3.3.3 Decision trees

Question 1

What are decision trees?

Answer 1

Set out diagrammatically, alternatives relating to a possible problem/issue and all possible outcomes that stem from these alternatives, together with the likelihood of different outcomes occurring and the associated financial consequences.

Question 2

How have the numbers within a decision-tree been obtained?

Answer 2

market research using quantitative and qualitative measures.

Question 3

How would you possibly conclude an answer using decision-trees?

Answer 3

Yes, but I would like more information to be a holistic before making a decision.

Question 4

Should you make a decision based on the decision-tree?

Answer 4

No as ther may be unidentifiable factors that haven’t been account for in the market research.

Question 5

What are decision-trees only as good as?

Answer 5

The data that has input into the decision tree.

Question 6

What are the positives of using decision-trees?

Answer 6

+ simple, quick and easy
+ aids decision-making
+ addresses possible risks
+ helps consider all possible outcomes.

Question 7

What are the negatives of using decision-trees?

Answer 7

• probabilities are just estimates
• could be impacted by bias
• can become complicated for long projects
• difficult to obtain meaningful and lots of data.

Question 8

What are the squares in decision-trees?

Answer 8

decision nodules

Question 9

What are the circles in decision-tree?

Answer 9

circular chance nodules