Using the Essential elements ( Start with your primary decision, Identify your options , Consider the results, Assign values and probabilities, Calculate the value for each option)

Follow the instructions in Secrion 2. GET READY and complete the description of the diagram to help Quest make their decision

Creating Decision Trees When you want to use a rational approach to select the best option from several altematives, use odeci sion tree. A decialon tree is a support tool that models dechions using a treelike diagram. Each brench of the tree represents an option and its berefits, costr, and libelihood, Organizations use decihion triten to identily the strategy or choice that will lead them to a deired goal. Because a decision tree is a grighich helps you explore possibilities and track their cutcomes, it also creates a simple summary of a compho decision that you can share with other stakeholders. You can create a decision tree by hand or oring any basic graphics or drawing package on a computer. IRaeh The Quest Marketing Department finds that adventure tours in Latin America are becoming more popular among corporate clients, and has identhitg potential destinabions. Grace Wong is not sure which one would generate the most income. She ank yoy to help her create a decision tree to determine the best option. 1. Start with your primary decision Begin by determining the primary decision to make or problem to solve. This becomes your goal, saich as t Identify a new destination in Latin America for an adventure tour. Draw a small box on the left side of a piece of paper or on your computer screen. Label this objective box with a deseription of the problem. 2. Identify your options Identify the options in the decision or problem. For example, as shown in Figure 5.13, the destinationi are Curco in Peru, Quito in Ecuador, of neither one. Draw a line for each option from the objective bor to the right. Keep the lines far apart to leave yourself room to include labels and add your thoughts. Label each line with a short description of the option. 3. Consider the results At the end of each line, insert the result. If the result of choosing that option is uncertain, dras a smald dir. de. If the result requires you to make a decision, draw a small square. Repeat this process from each dexiiion square until you've drawn lines representing all of the possible outcomes that you identified. 4. Assign values and probabilities Estimate how much each option is worth to you or your organlzation. This can be a monetary amount ic a score, such as one based on a 1-5 rating scale. For example, the Curco tour could generate $730,000 ia revenue, and the Quito tour could generate $670,000. Label the outcome with this value. Next, for tath circle (called an uncertainty node), estimate the probability or likelihood of each outcome. The total at each circle must equal 100\%. Repeat this for all of your decision nodes. 5. Calculate the value for each option Calculate the value associated with each possible outcome. Start at the right side of your decision tree and work back to the left. See Table 5-5. Practice creating decision trees by completing a diagram. Open the PS5-Y39.docx document and follow the steps in the worksheet. When you are finished, submit the document to your instructor as requested. Trte your name Moondes wete dawan Creating Decision Trees and 3 phople ter in sheck be indoon following thes. - inenosecait. - Eiven pendele. 1. Save this file with a eerw name 3. Now you try it 2. Get ready