In this section, we will focus on practical exercises designed to reinforce the concepts learned throughout the Decision Making course. These exercises will cover various scenarios and require you to apply different decision-making tools and techniques. Each exercise will be followed by a solution and feedback to help you understand the correct approach and common pitfalls.

You are the manager of a small retail store. Recently, a new competitor has opened a store nearby, and you need to decide how to respond to this new competition.

Conduct a SWOT analysis to identify your store's strengths, weaknesses, opportunities, and threats.

• Common Mistake: Overlooking internal factors (strengths and weaknesses) and focusing only on external factors (opportunities and threats).
• Tip: Ensure a balanced analysis by considering both internal and external factors.

You need to choose a new software for project management. The options are Software A, Software B, and Software C. The criteria for selection are cost, ease of use, features, and customer support.

Create a decision matrix to evaluate the options based on the given criteria.

• Common Mistake: Not weighting the criteria according to their importance.
• Tip: Assign weights to each criterion based on their relevance to ensure a more accurate evaluation.

You are considering expanding your business to a new location. The decision depends on the potential market size and the cost of expansion.

Create a decision tree to evaluate the potential outcomes and make a decision.

1. Decision Node: Expand or Not Expand
   • Expand
     • Market Size Node: Large Market
       • Outcome: High Profit (Probability: 0.6, Value: $200,000)
       • Outcome: Low Profit (Probability: 0.4, Value: $50,000)
     • Market Size Node: Small Market
       • Outcome: Break Even (Probability: 0.7, Value: $0)
       • Outcome: Loss (Probability: 0.3, Value: -$100,000)
   • Not Expand
     • Outcome: No Change (Value: $0)

• Common Mistake: Ignoring the probabilities of different outcomes.
• Tip: Always consider the likelihood of each outcome to make a more informed decision.

Your company is considering implementing a new training program for employees. The cost of the program is $50,000, and the expected benefits include increased productivity worth $70,000 and reduced turnover costs worth $20,000.

Perform a cost-benefit analysis to determine if the training program is a good investment.

Net Benefit: $90,000 - $50,000 = $40,000

• Common Mistake: Not considering all potential costs and benefits.
• Tip: Ensure a comprehensive analysis by including both direct and indirect costs and benefits.

These practical exercises are designed to help you apply the decision-making tools and techniques learned in this course. By practicing these exercises, you will develop a stronger understanding of how to make informed decisions in various scenarios. Remember to consider all relevant factors, weigh your options carefully, and use the appropriate tools to guide your decision-making process.