Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Decision-making - Types and Process

A manager of Kaveri Foods compares three expansion options using a weighted score. Criteria weights: cost 50%, risk 30%, speed 20%. Scores out of 10 for Option P are cost 6, risk 8, speed 5. Option Q: cost 8, risk 5, speed 6. Option R: cost 7, risk 7, speed 7. Which option should be selected?

Option R should be selected. Its weighted score is 7.0 (0.5×7 + 0.3×7 + 0.2×7), higher than Option Q at 6.7 and Option P at 6.4, so it best meets the weighted criteria.

  1. AOption P
  2. BOption QCorrect
  3. COption R
  4. DOptions Q and R tie

Explanation

P = 0.5×6+0.3×8+0.2×5 = 3+2.4+1 = 6.4. Q = 0.5×8+0.3×5+0.2×6 = 4+1.5+1.2 = 6.7. R = 0.5×7+0.3×7+0.2×7 = 7.0. Highest is R at 7.0, so Q is wrong; the key is R.

Did you get it right without looking?

One question tells you little. A timed set on Decision-making - Types and Process shows your real accuracy, how long you take and where you lose marks.

Practise Decision-making - Types and ProcessFree diagnostic mock

More Decision-making - Types and Process questions