary information to assign probabilities to the outcomes of alternative
solutions. The individual may not be able to define the problem, much less
identify alternative solutions and possible outcomes. Uncertainty often
suggests that the problem and the alternative solutions are both
ambiguous and highly unusual.
c. Risk is the condition under which individuals can define a problem,
specify the probability of certain events, identify alternative solutions, and
state the probability of each solution leading to the desired results. Risk
generally means that the problem and the alternative solutions fall
somewhere between the extremes of being relatively common and well-
defined and being unusual and ambiguous.
What are the seven phases of decision making in the rational model?
Describe at lease two phases
1. Define and diagnose the problem
notising,interpreting,incorporating
2.Set goals
The setting of objectives in respect of problem resolution is essential.
Managers must know exactly what they are trying to achieve before they
can formulate appropriate courses of action.
3.Search for alternative solutions
There is rarely just one solution to a problem, nor should management be
about just picking one and living with it. The optimum method should be to
generate a number of different ways of resolving the problems.

6. 4.Compare and evaluate alternative solutions
Once a number of possible solutions have been found, managers must
evaluate each solution, compare them and assess the likely consequences
of each solution before choosing the "best".
5.Choose among alternative solutions
Often the consequences of a solution to a problem are wide reaching. This
step is particularly difficult when the problem is complex and involves high
degrees of uncertainty (and therefore risk).
6.Implement the solution selected
Once the decision has been approved, it needs to be communicated
properly to all concerned. Implementation then involves the management
activities of organising, allocating resources and directing.
7.Follow-up and control
Continual monitoring of the solution that has been implemented has to
take place and progress assessed against the desired objectives. Sometimes
the problem has to be redefined and/or corrective action taken.