Describe A Decision Tree By Using A Business Example. Please Explain Why The Decision Tree Helps Leaders Make Decisions.

Running head: DECISION MAKING USING DECISION TREES 1

DECISION MAKING USING DECISION TREES 3

Decision Making Using Decision Trees

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In a business world where businesses are surrounded by uncertainties, decision trees have become instrumental tools for management when making decisions over investments. The business decision problems that organizations face today are not isolated cases but rather these decisions depend on future decisions (Kotsiantis, 2013). Further, decision problems do not occur in a sequence because decisions made in the future can be affected by the decisions that are made at the present (Gligorov & Williams, 2013). These decision problems can well be tackled by the use of decision trees. Decision tress will always consist of choices of action and possible outcomes of the actions that are influenced by chance or unavoidable situations.

Decision trees help leaders in making decisions by firstly providing alternatives available and illustrating the points of decision making. The decision trees provide various paths that can lead to the attainment of the various business outcomes (Kotsiantis, 2013). These paths or alternatives are represented by a nodes and branches. To make this point clear, I will use a simple case of a business of making cocktail for a party. The decision problem lies on whether the party should be held indoors or outdoors. Thus, the first two nodes have the choices of either making the part indoor or outdoor. These two branches provide alternatives that are available for the cocktail business. Further, these alternatives can each branch into events on whether there will be rain or no rain on the day of the party. The subsequent branches that follow the event of rain or no rains represent the results of the event which could be a ruined event, dull atmosphere or even unhappy clients in the event of rain. In the event of no rains, the results would be a lively party, happy clients and a feeling of comfort.

From the above business example, a decision tree would be useful to leaders in making their decisions because it would help them by providing an illustration of the chain of events. This makes it easy for leaders to be in a position to predict the outcome of events. In addition, decision trees help leaders to determine the uncertainties and the range of alternative results at the given points of decision making (Gligorov & Williams, 2013). Lastly, using the decision trees, leaders are able to carry out an analysis of the values for the available choices.

References

Gligorov, V. V., & Williams, M. (2013). Efficient, reliable and fast high-level triggering using a bonsai boosted decision tree. Journal of Instrumentation, 8(02), P02013.

Kotsiantis, S. B. (2013). Decision trees: a recent overview. Artificial Intelligence Review, 39(4), 261-283.