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  • Decision Tree Example

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    Adeeljaan1234
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    Decision tree is basically a representation of all the possible alternatives and their consequences which are being presented graphically. A box Lines is used to show a choice that the manager has to make. Connect outcomes to their choice or probability outcome. You have to analyze the costs associated to both alternatives and perform a sort of cost benefit analysis. What are some of the costs we should take into account when deciding whether or not to go to business school?

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    Decision tree is basically a representation of all the possible alternatives and their consequences which are being presented graphically. A box Lines is used to show a choice that the manager has to make. Connect outcomes to their choice or probability outcome. You have to analyze the costs associated to both alternatives and perform a sort of cost benefit analysis. What are some of the costs we should take into account when deciding whether or not to go to business school?

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    17 просмотров1 страница

    Decision Tree Example

    Загружено:

    Adeeljaan1234
    Decision tree is basically a representation of all the possible alternatives and their consequences which are being presented graphically. A box Lines is used to show a choice that the manager has to make. Connect outcomes to their choice or probability outcome. You have to analyze the costs associated to both alternatives and perform a sort of cost benefit analysis. What are some of the costs we should take into account when deciding whether or not to go to business school?

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    Attribution Non-Commercial (BY-NC)
    Скачайте в формате PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 1

    Decision tree is basically a representation of all the possible alternatives and their consequences which are being presented

    graphically. Example: A Decision Tree with two choices.

    Go to Graduate school to get my MBA. Go to work in the real world.

    A box Lines

    is used to show a choice that the manager has to make. connect outcomes to their choice or probability outcome.

    Now you have two choices whether to go to the school or to go to work. And you have to analyze the costs associated to both alternatives and perform a sort of cost benefit analysis. What are some of the costs we should take into account when deciding whether or not to go to business school? Evaluation of the decision: Choice # 1: 2 Years of tuition: Rs. 55,000, 2 years of Room/Board: Rs. 20,000; 2 years of Opportunity Cost of Salary = Rs.100, 000 Total = Rs.175, 000. PLUS expected 5 year salary after Business School = Rs.600, 000. NPV (Net present value) (business school) = Rs.600, 000 - Rs.175, 000 = Rs.425, 000 (NPV= is the difference between the present value of cash inflows and the present value of cash outflows). Choice # 2: First two year salary = Rs.100, 000 (from above), minus expenses of Rs.20, 000. Final five year salary = Rs.330, 000 NPV (no business school) = Rs.410, 000 On evaluation of both the choices we will move towards our best possible decision with the help of decision tree.

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