Some problems can be expressed as a series of steps, each of which is assigned a specific probability and value. In this video, learn how to represent the problem using a decision tree.
- [Teacher] Some problems can be expressed…as a series of steps,…each of which is assigned a specific probability in value.…For example, if you start to develop a product…you will spend money to start,…then have to decide whether you want to continue development…or abandon the project.…In this movie,…I will show you how to represent that sort of problem…using a decision tree.…In a decision tree, you make a decision…and then events can happen by chance.…You represent those probabilities or possibilities as a tree…and each branch has a probability of occurrence,…so for example, you might have a 30-percent chance…that a new product will be well received…and a 70-percent chance that it won't be well received.…
You evaluate the likelihood of reaching the outcome…and then multiply the probabilities by the payoffs…to get a total expected value.…So what does decision tree actually look like?…Well, here's one…and it is broken out into a series of pathways.…You start with your note zero, which is the start,…that's where you make a decision to go forward,…
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- Finding target values using Goal Seek
- Finding a solution using Solver
- Tuning investment portfolios
- Organizing worksheets
- Creating objective and control formulas
- Experimenting with different constraints
- Optimizing resource placement
- Defining decision trees