What does a decision tree map?
The possible outcomes of a series of related choices.
What shape marks a decision point in a decision tree?
A square marks the decision point.
What is one advantage of decision trees regarding data preparation?
They require minimal data preparation.
What is a limitation of decision trees related to complexity?
They may become too complex.
Decision tree: Purpose
Map outcomes of choices, compare costs, benefits.
Decision tree symbols
Squares = decisions, Circles = outcomes.
Decision tree benefits
Easy to interpret, considers multiple outcomes.
Decision tree limits
Can be complex, rely on unrealistic expectations.
Expected value
Weighted average of outcomes based on probabilities.
Decision analysis goal
Select option with highest expected value.
Cost-benefit analysis compares
Projected costs and benefits of a project.
Answer 11 questions on Business Decision-Making Techniques.
1. What does a decision tree primarily represent?
2. How does a decision tree develop from its starting point?
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