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

Explain ranking of decision packages - zero base budgeting, Explain Ranking...

Explain Ranking of decision packages - zero base budgeting Ranking of decision packages: by ranking the decision packages a company will be able to weed out a lot of marginal e

Elimination of non-value activity-jit features, Elimination of non-value ad...

Elimination of non-value added activity JIT manufacturing can be described as a philosophy of management, dedicate to the elimination of waste. Waste is stated as anything whic

Determine the absolute liquid ratio - liquidity ratios, Absolute liquid rat...

Absolute liquid ratio - Liquidity ratios Although receivables debtors and bills receivable are usually more liquid than inventories yet there may be doubts regarding their rea

Motives for holding cash, The firm's require holding cash may be attributed...

The firm's require holding cash may be attributed to the three motives specified below: The transaction motive The precautionary motive The speculative motive.

Z or t statistics, Z or t Statistics If n ≥30 we use Z, if, n Ho:  B ...

Z or t Statistics If n ≥30 we use Z, if, n Ho:  B = O that is, there is no relationship between X and Y HA:  B≠ O There is a significant relationship between X and Y The l

Budgets, Budgets An essential planning component is budgeting. Budgets ...

Budgets An essential planning component is budgeting. Budgets sketch the financial plans for an organization. There are number of budget types. Operating Budgets -- A plan

Explanation of objectives of budgetary control system, Problem 1 Manage...

Problem 1 Management accounting is sensitive to management needs; however, it assists the management and does not replace it. Write down in detail the scope of management accou

Costs, Recommend whether marginal or absorption costing should be use for i...

Recommend whether marginal or absorption costing should be use for internal monthly reporting

Accrued expenses, The other source of spontaneous short-term financing is t...

The other source of spontaneous short-term financing is the accrued expenses which arise by the general conduct of business. An accrued expense is an expense which has been incurre

Overhead analysis sheet, .1 You are the Management accountant of an industr...

.1 You are the Management accountant of an industrial concern and have been assigned the duty of preparing a cost accounting system. Initially it has been decided to prepare three

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