Steps making decisiontree, Managerial Accounting

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







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
Related Questions
1. In common, accounting period is the time period reflected by a series of financial statements.  2. In terms of taxation, it is twelve-month period a taxpayer uses to know

JIT and Management Accounting Management accountants in many organizations have been criticized because of their failure to change their managing accounting system to reflect

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


Moore Company uses process costing.  The following information was available for October: During October, 1,000 units were started, and costs incurred during the month were

Determine important factors while praparing sales budget The possible factors to be taken into account while preparing a sales budget are discussed as follows: 1) Past sales

Salialailai Ltd manufactures water tanks for different sizes for use by industrial customers. The company uses a job costing system, in which manufacturing overhead is applied on t

Trinco Ltd (Trinidad & Tobago-T&T) has been negotiating a contract with a potential customer in Jamaica. Before the negotiations started the Jamaican company agreed to pay $10,000

Define the Balanced Score Card? 1. Distinguish between standard control and budgetary costing. 2. Define the ‘Balanced Score Card? Explain the steps in implementing ‘Balance

Suppose the spot price of gold is $1700 per ounce. The futures price for delivery in six months is $1712, while the futures price for delivery in one year is $1720. The interest ra