Decision Trees

Definition
They are a form of diagrammatic analysis used to help businesses with decisions.
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Where do Decision Trees play an important role?
Where chance is involved in the outcome
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What probability do Decision trees provide?
Success or Failure
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With a Decision Tree what do you begin with?
The decisions Businesses want to make.
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How many choices are there with a Decision Tree?
2-3
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When Drawing a Decision Tree what do you begin with?
A Square (Node)
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What is the next course of action when drawing a Decision Tree?
Draw lines outwards for each option and write the description along the line.
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After that process what happens next?
This is where you consider the likely outcome of each decision and draw a circle.
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How do you work out the value of each option?
The probability for each outcome is multiplied by the estimated return.
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What should you take into account when deciding which option to take?
The initial investment and the estimated return/ probability.
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Identify some benefits of a Decision Tree
Lays out the Problem clearly so all options are considered/ You can fully analyse the consequences and risks of a decision
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Identify some limitations of a business tree
Only an estimate so could be inaccurate/ oversimplify a decision and focuses too much on finance.
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What do the predicted outcomes and estimates need to be based on?
Valid Data and quantitative value.
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Should you consider other decision making methods?
Yes
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What other factor could influence a businesses decision?
Qualitative factors
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Give examples of that factor
Workforce, management, suppliers, customers, costs, recruitment etc.
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Other cards in this set

Card 2

Front

Where do Decision Trees play an important role?

Back

Where chance is involved in the outcome

Card 3

Front

What probability do Decision trees provide?

Back

Preview of the front of card 3

Card 4

Front

With a Decision Tree what do you begin with?

Back

Preview of the front of card 4

Card 5

Front

How many choices are there with a Decision Tree?

Back

Preview of the front of card 5
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