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

Queue discipline, Queue discipline 1) It refers to the manner in which ...

Queue discipline 1) It refers to the manner in which customers behave in a queue, and to the order in which they are served up. For illustration; A customer may arrive at a que

Extra cost decision, Discuss arguably how management accountants should dec...

Discuss arguably how management accountants should decide when are faced with the extra shift decision

Markov chains, Markov Chains: Markov Chains are named after the Russia...

Markov Chains: Markov Chains are named after the Russian statistician A.A Markov who developed probabilistic models that are often applicable to decision making problems in bu

What are the characteristics of standard costing, Characteristics of standa...

Characteristics of standard costing 1) Flow of information : in a standard costing system cost information flows in a straight forward manner as material is requisitioned and

Calculate the break-even point and safety margin, The Braggs & Struttin' Co...

The Braggs & Struttin' Company manufactures an engine for carpet cleaners called the "Snooper." Budgeted cost and revenue data for the "Snooper" are given below, based on sales of

Operating leverage, How do you compare two companies operating leverage? Mu...

How do you compare two companies operating leverage? Must the sales volume be set the same or the net operating income?

Describe breadth indicators and market sentiment indicators, Describe bread...

Describe breadth indicators and market sentiment indicators? 1. Distinguish among technical and fundamental analysis. As well explain essential concepts underlying chart analys

Objective function, Objective Function Although the standard LP model c...

Objective Function Although the standard LP model can be either the maximization or the minimization type, it is sometimes useful to convert one form to the other. The maximiz

Decision making, A local government authority owns and operates a leisure c...

A local government authority owns and operates a leisure centre with numerous sporting facilities, residential accommodation, a cafeteria and a sports shop. The summer season lasts

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