Based upon the following, I am trying to determine how to create a decision tree. Using the
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Question:
Based upon the following, I am trying to determine how to create a decision tree. Using the open source tool I understand how to add nodes, but I am struggling with the inputs (i.e., costs). The essence of the exercise is to decide whether or not an application should be built in house or outsourced with the lower capital investment being the optimal choice.
The data is as follows:
Cost to build application in-house | $95,000 |
Cost to outsource the task of developing the application | $80,000 |
Probability of passing user acceptance testing if built in-house | 90% |
Probability of passing user acceptance testing if work is outsourced | 30% |
Cost of rework after user acceptance testing if built in-house | $50,000 |
Cost of rework after user acceptance testing if work is outsourced | $25,000 |
The tool to create the decision tree is located at (http://silverdecisions.pl/SilverDecisions.html?lang=en(Links to an external site.)). Again, I am seeking direction with the data inputs.
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