decision trees

Question 1

decisions can be broken down in which three categories ?

Answer 1

strategic, tactical, operational

Question 2

aspects of strategic decisions :

Answer 2

complex decisions, influence entire firm, long-term, non-routine

Question 3

aspects of tactical decisions :

Answer 3

less complex, seek to achieve corporate aims, medium-term

Question 4

aspects of operational decisions :

Answer 4

routine decisions, quick to make, low risk

Question 5

scientific decision model :

Answer 5

clarify objective, gather data, analyse data, reach and implement decision, review decision

Question 6

benefits of decision trees :

Answer 6

• they attach numerical values to decisions
• they help management to account for risks in decision making and to identify key decisions
• it provides a visual means of showing decisions

Question 7

drawbacks of decision trees :

Answer 7

-time consuming process and heavily reliant upon accurate data
- the data can quickly become out of date and obsolete as the market changes
- risk of bias in selecting the probability values
- does not take any qualitative factors into account in the decision making process