3.3.3 Decision Trees Flashcards
(6 cards)
1
Q
What are decision trees used for?
A
To analyse the probability of success
2
Q
What does a square represent in a decision tree?
A
A decision node
3
Q
What are the lines coming from each decision node?
A
Show the possible courses of action and the cost for each action.
4
Q
What does a circle represent?
A
A chance node which shows alternative outcomes
5
Q
Advantages of decision trees
A
- good visual representation of the potential outcomes
- allow managers to compare quantitively and objectively
6
Q
Disadvantages of decision trees
A
- they ignore non-numerical (qualitative) data
- uncertainty as probabilities are difficult to predict
- the values on a decision tree depend on the person who makes it (different opinions)
- in reality there’s a wider range of potential outcomes than the decision tree suggests