Decisions Tree

Decisions Tree

It is a means of an analytical nature through which the possible available alternatives are represented in a schematic way, which allows the ease of better decision-making, especially when exposed to risks, benefits, costs, as well as various options.

It is a model very similar to a tree , hence its name and is considered ideal when making important decisions in momentous moments or situations. They are generally used to:

  • When it comes to well-defined alternatives or actions.
  • When the case of well-defined or specified uncertainties arises .
  • And when you have clear objectives .

A decision tree generally begins with a single node that later branches out into possible outcomes, consecutively generating extra nodes that in turn branch out into possible solutions or probabilities, thus giving the appearance of a tree.

There are three nodes used in the decision tree, namely:

  • Probability node: it is represented with a circle and is in charge of showing the possible solutions or probabilities of some results.
  • Decision node: it is represented with a box and shows in it the decisions that must be made.
  • Terminal node: it shows the final result of each possible solution or probability.

How to start a decision tree

The first thing you should take into account are the following steps that we will describe below:

  • Main decision: draw a box that reflects this decision. This will be the starting point from where you will later draw the possible solutions or actions; keep in mind that you must identify them correctly.
  • Decision nodes or probabilities: in it you will place the necessary aspects in case of alternate decisions to the main one that are necessary, in case of results that are considered uncertain or in case the problem has been solved.
  • Proceed with the expansion guideline until one end is reached for each line, that is, there are no more decisions to be made, exhausting all resources. Later you must assign to each possible result a level or degree of approval.

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