Decision trees

Question 1

Decision trees - action paths (Advantage)

Answer 1

Decision trees may reveal possible action paths not previously considered by the business.
>Potentially enables business to maximise competitiveness by capitalising upon new opportunities

Question 2

Decision trees - numerical values (Advantage)

Answer 2

Decision trees place numerical values upon decisions > tends to improve results.

Question 3

Decision trees - risk recognising (Advantage)

Answer 3

Decision trees force management to recognise risks involved in decisions, separating important from unimportant risks.
>enables management to prioritise

Question 4

Decision trees - estimated probabilities (Disadvantage)

Answer 4

Decision trees’ probabilities = often estimated, decreasing reliability

Question 5

Decision trees - legal constraints (Disadvantages)

Answer 5

Decision trees do not account for the influence of legal constraints upon decisions.
>May lead to a chosen decision which isn’t actually feasible

Question 6

Decision trees - time lags (Disadvantage)

Answer 6

Time lags often occur in decision-making. This means numerical data may be out of date by the time a decision is made.
>Decreased accuracy > Could be particularly detrimental if opportunity cost decision was numerically close-cut