Steps making decisiontree, Managerial Accounting

Assignment Help:

Steps making DecisionTree

A decision tree is a graphical representation of decision process indicating decision alternatives, states of nature, related probabilities and conditional pay-offs for each combination of decision alternatives and states of nature. It shows all the possible choices that can be made as branches on the tree. And all the probable outputs for each selection as subsidiary branches on the tree.

Steps followed in making the tree are:


•    State the problem or recognize the objectives
•    Identify the possible causes of action, (i.e., decision alternative)
•    Recognize the possible states of nature/situations
•    Calculate approximately the probabilities for each state of nature
•    Estimate the restricted pay-off for each alternative and states of nature
•    Draw the decision tree

Compute the predictable monetary value at each state of nature node using the roll back method.


Related Discussions:- Steps making decisiontree

Parameter prediction error-randomness of operating process, Parameter predi...

Parameter prediction error: This is another aspect of faulty planning. As Hongren says, ‘planning decisions are based on predictions of future costs, future selling price, fut

Capital budgeting – planning investments, The management of Popular Stores ...

The management of Popular Stores Sdn. Bhd. are in the process of exploring the company’s investment opportunities.

Explain the break-even analysis, Explain the Break-Even Analysis  The s...

Explain the Break-Even Analysis  The study of cost volume profit analysis is often referred to as break-even analysis and the two terms are used interchangeably by many. This i

150 to 200 words, solutions for (POS) slow printing of sales tickets and un...

solutions for (POS) slow printing of sales tickets and unpredictable action of cash drawers. when credit approvals delayed the checkout process or when the computer was down, thus

Basic assumption of transportation model, Basic Assumption of Transportatio...

Basic Assumption of Transportation Model The basic assumption of the model is that the transportation cost on a given route is directly proportional to the number of units tran

Net operating increase problem , The president expects sales to increase by...

The president expects sales to increase by 12% next year. By how much should net operating income increase? Sales $2,000,000 Variable expenses 1,000

How the tax credit will affect price and quantity , 1. In order to boost th...

1. In order to boost the housing market throughout 2009 and into 2010, the federal government offered a tax credit to first-time home buyers and some repeat buyers.

Determine interest expense for company, Answer each of the following indepe...

Answer each of the following independent questions in the space provided on page 11. Round all computations to the nearest dollar. a) Company A deposited $15,000 in a savings ac

Analysis of credit file, Analysis of Credit File: Credit file is a compila...

Analysis of Credit File: Credit file is a compilation of each the relevant credit information of the customer. All the credit information collected throughout the credit informati

Continuous probability distribution, CONTINUOUS PROBABILITY DISTRIBUTION (U...

CONTINUOUS PROBABILITY DISTRIBUTION (USE OF NORMAL DISTRIBUTION) In reality the C-V-P variables might take any values in a continuous range. It could therefore be more appropriat

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd