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    Decision Tree Analysis: - Dr. Jay Prakash Verma

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    Ayush Gupta
    Decision tree analysis is a diagrammatic method for systematically analyzing and evaluating decision problems. It depicts decision problems, alternative courses of action, possible outcomes, and states of nature as branches in a horizontal tree structure. Decision nodes represent points where decisions are made, while chance nodes represent uncertainty. Decision branches show alternative courses of action and chance branches show possible states of nature. Respective payoffs are shown alongside the branches. Decision trees can be deterministic or probabilistic, single-stage or multi-stage. They provide advantages such as focusing attention on key elements, enabling evaluation of sequential decisions, and allowing problems to be explicitly defined and evaluated across fields like product development, marketing, and investment decisions.

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    Decision Tree Analysis: - Dr. Jay Prakash Verma

    Uploaded by

    Ayush Gupta
    38 views6 pages
    Decision tree analysis is a diagrammatic method for systematically analyzing and evaluating decision problems. It depicts decision problems, alternative courses of action, possible outcomes, and states of nature as branches in a horizontal tree structure. Decision nodes represent points where decisions are made, while chance nodes represent uncertainty. Decision branches show alternative courses of action and chance branches show possible states of nature. Respective payoffs are shown alongside the branches. Decision trees can be deterministic or probabilistic, single-stage or multi-stage. They provide advantages such as focusing attention on key elements, enabling evaluation of sequential decisions, and allowing problems to be explicitly defined and evaluated across fields like product development, marketing, and investment decisions.

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    Decision tree analysis is a diagrammatic method for systematically analyzing and evaluating decision problems. It depicts decision problems, alternative courses of action, possible outcomes, and states of nature as branches in a horizontal tree structure. Decision nodes represent points where decisions are made, while chance nodes represent uncertainty. Decision branches show alternative courses of action and chance branches show possible states of nature. Respective payoffs are shown alongside the branches. Decision trees can be deterministic or probabilistic, single-stage or multi-stage. They provide advantages such as focusing attention on key elements, enabling evaluation of sequential decisions, and allowing problems to be explicitly defined and evaluated across fields like product development, marketing, and investment decisions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    38 views6 pages

    Decision Tree Analysis: - Dr. Jay Prakash Verma

    Uploaded by

    Ayush Gupta
    Decision tree analysis is a diagrammatic method for systematically analyzing and evaluating decision problems. It depicts decision problems, alternative courses of action, possible outcomes, and states of nature as branches in a horizontal tree structure. Decision nodes represent points where decisions are made, while chance nodes represent uncertainty. Decision branches show alternative courses of action and chance branches show possible states of nature. Respective payoffs are shown alongside the branches. Decision trees can be deterministic or probabilistic, single-stage or multi-stage. They provide advantages such as focusing attention on key elements, enabling evaluation of sequential decisions, and allowing problems to be explicitly defined and evaluated across fields like product development, marketing, and investment decisions.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6

    Decision Tree Analysis

    -Dr. Jay Prakash Verma

    Decision Tree Analysis


    Device for representing a diagrammatic
    presentation
    of
    sequential
    and
    multidimensional aspects of a particular decision
    problem
    for
    systematic
    analysis
    and
    evaluation.
    Decision problem, Alternative Course of
    Action, States of Nature, and the likely
    Outcomes
    of
    Alternatives
    are
    diagrammatically or graphically depicted as if
    they are branches and sub branches of
    horizontal tree.

    Decision Tree
    Nodes: - are of two types
    Decision Nodes (represented by
    Chance Nodes (represented by

    )
    )

    Decision Branch:- shows Course of


    action
    Chance Branch:- shows States of
    Nature
    Respective Payoffs:- are shown
    alongside the branches.

    Types of Decision Tree


    Decisio
    n Tree
    Determini
    stic
    (Certainty
    )
    Single
    Stage
    (One
    Decision)

    Multi
    Stage
    (Chain of
    Decisions)

    Probabilis
    tic
    (Uncertai
    nty)

    Single
    Stage

    Multi
    Stage

    Advantages of Decision Tree


    Useful for portraying the inter-related, sequential and
    multi-dimensional aspects of any major Decision problem.
    Focus attention on critical elements.
    Useful when Decision Maker has to make a sequence of
    decisions on major Decision Problem.
    Enables the Decision Maker to see various elements of his
    problem.
    Problems can be systematically and explicitly defined and
    evaluated.
    Can be applied on various fields such as New product
    Introduction, Marketing Strategy, Make Vs. Buy Decisions,
    Assets acquisitions, Investment Decisions, etc.

    Portray Of a Decision Tree

    r
    B
    n

    ch
    n
    a

    io
    s
    i
    c
    1 t
    De
    A f Ac

    Decisio(C
    n Node

    rs
    ou

    (C
    ou
    rs

    De
    c is

    Chan
    ce
    n)
    io Node

    ch
    n
    a
    r
    Decisi
    B
    e
    c
    n
    on
    Cha
    1

    S
    of
    s
    e
    t
    Sta ture
    na

    St S2
    a
    na t e s
    tu of
    re

    Q1

    A3

    Node

    Chan
    ce
    Node

    Q2
    Q3

    Q4
    A

    eo 2
    ion f Act
    Br ion)
    a

    nc
    h

    Chan
    ce
    Node

    Q5
    S3
    of
    States
    nature

    S
    Stat 4
    es
    natu of
    re

    Q6

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