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Basing Decisions on Assumptions

Scenario:

As a recently promoted manager, you are learning about the importance of basing important decisions on good assumptions; you thought you would practice by thinking through some major decisions that have been made and what the assumptions that the decisions were based upon must have been.

Find two situations in which decisions were made. For each situation, describe the likely assumptions that were made prior to each decision.

Do you feel the decision was a good one? Why or why not?

Solution Preview

A manager often bases decisions upon assumptions. In the supermarket industry buyers are frequently presented new products and line extensions. It would be wrong and bad for business to make buying decisions for a chain of stores based on personal likes and dislikes. But it would also be wrong to make the decision of which items to stock based on assumptions. There is enough data available in the marketplace to determine if another line of cat food is needed, for instance, based on current cat food sales, market trends, and the economic situation. A buyer does not need to rely on his assumption that another line of cat food is a good idea because he has seen a few cats in the last two days as he drove home. Going on a hunch can be financial nightmare as money and time are invested in new products without facts ...

Solution Summary

This solution outlines decisions that have been made and the likely assumptions that were made prior to each decision. It analyzes the idea that important decisions can be made on good assumptions.Next, the solution discusses if the decisions were good or not based on the assumptions. It includes examples to illustrate the solution.

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