Decisions Trees

Question 1

What are decision tress?

Answer 1

Simple, visual way of presenting probabilistic information to management
Should be used where a problem involves a series of decisions being made and several outcomes arise during the decision making process
A complex problem is broken down into smaller sections

Question 2

What are the symbols for decisions tress?

Answer 2

SQUARE: Point at which a decision is made
CIRCLE: Point at which a chance vent occurs

Question 3

What are the steps when drawing a decision tree?

Answer 3

Step 1 Draw the tree from left to right

Step 2
Evaluate the tree from right to left:
Calculate an EV at each outcome point
Choose the best option at each decision point

Step 3
Recommend a course of action