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1、11DecisionMakingandRelevantInformationLearningObjectivesHowmanydecisionshaveyoumadetoday?Maybeyoumadeabigone,suchasacceptingajoboffer.Or1.Usethefive-stepdecision-makingmaybeyourdecisionwasassimpleassettlingonyourplansfortheprocesstomakedecisionsweekendorchoosingares
2、taurantfordinner.Regardlessofwhether2.Distinguishrelevantfromirrelevantdecisionsaresignificantorroutine,mostpeoplefollowasimple,informationindecisionsituationslogicalprocesswhenmakingthem.Thisprocessinvolvesgatheringinformation,makingpredictions,makingachoice,actingo
3、nthe3.Explaintheopportunity-costcon-ceptandwhyitisusedindeci-choice,andevaluatingresults.Italsoincludesdecidingwhatcostssionmakingandbenefitseachchoiceaffords.Somecostsareirrelevant.Forexample,onceacoffeemakerispurchased,itscostisirrelevant4.Knowhowtochoosewhichprod-
4、whendecidinghowmuchmoneyapersonsaveseachtimeheoructstoproducewhentherearecapacityconstraintsshebrewscoffeeathomeversusbuyingitatStarbucks.Thecostofthecoffeemakerwasincurredinthepast,andthemoneyisspent5.Discussfactorsmanagersmustandcan’tberecouped.Thischapterwillexpla
5、inwhichcostsandconsiderwhenaddingordroppingcustomersorsegmentsbenefitsarerelevantandwhicharenot—andhowyoushouldthinkofthemwhenchoosingamongalternatives.6.Explainwhybookvalueofequip-mentisirrelevantinequipment-replacementdecisionsRelevantCosts,JetBlue,andTwitter17.Exp
6、lainhowconflictscanarisebetweenthedecisionmodelusedbyamanagerandtheperformance-WhatdoesitcostJetBluetoflyacustomeronaround-tripflightfromevaluationmodelusedtoevaluateNewYorkCitytoNantucket?Theincrementalcostisverysmall,themanageraround$5forbeverages,becausetheotherco
7、sts(theplane,pilots,ticketagents,fuel,airportlandingfees,andbaggagehandlers)arefixed.Becausemostcostsarefixed,woulditbeworthwhileforJetBluetofillaseatprovideditearnsatleast$5forthatseat?Theanswerdependsonwhethertheflightisfull.SupposeJetBluenormallycharges$330forthis
8、round-tripticket.Iftheflightisfull,JetBluewouldnotselltheticketforanythinglessthan$330,becausetherearestillcustomerswillingtopaythi
