3.3.3 Decison Trees 🌳

Question 1

What is a decision tree?

Answer 1

A technique that shows the Possible outcomes of a decision

Question 2

What do decision trees analyse?

Answer 2

Probability of a success

Question 3

How do we calculate the net gain of a decision tree ?

Answer 3

Multiplied to success and failure with the outcome add them up

(Or subtract if it’s a negative failure)

then subtract with the cost

Pick the chance note with the higher net gain

Question 4

What are the three positives of decision trees?

Answer 4

Forces manages to take in account the risks involved in decisions and help separate from important and unimportant risks

involved numerical values on decisions improve results

Helios Show possible courses of action of previously considered

Question 5

What are the negatives of decision Trees ?

Answer 5

Based on probabilities which are estimated

Factors such as peoples opinions and the constraints are not shown lack of qualitative data

time lag - some numerical information may be out of date

Managers may be biased towards a certain chance node and manipulate the data

may be time-consuming

may not take account of the dynamic nature of business

sudden change in economic climate may change the decision Tree - obsolete