List of top Decision Making Questions on Analytical Decision Making asked in XAT

Arya, a graduate from a reputable institute, got a job in an IT company but became bored after a year. Her best friend S, who worked at the same company, joined a top-tier B-school for an MBA, which tempted Arya to pursue the same path. Her friend assured her that an MBA would boost her career prospects and salary. Arya started preparing for an MBA while continuing her job, but the challenge of balancing preparation with work made her consider leaving the job.

There’s a community 30 km outside of the main city. Mr. S started a grocery business in the community after winning the bid by offering way above the rent initially drafted by the community council. The community council, led by Mr. D, agreed to the offer with a performance review every three years. Mr. S also agreed to provide an additional 15% of his grocery sales to the council, banking on the prospect of selling in higher volumes. After setting up his business, Mr. S noticed that SUV owners in the community usually bought goods in bulk from the city once a week and used his store primarily for daily necessities and occasional big purchases like mixer grinders.

Tech predictions often fail not because of wrong models or a lack of imagination, but due to lack of humility in admitting our uncertainty about the future.( Maximum 250 words )

Prof. Vijya, the chairperson of the FAC, is tasked with determining the appropriate course of action.

The incident began with an allegation that Biswajit, a final year student, had inflated his grades on the bio-data submitted to potential employers. In response, the President of the SPC requested that the FAC bar Biswajit from the campus recruitment process.

During the FAC meeting to discuss the matter, a professor asserted that Biswajit should have the opportunity to defend himself. However, when Biswajit was brought into the meeting, the situation escalated. He alleged that other students, who he claimed were close to the President of the SPC, had also misrepresented their grades to secure jobs and had faced no consequences. Furthermore, Biswajit contended that his own grades had been deliberately manipulated by someone else in his bio-data.

These counter-allegations created confusion among the FAC members, leading to the decision to adjourn the meeting. Prof. Vijya is now left to decide the next steps in this multifaceted issue. The core of the problem involves not only the initial accusation against Biswajit but also his serious claims of favoritism and data tampering within the student placement process.

Read the following caselet and choose the best alternative:

It was the end of performance review cycle for the year 2012 when you asked your subordinates about any problems they were facing. Natrajan told you that an important member of his team, Vardarajan, who had also won the best performance award for the year 2011, was not taking interest in work. Despite Natrajan's counseling, no change was noticed in Vardarajan; rather his attitude deteriorated. You had also received such information from other employees. You had not interfered, hoping that Natrajan, an experienced hand, would be able to solve the problem. But now that Natrajan himself brought this to your notice, you decided to call Vardarajan and counsel him.

Marathe is a Vice President in a construction equipment company in the city of Mumbai. One day, his subordinate Bhonsle requested that Kale, a project manager, be transferred to the Chennai office from the Mumbai office. In Chennai, Kale would work alone as a researcher. Bhonsle gave the following reasons for his request: "Kale is known to frequently fight with his colleagues. Kale is conscientious and dedicated only when working alone. He is friendly with seniors, but refuses to work with colleagues in a team. He cannot accept criticism and feels hostile and rejected. He is over-bearing and is generally a bad influence on the team."

Marathe called upon Gore, another project manager, and sought further information on Kale. Gore recalled that a former colleague, Lakhote (who was also Kale's former boss) had made a few remarks on his appraisal report about Kale. In his opinion, Kale was not fit for further promotion as he was emotionally unstable to work in groups though he had seven years of work experience. Lakhote had described Kale as too authoritative to work under anyone. Lakhote had further told Gore that Kale had an ailing wife, and an old mother, who does not want to stay with his wife.

Some environmentalists, tired of waiting for ‘green economics’ to catch up with society at large, have adopted their own strategies for tipping the financial calculation in favour of the land. In the forest surrounding Vancouver, where trees are being felled for paper to print philosophy books, groups have used metal spikes hidden in trees to prevent chainsaws from operating safely, pushing up the cost of harvesting trees. In Phoenix, Arizona, where mountain nature reserves have been encroached on by new houses, hooded vigilantes have burnt down the new residences. The arsonists, according to the local paper, pray before they burn down a house that no one will get hurt, thinking primarily of the firefighters; the new houses are burned while still empty. “We don’t pray for ourselves not to get caught – that’s God’s will,” one is quoted as saying.
As per the activists, all aforementioned activities seem clearly very principled. But is it ethical?

Dr. Puneet worried about the test results of his patient, Ms. Benita. Ms. Benita was an old rich widow with no dependents. The results indicate that Ms. Benita has the potentially fatal Lymphangioleiomyomatosis (LAM) disease. LAM is rare and difficult to diagnose. People with LAM often need oxygen and lung transplants as the disease continues its course. According to the test results, Ms. Benita might have got it.
Dr. Puneet explained the situation to Ms. Benita carefully. Without naming the disease, he explained that the disease was progressive and would need treatment using drugs which were still at the experimental stage. Even then, the chance of success was not too bright. If the treatment was unsuccessful, then they would have to get ready for a lung transplant. The lung transplant itself was a risky course of treatment. Even if successful, she would require constant medical support and treatment.
Ms. Benita looked blank. She asks Dr. Puneet for his advice about the course of action. He nods gravely, “I’m afraid, Ms. Benita, I think there is only one course we can take.”
What should be Dr. Puneet’s advice?

Read the following case and choose the best alternative.

Ranjan Tuglák, the youngest cabinet minister of the newly elected coalition, glanced through the notes prepared by his secretary regarding the recent controversies on racket, the most popular game of the country. While International Racket Association (IRC) has agreed to implement Drug Testing Code (DTC) promoted by World Athletic and Gamer Federation, Racket Club which controls the entire racket related activities (unlike any other sports and games of the country) had some reservations regarding the initiative. Majority of the citizens waited for the international competitions eagerly and were fanatical about their country’s participation in them. As a result of the popularity of the game, 70% of the total revenue associated with the game originates from the country. Hence Racket Club has high bargaining power with IRC and can change any decision that is not aligned with its interests. Three most popular and senior players, including the captain, are against the application of DTC citing security reasons. A decision against the interests of these players may result in law and order problems throughout the country. Other players support the decision of their senior colleagues and if Racket Club refuses to agree, players may support Counter Racket Club, a new national level initiative. Counter Racket Club may threaten the monopoly of Racket Club, if it succeeds to attract some popular racket players.

Ranjan’s father had been forced to resign from politics due to alleged corruption charges. Ranjan had completed his entire education from abroad before returning to join politics. He is a great soccer player and has major reservations against racket. According to him, racket has negative influence on the country’s youth and diverts their attention from productive work. He also considers drug testing as an essential feature for any sports and games across the world. As the new cabinet minister for Youth and Sports he needs to take some important decisions on this controversial issue.

Read the following case and choose the best alternative – Guruji's guidance

Bhola, an avid nature lover, wanted to be an entrepreneur. He dreamt of establishing a chain of huts in Chaptur region to cater to tourists, who came attracted by the beauty and splendour of the Himalayas.

However, he was appalled by current degradation of the Himalayan environment. He remembered the early times when everything was so green, clean and peaceful. Now, greenery was replaced by buildings, peace was shattered by honking of vehicles and flocking of tourists, and cleanliness was replaced by heaps of plastics.

Bhola had a strong sense of right and wrong. On speaking to few locals about the issue, he realized that the locals were aware of these issues. However, they pointed out the benefits of development: pucca houses for locals; higher disposable income and with that, ability to send their children to better schools and colleges, better road connectivity, and access to latest technology in agriculture. Most locals wanted the development to continue.

Saddened by the lack of support from the locals, Bhola took up the issue with the government. He met the chief minister of the state to find out if government could regulate the developmental activities to prevent environmental degradation. However, the chief minister told Bhola that such an action would slow down the economic progress. That also meant loss of substantial tax revenues for the government.

Bhola needed to resolve the dilemma. Bhola always wanted to be an entrepreneur, who could contribute to the society and earn money as well. However, his business would also be responsible for destroying environment. If he did not set up his business, he would not be able to earn money and contribute to the society.

After mulling over the issues, he went to his mentor “Guruji”. Guruji realized that it was really a difficult puzzle: if one saves the environment, there seems to be no development and if the people and the government sought development, the environment and hence future of this planet and human beings was at stake. After careful thought, he felt that the dilemma could be resolved. He fixed up a meeting with Bhola to answer Bhola's queries.

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 a 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, first 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 Bernoulli, 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 \(0.50 \times u(200)\), 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 curve, respectively.) It follows from a concave function that the subjective value attached to a gain of $100 is more than 50 percent of the value attached to a gain of $200, which gives a 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 gives a convex function for losses and a preference for risky prospects over sure outcomes of equal expected value, called risk seeking. Except for prospects that involve very small probabilities, risk aversion is generally seen in choices involving gains, while risk seeking tends to hold in choices involving losses.

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

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

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. Preference for a sure outcome over a risky prospect of equal expected value is called risk averse; people tend to be risk averse when choosing between prospects with positive outcomes, a pattern explained by diminishing sensitivity: the utility from a small increase in wealth falls as the wealth already held rises, so the person's utility function \(u\) is concave for gains. A convex utility function is the mirror image of this: it gives MORE weight to the extreme, spread-out outcome of a gamble than to a 'safer,' more sure-like outcome of the same expected value, and a person with such a function is called risk taking or risk seeking.

Based on the above, look at the decision situation faced by Babitha.

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

Recall Babitha's game: three options with probabilities 0.4, 0.5 and 0.8, giving likely gains of $100, $80 and $50 respectively (all three have the same expected value of $40, and Babitha, being risk taking, was shown to favour the first, most spread-out option when she can play repeatedly).

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

Decisions are often 'risky' in the sense that their outcomes are not known with certainty. Expected value is the sum of possible outcomes weighted by their probability of occurrence, and a preference between prospects can be judged purely on this basis under the expected value hypothesis, without reference to any personal utility function. Utility functions, and the concepts of concave (risk averse) or convex (risk seeking) curvature, belong to the SEPARATE expected utility hypothesis, not to expected value itself, which is just a plain, objective weighted sum.

Based on the above, look at the decision situation faced by Bablu.

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

Read the following situation and choose the best possible alternative.

A database software company found out that a product it had recently launched had a few bugs. The product had already been bought by more than a million customers. The company knew that these bugs could cost its customers a lot of money or trouble. However, if it told customers about the bugs, it was afraid of losing its credibility in the market. What would be the most ethical option for the company?

Read the following situation and choose the best possible alternative.

The city of Nagar has a population of 10 million: 2 million are rich, 3 million are poor and 5 million belong to the middle class. Saundarya Cosmetics makes and sells beauty products to the rich class at a premium price, and its products are very popular with these customers. Many people from the middle and poor segments want to buy these products but cannot afford them because of the high prices. Lately, sales growth in the rich segment has been slowing down. Which of the following is the best option for Saundarya Cosmetics to increase its profits over the long term?

Read the following situation and choose the best possible alternative.

Seema was a finance manager at an MNC and felt that gender discrimination at her workplace was slowing down her career. Frustrated, she quit her job and started her own company. When she started the company, Seema decided to keep an equal number of male and female employees. Over the last six years, Seema has become a very successful entrepreneur and has grown her business to eight locations across the country. Recently, however, Seema has run into an ethical problem: many of her female employees are not willing to travel between cities or work late hours, even though the job needs this, while her male employees do this without hesitation. Seema is now under pressure to reduce the number of female employees, but she also knows that hiring equal numbers of men and women was one of the strongest reasons she started the company in the first place. What should she do as a responsible woman entrepreneur?

Read the following situation and choose the best possible alternative.

You are a recruitment manager interviewing Mayank, a hard-working young man who has trouble speaking fluent English because he studied in schools and colleges that used a regional language as the medium of instruction. If your company currently has open positions, what would you choose to do?

Directions: Professor Mukhopadhay works only on Mondays, Tuesdays, Wednesdays, Fridays, and Saturdays. She performs four different activities: lecturing, conducting quizzes, evaluating quizzes, and working on consultancy projects. Each working day she performs exactly one activity in the morning and exactly one activity in the afternoon. Her weekly schedule must satisfy all of the following restrictions:

1. She conducts quizzes on exactly three mornings.
2. If she conducts a quiz on Monday, she does not conduct a quiz on Tuesday.
3. She lectures in the afternoon on exactly two consecutive calendar days.
4. She evaluates quizzes on exactly one morning and three afternoons.
5. She works on a consultancy project on exactly one morning.
6. On Saturday, she neither lectures nor conducts a quiz.

Which of the following statements must be true?

Directions: Professor Mukhopadhay works only on Mondays, Tuesdays, Wednesdays, Fridays, and Saturdays. She performs four different activities: lecturing, conducting quizzes, evaluating quizzes, and working on consultancy projects. Each working day she performs exactly one activity in the morning and exactly one activity in the afternoon. Her weekly schedule must satisfy all of the following restrictions:

1. She conducts quizzes on exactly three mornings.
2. If she conducts a quiz on Monday, she does not conduct a quiz on Tuesday.
3. She lectures in the afternoon on exactly two consecutive calendar days.
4. She evaluates quizzes on exactly one morning and three afternoons.
5. She works on a consultancy project on exactly one morning.
6. On Saturday, she neither lectures nor conducts a quiz.

If the Professor conducts a quiz on Tuesday, then her schedule for evaluating quizzes could be:

Directions: Professor Mukhopadhay works only on Mondays, Tuesdays, Wednesdays, Fridays, and Saturdays. She performs four different activities: lecturing, conducting quizzes, evaluating quizzes, and working on consultancy projects. Each working day she performs exactly one activity in the morning and exactly one activity in the afternoon. Her weekly schedule must satisfy all of the following restrictions:

1. She conducts quizzes on exactly three mornings.
2. If she conducts a quiz on Monday, she does not conduct a quiz on Tuesday.
3. She lectures in the afternoon on exactly two consecutive calendar days.
4. She evaluates quizzes on exactly one morning and three afternoons.
5. She works on a consultancy project on exactly one morning.
6. On Saturday, she neither lectures nor conducts a quiz.

Which one of the following must be a day on which the professor lectures?

Directions: Professor Mukhopadhay works only on Mondays, Tuesdays, Wednesdays, Fridays, and Saturdays. She performs four different activities: lecturing, conducting quizzes, evaluating quizzes, and working on consultancy projects. Each working day she performs exactly one activity in the morning and exactly one activity in the afternoon. Her weekly schedule must satisfy all of the following restrictions:

1. She conducts quizzes on exactly three mornings.
2. If she conducts a quiz on Monday, she does not conduct a quiz on Tuesday.
3. She lectures in the afternoon on exactly two consecutive calendar days.
4. She evaluates quizzes on exactly one morning and three afternoons.
5. She works on a consultancy project on exactly one morning.
6. On Saturday, she neither lectures nor conducts a quiz.

On Wednesdays, the professor could be scheduled to:

Directions for Q125-129: The following set of questions is based on a decision-making situation described below. Read the passage and answer the questions that follow.

Ram Kumar, an overworked executive in Delhi, has to decide on the travel plan for attending his friend's marriage in Ajmer, Rajasthan. He has barely managed to get leave from his boss, so he must make sure he reaches Ajmer at least on the day of the marriage. Since it had been a while since his last break, he also planned to visit a few tourist spots along the way to de-stress after a year of demanding work.

As per his plan, Ram would start from Delhi and first visit the Bharatpur bird sanctuary, staying at the forest guest house for some time. He would then travel to Jodhpur for a day or two of sightseeing, and from Jodhpur move to Jaipur to spend a few days visiting the city. After that he would travel on to Ajmer, where his friend's wedding would take place.

Leg 1, Delhi to Bharatpur (bus, taxi or train, all three taking 12 hours): the probability of reaching on time is 0.65 by bus, 0.75 by taxi and 0.9 by train.
Leg 2, Bharatpur to Jodhpur (train, bus or private taxi): the probability of reaching on time is 0.9 by train (12 hours), 0.8 by bus (16 hours) and 0.85 by taxi (14 hours).
Leg 3, Jodhpur to Jaipur (flight, train, bus or taxi): the probability of reaching on time is 0.85 by flight (2 hours), 0.9 by train (10 hours), 0.65 by bus (15 hours) and 0.7 by taxi (15 hours).
Leg 4, Jaipur to Ajmer (train, bus or taxi): the probability of reaching on time is 0.75 by train (4 hours), 0.55 by bus (5 hours) and 0.55 by taxi (5 hours).

Since both Jaipur and Jodhpur have airports, Ram could also fly directly from Delhi to either city, or use a flight partway along with a combination of land transport.

Q125. The second best option (in terms of travel time) gives a total travel time of ______ hours for the entire itinerary.

Directions for Q125-129: The following set of questions is based on a decision-making situation described below. Read the passage and answer the questions that follow.

Ram Kumar, an overworked executive in Delhi, has to decide on the travel plan for attending his friend's marriage in Ajmer, Rajasthan. He has barely managed to get leave from his boss, so he must make sure he reaches Ajmer at least on the day of the marriage. Since it had been a while since his last break, he also planned to visit a few tourist spots along the way to de-stress after a year of demanding work.

As per his plan, Ram would start from Delhi and first visit the Bharatpur bird sanctuary, staying at the forest guest house for some time. He would then travel to Jodhpur for a day or two of sightseeing, and from Jodhpur move to Jaipur to spend a few days visiting the city. After that he would travel on to Ajmer, where his friend's wedding would take place.

Leg 1, Delhi to Bharatpur (bus, taxi or train, all three taking 12 hours): the probability of reaching on time is 0.65 by bus, 0.75 by taxi and 0.9 by train.
Leg 2, Bharatpur to Jodhpur (train, bus or private taxi): the probability of reaching on time is 0.9 by train (12 hours), 0.8 by bus (16 hours) and 0.85 by taxi (14 hours).
Leg 3, Jodhpur to Jaipur (flight, train, bus or taxi): the probability of reaching on time is 0.85 by flight (2 hours), 0.9 by train (10 hours), 0.65 by bus (15 hours) and 0.7 by taxi (15 hours).
Leg 4, Jaipur to Ajmer (train, bus or taxi): the probability of reaching on time is 0.75 by train (4 hours), 0.55 by bus (5 hours) and 0.55 by taxi (5 hours).

Since both Jaipur and Jodhpur have airports, Ram could also fly directly from Delhi to either city, or use a flight partway along with a combination of land transport.

Q126. Due to winter fog, flights out of Delhi have become uncertain and unreliable. Given this constraint, the itinerary Ram should adopt to have the best probability of reaching Ajmer on time is: