November 17, 2013

Decision making XAT

Cetking XAT Decision Making WorkshopsCetking demo videos

Workshop 1 – Introduction to Decision Making
Workshop 2 – Cetking 4 step strategy and common traps
Workshop 3 – Business decisions based questions
Workshop 4 – Business decision based Long decision making questions
Workshop 5 – Logic Based decision making workshop
Workshop 6 – Ethics based decision making
Workshop 7 – Quant based decision making

From 2012 onwards XAT had dedicated section on decision making…
With 25 questions out of 91 based on decision making..

Sample questions given below.

Each question presents a situation and asks you to make a judgment regarding that particular circumstance. Answer each one solely on the basis of the information given.

Q1. The school principal has received complaints from parents about bullying in the school yard during recess. He wants to investigate and end this situation as soon as possible, so he has asked the recess aides to watch closely. Which situation should the recess aides report to the principal?

a. A girl is sitting glumly on a bench reading a book and not interacting with her peers.
b. Four girls are surrounding another girl and seem to have possession of her backpack.
c. Two boys are playing a one-on-one game of basketball and are arguing over the last basket scored.
d. Three boys are huddled over a handheld video game, which isn’t supposed to be on school grounds.

Q2. Dr. Miller has a busy pediatric dentistry practice and she needs a skilled, reliable hygienist to keep things running smoothly. The last two people she hired were recommended by top dentists in the area,
but they each lasted less than one month. She is now in desperate need of a hygienist who can competently handle the specific challenges of her practice. Which one of the following candidates should Dr. Miller consider most seriously?

a. Marilyn has been a hygienist for fifteen years, and her current employer, who is about to retire, says she is the best in the business. The clientele she has worked with consists of some of the wealthiest and most powerful citizens in the county.
b. Lindy recently graduated at the top of her class from one of the best dental hygiene programs in the state. Prior to becoming a dental hygienist, Lindy spent two years working in a day care center.
c. James has worked as a dental hygienist for three years in a public health clinic. He is very interested in securing a position in a private dental office.
d. Kathy is an experienced and highly recommended dental hygienist who is also finishing up a degree in early childhood education, which she hopes will get her a job as a preschool teacher. She is eager to find a
job in a pediatric practice, since she has always wanted to work with children.

Q3. Mrs. Jansen recently moved to Arizona. She wants to fill her new backyard with flowering plants.
Although she is an experienced gardener, she isn’t very well-versed in what plants will do well in the Arizona climate. Also, there is a big tree in her backyard making for shady conditions and she isn’t sure what plants will thrive without much direct sunlight. Her favorite gardening catalog offers several backyard seed packages. Which one should Mrs. Jansen choose?

a. The Rainbow Collection is ideal for Northeast gardens. It includes a variety of colorful perennials that thrive in cool, moist conditions.
b. The Greenhouse Collection will blossom year after year if planted in brightly lit locations and watered regularly.
c. The Treehouse Collection will provide lush green plants with delicate colorful flowers that thrive in shady and partially shady locations.
d. The Oasis Collection includes a variety of perennials that thrive in dry climates and bright sunlight.

Q4. Eileen is planning a special birthday dinner for her husband’s 35th birthday. She wants the evening to be memorable, but her husband is a simple man who would rather be in jeans at a baseball game than in
a suit at a fancy restaurant. Which restaurant below should Eileen choose?

a. Alfredo’s offers fine Italian cuisine and an elegant Tuscan dcor. Patrons will feel as though they’ve spent the evening in a luxurious Italian villa.
b. Pancho’s Mexican Buffet is an all-you-can eat family style smorgasbord with the best tacos in town.
c. The Parisian Bistro is a four-star French restaurant where guests are treated like royalty. Chef Dilbert Olay is famous for his beef bourguignon.
d. Marty’s serves delicious, hearty meals in a charming setting reminiscent of a baseball clubhouse in honor of the owner, Marty Lester, a former major league baseball all star.

Q5. Mark is working with a realtor to find a location for the toy store he plans to open in his town. He is looking for a place that is either in, or not too far from, the center of town and one that would attract the
right kind of foot traffic. Which of the following locations should Mark’s realtor call to his attention?

a. a storefront in a new high-rise building near the train station in the center of town whose occupants are mainly young, childless professionals who use the train to commute to their offices each day
b. a little shop three blocks away from the town’s main street, located across the street from an elementary school and next door to an ice cream store
c. a stand-alone storefront on a quiet residential street ten blocks away from the town’s center
d. a storefront in a small strip mall located on the outskirts of town that is also occupied by a pharmacy and a dry cleaner

Answer Keys for Question Set 1:

Q1 b
Q2 b
Q3 c
Q4 d
Q5 b

Decision Making Question Set – 2

Q6. Rita, an accomplished pastry chef who is well known for her artistic and exquisite wedding cakes, opened a bakery one year ago and is surprised that business has been so slow. A consultant she hired to conduct market research has reported that the local population doesn’t think of her shop as one they would visit on a daily basis but rather a place they’d visit if they were celebrating a special occasion. Which of the following strategies should Rita employ to increase her daily business?

a. making coupons available that entitle the coupon holder to receive a 25% discount on wedding, anniversary, or birthday cakes
b. exhibiting at the next Bridal Expo and having pieces of one of her wedding cakes available for tasting
c. placing a series of ads in the local newspaper that advertise the wide array of breads, muffins, and cookies offered at her shop
d. moving the bakery to the other side of town

Q7. Mrs. Carson took a taxi to meet her three friends for lunch. They were waiting for her outside the restaurant when she pulled up in the car. She was so excited to see her friends that she left her tote bag in the taxi. As the taxi pulled away, she and her friends took notice of the license plate number so they would be able to identify the car when they called the taxi company. The four license plate numbers below represent what each of the four women thinks she saw. Which one is most likely the license plate number of the taxi?

a. JXK 12L
b. JYK 12L
c. JXK 12I
d. JXX 12L

Q8. Zachary has invited his three buddies over to watch the basketball game on his wide-screen television. They are all hungry, but no one wants to leave to get food. Just as they are arguing about who should make the food run, a commercial comes on for a local pizzeria that delivers. The phone number flashes on the screen briefly and they all try to remember it. By the time Zachary grabs a pen and paper, each of them recollects a different number. Which of the numbers is most likely the telephone number of the pizzeria?

a. 995-9266
b. 995-9336
c. 995-9268
d. 995-8266

Answer Q9. solely on the basis of the following information.
When a new employee is hired at the law firm, a human resources representative should take the following steps on the employee’s first day of work.

1. Greet the employee in the reception area and offer him coffee or tea.
2. Take the employee back to the human resources office and have him complete a general information questionnaire, a healthcare insurance form, and a tax form.
3. Take a photograph of the employee for his identification card.
4. Issue the employee a temporary identification card.
5. Walk the employee to the department in which he will be working and introduce him to his colleagues.
6. Bring the employee to his office or cubicle.

Q9. It is Kate Milford’s first day of work as a paralegal at the law firm of Jasper, Jenkins & Mead. Taylor Franklin, the human resources manager, greets Kate in the reception area and gets her a cup of tea as they walk back to the human resources office. Taylor asks Kate to sit at a table and fill out three forms. While Kate completes the forms, Taylor checks her messages and asks her secretary to confirm a meeting she has for later that morning. Taylor then takes a photograph of Kate that will be used on her company identification card. As Taylor walks Kate over to the paralegal department, she tells her that the identification card should be ready in a couple of days. Taylor introduces Kate to her new colleagues, who
all greet her quite warmly, and then shows her to her new cubicle, jots down her phone extension, and says that Kate should call her if she has any questions at all. Taylor Franklin’s actions were

a. proper, because she is the human resources manager and knows how to greet a new employee.
b. improper, because she did not spend enough time making sure that Kate was comfortable.
c. proper, because she told Kate that she should feel free to call her if she had questions.
d. improper, because she did not issue a temporary identification card.

Answer Q10. solely on the basis of the following information.
When a client comes in looking for a new home, the real estate agency requires its realtors to follow some specific guidelines during the first meeting. The realtor is expected to do the following.

1. Be sure the client is comfortably seated and has been offered a drink.
2. Get background information on the client’s current living circumstances.
3. Ask the client what qualities she is looking for in a house.
4. Discuss the price range that the client has in mind and determine whether or not she has been preapproved for a mortgage.
5. With the computer screen facing the client, browse the current house listings and print out information for any of the houses that the client would like to see in person.
6. Ask the client if she is available to look at some of the houses immediately, and if not, make an appointment to show her the houses as soon as possible.

Q10. Marcus and Cynthia Howard arrive at Smithfield Realty for their appointment with realtor Patricia Russo. Ms. Russo leads the couple to a comfortable sofa in her office and gets them both a cup of coffee.
Ms. Russo asks Marcus and Cynthia what kind of house they are looking for and it becomes clear that they have very particular ideas. Most importantly, they are looking for a house that is in walking distance of the
train station. They also want a newer house, preferably one built after 1970. They must have four bedrooms and central air conditioning. A finished basement would be a welcome bonus. Ms. Russo
discusses price range with her new clients, and before the discussion is finished, they hand her a letter from their mortgage company that indicates that they have been pre approved for a mortgage. Together, the three of them browse the listings on Ms. Russo’s computer screen and information is printed out for four houses that the couple would like to see. Ms. Russo determines that Marcus and Cynthia are free for another few hours, so the three of them head to her car to begin looking at potential new homes.
Based on the company guidelines, the actions taken by Ms. Russo were

a. improper, because she was only able to find four houses that Marcus and Cynthia wanted to see.
b. proper, because she obtained all the necessary information from the clients.
c. improper, because she failed to get any details about the client’s current living circumstances.
d. proper, because she didn’t try to persuade the clients to consider houses that didn’t meet all of their criteria.

Keys for Question Set 2:

Q6. c
Q7. a
Q8. a
Q9. d
Q10. C

Decision Making Question Set 3

Read the following and choose the best alternative:

Decisions are often,risky in the sense that their outcomes are not known with certainty.Presented with a choice between a risky prospect that offers a 50 percent chance to win $200(otherwise nothing) and an alternative of receiving $100 for sure, most people prefer the sure gain over the gamble, although the two prospects have the same expected value. (Expected value is the sum of possible outcomes weighted by their probability of occurrence.) Preference for a sure outcome over risky prospect of equal expected value is called risk averse ; indeed, people tend to be risk averse when choosing between prospects with positive outcomes. The tendency towards risk aversion can be explained by the notion of diminishing sensitivity, fir st formalized by Daniel Bernoulli in 1738. Just as the impact of a candle is greater when it is brought into a dark room than into a room that is well lit so, suggested Ber noulli, the utility resulting from a small increase in wealth will be inversely proportional to the amount of wealth already in one s possession. It has since been assumed that people have a subjective utility function, and that preferences should be described using expected utility instead of expected value. According to expected utility, the worth of a gamble offering a 50 percent chance to win $200 (otherwise nothing) is 0.50 *u($200), where u is the person’s concave utility function. (A function is concave or convex if a line joining two points on the curve lies entirely below or above the curves, respectively). Itfollows from a concave function that the subjective value attached to a gain of $100 is more than50 percent of the value attached to a gain of $200, which entails preference for the sure $100 gain and, hence, risk aversion.

Consider now a choice between losses. When asked to choose between a prospect that offers a 50 percent chance to lose $200 (otherwise nothing) and the alternative of losing $100 for sure, most people prefer to take an even chance at losing $200 or nothing over a sure $100 loss. This is because diminishing sensitivity applies to negative as well as to positive outcomes: the impact of an initial $100 loss is greater than that of the next $100. This results in a convex function for losses and a preference for risky prospects over sure outcomes of equal expected value, called risk seeking. With the exception of prospects that involve very small probabilities, risk aversion is generally observed in choices involving gains, whereas risk seeking tends to hold in choices involving losses.

Based on above passage, analyse the decision situations faced by three persons: Babu, Babitha and Bablu.

Q11. Suppose instant and further utility of each unit of gain is same for Babu. Babu has decided to play as many times as possible, before he dies. He expected to live for another 50 years. A game does not last more than ten seconds. Babu is confused which theory to trust for making decision and seeks help of a renowned decision making consultant: Roy Associates. What should be Roy Associates advice to Babu?

A. Babu can decide on the basis of Expected Value hypothesis.
B. Babu should decide on the basis of Expected Utility hypothesis.
C. Mr. Babu, I m redundant.
D. A and B
E. A, B and C

Q12. Babitha played a game wherein she had three options with following probalilities: 0.4, 0.5 and 0.8. The gains from three outcomes are likely to be $100, $80 and $50. An expert has pointed out that Babitha is a risk taking person. According to expected utility hypothesis, which optionis Babitha most likely to favour?

A. First
B. Second
C. Third
D. Babitha would be indifferent to all three actions.
E. None of the above.

Q13. Continuing with previous question, suppose Babitha can only play one more game, which theory would help in arriving at better decision?

A. Expected Value.
B. Expected Utility.
C. Both theories will give same results.
D. None of the two.
E. Data is insufficient to answer the question.

Q14. Bablu had four options with probalility of 0.1, 0.25, 0.5 and 1. The gains associated with each options are: $1000, $400, $200 and $100 respectively. Bablu chose the first option. As per expected value hypothesis:

A. Bablu is risk taking.
B. Expected value function is concave.
C. Expected value function is convex.
D. It does not matter which option should Babu choose.
E. None of above.


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