Scribd
Upload
26 views6 pages

03 - Decision Trees

Uploaded by

afillmubarok
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
26 views6 pages

03 - Decision Trees

Uploaded by

afillmubarok
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

16/09/2024

Decision Trees

Dikompilasi oleh Hadi Paramu, SE., MBA., Ph.D (FEB- Universitas Jember)
Sumber: Render, B., Stair, R.M., Hanna, M.E., & Hale, T.S. (2018). Quantitative
Analysis Management, 13 ed. Harlow: Pearson Education Limited.

The Basics

All decision trees are similar in that they contain decision nodes or decision
points and state-of-nature nodes or state-of-nature points

Lines or branches from the squares (decision nodes) represent alternatives,


and branches from the circles represent the states of nature.

Put the payoffs and probabilities on the tree and begin the analysis.

1
16/09/2024

2
16/09/2024

• When sequential
decisions need to be
made, decision trees are
much more powerful tools
than decision tables.
• Scenario: before deciding
about building a new
plant, John has the option
of conducting his own
Marketing research
survey, at a cost of
$10,000 (this is subtracted
to all top 10 tree payoffs)
• The lower part is exactly
the same as the previous
decision tree.

• Notice on the tree that a pair of slash


lines / / through a decision branch
indicates that a particular alternative is
dropped from further consideration.

3
16/09/2024

EXPECTED • What is the actual value of doing a survey?


• One way of measuring the value of market information is
VALUE OF to compute the expected value of sample information
(EVSI), which is the increase in expected value
SAMPLE resulting from the sample information
INFORMATION
EVSI = (EV with SI + cost) – (EV without SI) = 19.200

• the survey is indeed worthwhile.

• While none of these sources of


information are perfect, they can
be evaluated by comparing the
Efficiency of EVSI with the EVPI.
Sample • If the sample information was
Information perfect, then the efficiency would
be 100%.
• ESI = EVSI/EVPI = 19.200 / 60.000 =
32%

4
16/09/2024

Sensitivity • How sensitive is our decision (to conduct the


marketing survey) to the probability of favorable

Analysis survey results?


• Let p be the probability of favorable survey results
• Then (1 – p) is the probability of negative survey
results

• As long as the probability of favorable survey results, p, is


greater than 0.36, our decision will stay the same.
• When p is less than 0.36, our decision will be not to conduct the
survey.

10

5
16/09/2024

Beverly Mills has decided to lease a hybrid car to save on gasoline expenses and to do her part to help keep the
environment clean. The car she selected is available from only one dealer in the local area, but that dealer has
several leasing options to accommodate a variety of driving patterns. All the leases are for 3 years and require no
money at the time of signing the lease. The first option has a monthly cost of $330, a total mileage allowance of
36,000 miles (an average of 12,000 miles per year), and a cost of $0.35 per mile for any miles over 36,000. The
following table summarizes each of the three lease options:

Beverly has estimated that, during the 3 years of the lease, there is a 40% chance she will drive an average of
12,000 miles per year, a 30% chance she will drive an average of 15,000 miles per year,
and a 30% chance that she will drive 18,000 miles per year. In evaluating these lease options, Beverly would like
to keep her costs as low as possible.

11

You might also like