Decision Trees

Question 1

Circles in a decision tree

Answer 1

Where there are alternative outcomes

Question 2

Advantages of decision trees

Answer 2

1. Makes managers work out and think about the profitability of each outcome
2. Easy to see which outcome is best
3. Allow managers to compare products quantativley and objectively rather than just going for the fashionable option

Question 3

Disadvantages of decision trees

Answer 3

1. Things about numerical values rather than personal opinions
2. Probabilities are very hard to predict accurately
3. Wider range of potential outcomes that the tree doesn’t predict

Question 4

What is a square in a decision tree!

Answer 4

Represents a decision point