Decision trees
In this lesson, you'll learn how decision trees work as a visual decision-making tool and how to interpret them to recommend the best course of action—a skill tested across CIMA and ACCA papers.
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In this lesson
- 0:00 Decision trees: concept and structure
- 0:15 Key components: decision points and outcomes
- 0:34 Why decision trees matter for management
- 1:11 Restaurant chain case study setup
- 2:27 How to evaluate decision trees systematically
- 4:07 Working through the refurbishment options
- 5:07 Selecting the optimal decision path
About this lesson
Decision trees map out choices (shown as squares) and their potential outcomes (shown as circles with probabilities), allowing you to structure complex decisions and calculate expected values. You'll work through a real example involving a struggling restaurant location, comparing three options: closure, minor refurbishment, or major refurbishment. By evaluating the tree from right to left, calculating expected values at each outcome point, and selecting the option with the highest payoff at decision points, you'll see how to arrive at a clear recommendation based on quantified analysis.
Duration: 6m
Transcript
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