1.Explain the parts of a decision tree.
There are three parts of a decision tree. They are decision nodes (squares), probability nodes (circles), and decision alternatives (branches).
2.What are some benefits of using decision trees?
Decisions trees force you to consider as many possible outcomes of a decision. They can provide the framework to consider the probability and payoffs of decisions, which can help one, analyze a decision to make the most inform decision possible.
3.In what ways can decision trees be used for business decisions? Name some real-world examples.
Decision trees not only provide a useful investment tool, but also enable one to explore the ranging elements that could have a material impact of a decision. They may be used when oil and gas exploration companies have to decide whether to invest in a particular gas field, or in choosing to allocate resources to exploiting one gas field rather than another. Prior to airing a multi-million Super-Bowl commercial, a firm will want to determined the different possible outcomes of their marketing campaign.
Response to DQ1 week 2
Decision Trees are wonderful tools for helping one to choose between many courses of action. They provide an effective structure which one can lie out options and investigate the possible outcomes of choosing those options. They also give one a picture of the risks and rewards associated with each possible course of action.
DQ 2 Week 2
How does the science of probability affect decisions? Why?
The probability is truly helpful in the decision making process and reduces the risk of lost and other undesirable effects of a certain condition. Probability is a measure of how likely it is that something will happen or that a statement is true. This theory is applied in everyday life in risk assessment. From the professional gambler to the business executive, the science of probability is important in...