Multistage decision making under risk, Managerial Accounting

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Multi-stage decision making under risk (The use of decision trees)

Sequencing is concerned with the selection of an appropriate sequence or order of performing a series of jobs to be done on a finite number of machines or service facilities in some well defined technological order so as to optimize some measure of performance of the system, such as minimizing overall cost, total elapsed time. Decision trees are employed in solving sequential problems where there is an element of uncertainty. We use expected values to find the best alternative.

A decision tree is valuable for many reasons including:

  1. It provides a pictorial representation of a sequential decision process.
  2. It makes the expected value calculations easier because these calculations can be performed directly on the tree diagram.
  3. The actions of more than single decision maker can be considered.

 


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