Foundations of Management - Week 4 Article: Decision Trees for Decision Making
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What's the difference between a payout table and a decision tree?
A decision tree will actually show the routes taken to arrive at a particular decision
In a decision tree, what does a branch represent?
A different course of action
What does the end of a branch represent?
What will a decision tree always combine?
- Action choices
- Possible events or results that may be affected by chance
An immediate decision is often what?
- One of a sequence
- One of a number of sequences
What are the four requirements of making a decision tree?
- Identify decision points and alternatives for each point
- Identify uncertainty points and the alternatives for that point
- Estimate values to make the analysis (probabilities, costs, gains)
- Analyze alternative values to choose a course
What are the questions to ask when making a decision?
- What is at risk?
- Who is bearing the risk?
- What is the character of the risk that each person bears?
How are uncertainty alternatives handled on decision tree?
They are broken down to different subsets that may be used as discrete chance alternatives.
What would you like to do?
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