QUANTITATIVE ANALYSIS

FOR
DECISION MAKING
DECISION TREE
REPORTER :
LIGAYA AMOR O. LUMAWAG
PROFESSOR :
DR. RANDY TUDY

ADVANTAGES OF
DECISION TREE ANALYSIS
TRANSPARENCY
SPECIFICITY
COMPREHENSIVE NATURE
EASE OF USE
FLEXIBILITY
RESILIENCE
VALIDATION

TRANSPARENCY
The use of separate nodes
to denote user defined
decisions,
uncertainties,
and end of process lends
further
clarity
and
transparency
to
the
decision-making process.

SPECIFICITY
Ability to assign specific values to problem,
decisions, and outcomes of each decision.
Every possible scenario from a decision finds
representation by a clear fork and node,
enabling viewing all possible solutions clearly
in a single view.

Incorporation of monetary values to decision

trees help make explicit the costs and benefits
of different alternative courses of action.

COMPREHENSIVE NATURE
It

allows for a comprehensive

analysis of the consequences of
each possible decision, such as
what the decision leads to, whether
it ends in uncertainty or a definite
conclusion, or whether it leads to
new issues for which the process
needs repetition.

EASE OF USE
Provides a graphical illustration of the problem
and various alternatives in a simple and easy to
understand format that requires no explanation.

Break down data in an easy to understand

illustrations, based on rules easily understood by
humans.

It also allow for classification of data without

computation, can handle both continuous and

categorical variables, and provide a clear
indication of the most important fields for
prediction or classification, all unmatched
features when comparing this model to other
compatible models such as support vector or
logistic regression.

FLEXIBILITY
Decision trees remain flexible to
handle items with a mixture of
real-valued
and
categorical
features, and items with some
missing
features.
Once
constructed, they classify new
items quickly.

RESILIENCE

Focuses on the relationship

among various events and
thereby, replicates the natural
course of events, and as such,
remains robust with little
scope for errors, provided the
inputted data is correct.

VALIDATION
Validate results of statistical tests.
It naturally supports classification

problems with more than two classes

and
by
modification,
handles
regression problems.
Provide a framework to quantify the
values and probability of each
possible outcome of a decision,
allowing decision makers to make
educated choices among the various
alternatives.

THE MAJOR
DISADVANTAGE OF
DECISION TREES
LOSS OF INNOVATION - only past experience
and corporate habit go into the branching of
choices; new ideas dont get much consideration.
There is a tendency with trees to only consider
paths that have been successful in the past, thus
stultifying thought about changing situations.
The trees are usually over-simple, not branched
enough, and little consideration given to the
thickness (value and probability) of each
branch.

 Decision

trees
assist
managers
in
evaluating upcoming choices. The tree
creates a visual representation of all
possible outcomes, rewards and follow-up
decisions
in
one
document.
Each
subsequent decision resulting from the
original choice is also depicted on the tree,
so you can see the overall effect of any one
decision. As you go through the tree and
make choices, you will see a specific path
from one node to another and the impact a
decision made now could have down the
road.

THANK YOU