Discuss the advantages of Decision Tree.
is a decision support tool that uses a tree-like graph or model of decisions and theirpossible consequences, including chance event outcomes, resource costs, and utility. It is one way todisplay an algorithm. Decision trees are commonly used in operations research, specifically indecision analysis, to help identify a strategy most likely to reach a goal. If in practice decisions haveto be taken online with no recall under incomplete knowledge, a decision tree should be paralleledby a probability model as a best choice model or online selection model algorithm. Another use of decision trees is as a descriptive means for calculating conditional probabilities.In decision analysis, a "decision tree"
and the closely related influence diagram
is used as avisual and analytical decision support tool, where the expected values (or expected utility) of competing alternatives are calculated.A decision tree consists of 3 types of nodes:-1.
Decision nodes - commonly represented by squares2.
Chance nodes - represented by circles3.
End nodes - represented by triangles
Are simple to understand and interpret.
People are able to understand decision treemodels after a brief explanation.
Have value even with little hard data.
Important insights can be generated based on expertsdescribing a situation (its alternatives, probabilities, and costs) and their preferences foroutcomes.
If a given result is provided by a model, the explanation for theresult is easily replicated by simple math.
Can be combined with other decision techniques.
The following example uses Net PresentValue calculations, PERT 3-point estimations (decision #1) and a linear distribution of expected outcomes (decision #2):
Decision trees can be used to optimize an investment portfolio. The following example shows aportfolio of 7 investment options (projects). The organization has $10,000,000 available for the totalinvestment. Bold lines mark the best selection 1, 3, 5, 6, and 7, which will cost $9,750,000 and create