Decision Trees ADVANTAGES:

Slides:

Advertisements

Similar presentations

Sample hedging with futures and options Objective Exemplify the use of futures, forwards and options.

Advertisements

Lecture 8 - Capital Budgeting: Estimating Cash Flows and Analyzing Risk.

Decision Tree Analysis. Decision Analysis Managers often must make decisions in environments that are fraught with uncertainty. Some Examples –A manufacturer.

Risk Analysis & Management. Phases Initial Risk Assessment Risk Analysis Risk Management and Mitigation.

Corporate Finance Lecture 5. Topics covered Decision trees Decision trees Dealing with uncertainty Dealing with uncertainty –Sensitivity analysis –Senario.

Sensitivity and Scenario Analysis

4. Project Investment Decision-Making

Introduction Decision trees Decision trees enable one to look at decisions: alternativesstates of nature with many alternatives and states of nature which.

Copyright 2006 – Biz/ed Quantitative and Qualitative Factors in Decision Making.

Operations Management Decision-Making Tools Module A

Unit 3 University of Sunderland CSEM04 ROSCO Unit 3: Risk and Opportunity Life Cycles CSEM04: Risk and Opportunities of Systems Change in Organisations.

Decision Trees.

Decision Making What? Art of choosing between two or more courses of action. Always there cannot be a correct decision but … better decision.

Business Strategy. Content Types of strategy SWOT Decision making to meet objectives Decision trees Corporate plans Contingency planning.

1.3 ORGANIZATIONAL PLANNING & DECISION MAKING INTRODUCTION TO DECISION TREES (HIGHER LEVEL CONTENT)

“ The one word that makes a good manager – decisiveness.”

1Decision Trees 1 ENMA 6010: Decision Trees 1 Based on examples from: Decision Trees – A Primer for Decision-Making Professionals by Rafael Olivas ©2010.

A2 Business Studies Objectives and Strategy –Unit 6 Decision Trees.

1 Practical Problems in Capital Budgeting Lecture 3 Fall 2010 Advanced Corporate Finance FINA 7330 Ronald F. Singer.

Chapter 10 Principles of Corporate Finance Eighth Edition A Project is Not A Black Box Slides by Matthew Will Copyright © 2006 by The McGraw-Hill Companies,

A – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Decision Making A For Operations Management, 9e by Krajewski/Ritzman/Malhotra.

 To analyse the impact of ethical behaviour on business activities  To analyse and evaluate business’ social responsibility to stakeholders.

Decision Analysis Mary Whiteside. Decision Analysis Definitions Actions – alternative choices for a course of action Actions – alternative choices for.

Decision Trees. Introduction Decision trees enable one to look at decisions: with many alternatives and states of nature which must be made in sequence.

CAPITAL BUDGETING &FINANCIAL PLANNING. d. Now suppose this project has an investment timing option, since it can be delayed for a year. The cost will.

Chapter 11 Principles PrinciplesofCorporateFinance Ninth Edition Project Analysis Slides by Matthew Will Copyright © 2008 by The McGraw-Hill Companies,

1.6 Organisational planning and decision making By the end of the lesson, you should be able to: Analyse and interpret business plans Compare and contrast.

BUAD306 Chapter 5S – Decision Theory. Why DM is Important The act of selecting a preferred course of action among alternatives A KEY responsibility of.

2.2.1 U NDERSTANDINGMANAGEMENT DECISION MAKING AQA Business 2 M ANAGERS, LEADERSHIP AND DECISION MAKING What decisions do managers make: On a day to day.

By: Cassie.  Images taken from: 

©2009 McGraw-Hill Ryerson Limited 1 of Risk and Capital Budgeting Risk and Capital Budgeting Prepared by: Michel Paquet SAIT Polytechnic ©2009 McGraw-Hill.

IB Business & Management

Chapter 12 – Single Investment Risk Analysis u Reasons for looking at risk from a single project prospective u lack comprehensive knowledge u of the rest.

Investment decision making. Capital investment Capital investments are usually long term and expensive. Examples of capital investment include: Plant.

Key Questions about Managing Risk on the Farm--Chap. 15 What are the sources of risk that farmers face? What strategies do farmers use to control risks?

Market research (1) Lesson aims: To know the purposes of market research To explain the methods, advantages and disadvantages of primary and secondary.

Quantitative and Qualitative Factors in Decision Making.

Decision Tree Analysis. Definition A Decision Tree is a graphical presentation of a decision-making process within a business which aims to highlight.

Decision trees. A decision tree is a planning and decision making tool. Decision trees are probability and outcome maps of a scenario. Decision trees.

A – 1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. Decision Making A For Operations Management, 9e by Krajewski/Ritzman/Malhotra.

Cost and Management Accounting: An Introduction, 7 th edition Colin Drury ISBN © 2011 Cengage Learning EMEA Cost and Management Accounting:

Part Three: Information for decision-making Chapter Twelve: Decision-making under conditions of risk and uncertainty Use with Management and Cost Accounting.

1 5. Business Valuation, Risk Analysis, The Due Diligence Process for the New Venture 5.1 Business Valuation Methods for NV’s 5.2 Risk Estimation and Analysis.

Taking A Calculated Risk

Double and Multiple Sampling Plan

Quantitative and Qualitative Factors in Decision Making

Meaning of finance Finance may be defined as the art or science of management or managing money it includes financial services & financial management.

Investment Appraisal - Is it worth it?

Market-Risk Measurement

Software Project Management

Expected Value.

CHAPTER 14 Real Options.

Chapter 5S – Decision Theory

Project risk management

IB Business Management

MANAGEMENT AND COST ACCOUNTING

Profit and Loss Accounts

Section 1: The Role of Accounting

BUSINESS AND MANAGEMENT

GCE PROFESSIONAL BUSINESS SERVICES AS 3

Dickey County Agriculture and Natural Resources

Monday 2nd December Mr Nicholls

Learning Objectives By the end of this lesson students should:

UNIT FOUR THEORY OF THE FIRM.

Economics for Engineers Economic Decision Making

“Everyone Else Does It!” Ethics Project

What is the customer service level?

Decision Analysis.

Risk and uncertainty By 刘明周凯亮李名扬

Risk Management Part I Dr. Zahi Yaseen Contact Us

Presentation transcript:

Decision Trees ADVANTAGES: All outcomes are highlighted and considered. It makes people think about what happens when they make a decision. BUT The numbers are only estimates. Who produces the figures/where is the data from/ What is the worst case scenario? Qualitative factors- image, employees reactions, ethics etc. Therefore decision trees are part of the decision-making process, not the only deciding factor. RISK This must be taken into account eg. option B may have a higher expected value but also has a higher loss in the worst case scenario. How do firms estimate probabilities? Use of back-data eg. if 1 in 4 new products succeed then: 0.25 success, 0.75 failure. Test market results Judgement and intuition.