CHAPTER 12
DECISION TREE
MEANING OF DECISION TREE
Many decision problems in practice are not of the simple single stage type. Such multistage, sequential decision problems are characterised by a series of related but separate decisions. A decision tree is a graphical representation of various alternatives and sequence of events in these multi-stage decision problems.
STEPS INVOLVED IN DRAWING A DECISION TREE
The steps involved in draw‘ing a decision tree are stated below:
| Step 1 → | Identify all decisions (and their alternatives) to be made and the order in which they must be made. |
| Step 2 → | Identify the chance events that can occur after each decision. |
| Step 3 → | Develop a tree diagram showing the sequence of decisions and chance events. ... |
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