Quantitative Techniques: Theory and 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. The tree is constructed starting from left and moving towards right. The square box ‘’ denotes a decision point at which the available strategies are considered. The circle ‘O’ represents the chance Node or Event, the various state of nature or outcomes emanate from this ...