Steps making DecisionTree

A decision tree is a graphical representation of decision process indicating decision alternatives, states of nature, related probabilities and conditional pay-offs for each combination of decision alternatives and states of nature. It shows all the possible choices that can be made as branches on the tree. And all the probable outputs for each selection as subsidiary branches on the tree.

Steps followed in making the tree are:

•    State the problem or recognize the objectives
•    Identify the possible causes of action, (i.e., decision alternative)
•    Recognize the possible states of nature/situations
•    Calculate approximately the probabilities for each state of nature
•    Estimate the restricted pay-off for each alternative and states of nature
•    Draw the decision tree

Compute the predictable monetary value at each state of nature node using the roll back method.

Posted Date: 12/4/2012 7:17:50 AM | Location : United States

Ask an Expert

Related Discussions:- Steps making decisiontree, Assignment Help, Ask Question on Steps making decisiontree, Get Answer, Expert's Help, Steps making decisiontree Discussions

Write discussion on Steps making decisiontree
Your posts are moderated

Write your message here..

Related Questions

Explain quality control and total quality control, Explain Quality control ... Explain Quality control and Total quality control Quality control (QC) circles can be viewed as a group oriented suggestion system for making improvements. QC circle is a sm

Consulting project, CONSULTING PROJECT Pricing and Production Decision... CONSULTING PROJECT Pricing and Production Decisions at PoolOut Ltd  PoolOut Ltd manufactures and sells a single product called the "RainIn", which is a patent-protected au

Research and writing assignment, Write a response to your boss, the control... Write a response to your boss, the controller. The response should be 2-5 pages in length (double-space). Your response to the controller should include, but not be limited to, t

Define materials cost variance, Define Materials cost variance Material... Define Materials cost variance Material cost variance (MCV) is the difference between the standard cost of material specified and the actual cost of materials used." It is the

Quadratic loss function, Consider the following quality data for three diff... Consider the following quality data for three different manufacturers of automobile weather-strips: Weather-strip Bulb Dimension Specification y=20 +or- 4mm

Controlling material flow , Controlling material flow Figure below out... Controlling material flow Figure below outlines the progressive stages in purchasing, issuing and recording materials in a manufacturing concern. An efficient system of docume

Quadratic equation , 2x2+8x-m3 = 0 2x2+8x-m3 = 0

Illustration of graphic analysis , Illustration of Graphic Analysis Th... Illustration of Graphic Analysis The four steps of cost-volume-profit analysis can be employed to graph and study any cost-volume relationship. Suppose that you have been aske

Transfer pricing, Transfer pricing sometimes entails using different transf... Transfer pricing sometimes entails using different transfer pricing systems: one for tax purposes, and one for internal decision making, even though maintaining two systems can be

Transfer pricing methods, Transfer Pricing Methods Transfer pricing met... Transfer Pricing Methods Transfer pricing methods are concerned with the alternative means by which a transfer price can be set and its impact on organizations gauged. Emmanuel