Decision Trees

Question 1

What are the steps for working out a decision tree?

Answer 1

1. EMV x probability
2. minus cost
3. whichever one is highest

Question 2

Advantages

Answer 2

simplistic and visual
quick + cost effective
attempts to account level of risk involved
could be accurate

Question 3

Disadvantages

Answer 3

Depends upon accuracy of figures used
management may be bias when selecting figures
multiple variables which affect EMV
no time consideration