3.3.3 Decision trees

Question 1

What strategies are decision trees used for?

Answer 1

-A new product launch
-A new marketing campaign on the current product
-Relocation to a new building

Question 2

How do decision trees work?

Answer 2

Traces an alternative outcome of a decision, the results can be compared + the business can decide which option would be most profitable.

Question 3

What are the limitations of decision trees?

Answer 3

-Based on predicted data of the potential impact of a decision.
-Does not take into account unforeseen costs etc.
-Probabilities + net outcomes are all estimates.
-Sometimes businesses have to act quickly.
-Large degree pf uncertainty about any situation one is used for.