Language practice and Speaking

9. Answer the following questions for general understanding

l. What is according to the author natural logic of a manager?

2. What would an ideal decision maker do?

3. When must decision maker rely on models?

4. What is a model in general?

5. What types of predictive models are mentioned in the text?

10. Define the following in English

a) human limitations; b) sound decision; c) once-and-for all choice;

d) legal relationships; e) scientific relationships; f) probabilistic model.

11. Answer the following questions judging on your own experience

a) What are the alternative courses of action?

b) What are the variables under the decision maker's control?

c) What constraints limit the choice of options?

d) What are the consequences of each alternative action?

e) Should conditions change, how would this affect outcomes?

f) If outcomes are uncertain, what is the likelihood of each?

g) Can better information be acquired to predict outcomes?

Vocabulary (часть 3)

12. Remember the following words and word combinations by heart

1. to encounter – встречаться, сталкиваться

2. quantifiable – измеримый

3. analogously – аналогично

4. enumeration – перечисление

5. to settle on smth. – остановиться на чем-либо

6. painstaking – кропотливый

7. optimal decision – оптимальное решение

8. to tackle – блокировать, справиться

9. do not come out of thin air – не берутся «с потолка»

10. sensitivity analysis – анализ чувствительности

11. to alter – изменять (-ся)

Text C

13. Read and translate the text ( part 3) management: six basic steps in decision making Step 5: Make a Choice

In the vast majority of decisions we may encounter, the objectives and outcomes are directly quantifiable. Thus, the private firm, such as the steelmaker, can compute the profit results of alternative price and output plans. Analogously, a government decision maker may know the computed net benefits (benefits minus costs) of different program options. Given enough time, the decision maker could determine a preferred course of action by enumeration, that is, testing a number of alternatives and selecting the one that best meets the objective. This is fine for decisions involving a small number of choices, but it is impractical for more complex problems.

The decision maker need not rely on the painstaking method of enumeration to solve such problems. A variety of methods can identify and cut directly to the best or optimal decision. These methods rely to varying extents on marginal analysis, linear programming, decision trees, and benefit-cost analysis. These approaches are important not only for computing optimal decisions but for checking why they are optimal.

Step 6: Perform Sensitivity Analysis

In tackling and solving a decision problem, it is important to understand and be able to explain to others the «why» of your decision. The solution, after all, did not come out of thin air. It depended on your stated objectives, the way you structured the problem (including the set of options you considered), and your method of predicting outcomes. Thus, sensitivity analysis considers how an optimal decision would change if key economic facts or conditions were altered.

Sensitivity analysis is useful in:

(1) providing insight into the key features of the problem that affect the decision;

(2) tracing the effects of changes in variables about which the manager may be uncertain; and

(3) generating solutions in cases of recurring decisions under slightly modified conditions.

Once the decision maker has put the problem in context, formalized the objectives, and identified available alternatives, he or she must go about finding a preferred course of action.