Implementations of Decision Tree Analysis
Given that Decision Tree Analysis is such a fundamental management science tool that can be applied to a number of different models, there are numerous instances of its use in the business world and elsewhere. Included below are four different examples of how Decision Tree Analysis has been implemented as the primary tool for analysis in a given use case scenario. These cases do not highlight how decision trees can be incorporated into other decision models, but rather highlight how decisions trees can stand alone as a decision aiding tool.
Management Union Bargaining
Report Summary:
This case study analyzes how decision tree analysis was implemented to help model the interactions and bargaining between company management and unionized workers. The decision trees developed focuses on depicting the 'gains and risk associated with alternative positions,' with the goal of providing 'enhanced communication within the team and with management.' This analysis was developed from the perspective of the management, which potentially skewed some of the conclusions about the cost savings and/or consequences of a given situation. The conclusion of the report recommended the development of a decision tree analysis from the perspective of the union in order to provide a second perspective on the potential consequences of any given decision.
This case study analyzes how decision tree analysis was implemented to help model the interactions and bargaining between company management and unionized workers. The decision trees developed focuses on depicting the 'gains and risk associated with alternative positions,' with the goal of providing 'enhanced communication within the team and with management.' This analysis was developed from the perspective of the management, which potentially skewed some of the conclusions about the cost savings and/or consequences of a given situation. The conclusion of the report recommended the development of a decision tree analysis from the perspective of the union in order to provide a second perspective on the potential consequences of any given decision.
Mortgage Selection
Report Summary:
This case study analyzes how decision tree analysis was used to model the decision individuals make with regards to selecting a specific mortgage option. The model works based on historical data which has been shown to adequately describe the behavior of different mortgage options over time, and its purpose is to maximize the return on investment that a given individual/couple might receive. This model was positively reviewed by its implementers because "[the] approach provides, at a minimum, a rational framework for what is frequently decided in a very intuitive or subjective manner."
This case study analyzes how decision tree analysis was used to model the decision individuals make with regards to selecting a specific mortgage option. The model works based on historical data which has been shown to adequately describe the behavior of different mortgage options over time, and its purpose is to maximize the return on investment that a given individual/couple might receive. This model was positively reviewed by its implementers because "[the] approach provides, at a minimum, a rational framework for what is frequently decided in a very intuitive or subjective manner."
Project Risk Management
Report Summary:
This case study analyzes how decision tree analysis was used to provide an analytical framework for managing project risks at an Indian oil refinery. This report explains the utility of such a decision model by stating the following: "In the proposed framework, risks are identified using cause and effect diagram, analyzed using the analytic hierarchy process and responses are developmed using the risk map. Additionally, decision tree analysis allows modeling various different options for risk response development and optimizes selection of risk mitigating strategy."
This case study analyzes how decision tree analysis was used to provide an analytical framework for managing project risks at an Indian oil refinery. This report explains the utility of such a decision model by stating the following: "In the proposed framework, risks are identified using cause and effect diagram, analyzed using the analytic hierarchy process and responses are developmed using the risk map. Additionally, decision tree analysis allows modeling various different options for risk response development and optimizes selection of risk mitigating strategy."
Medical Decision Making
Report Summary:
This case study analyzes the implementation of a stochastic tree, which is essentially a generalized version of a decision tree allowing for 'explicit depiction of temporal uncertainty while still employing the familiar rollback procedure for decision trees." The stochastic tree model is used to analyze the "decision to undergo a total hip replacement from the perspective of an individual patient (via utility analysis) and of society (via cost effectiveness analysis)." This model was useful in describing the decision process for individuals with different risk preferences, while still incorporating relevant information on different consequences from medical actions.
This case study analyzes the implementation of a stochastic tree, which is essentially a generalized version of a decision tree allowing for 'explicit depiction of temporal uncertainty while still employing the familiar rollback procedure for decision trees." The stochastic tree model is used to analyze the "decision to undergo a total hip replacement from the perspective of an individual patient (via utility analysis) and of society (via cost effectiveness analysis)." This model was useful in describing the decision process for individuals with different risk preferences, while still incorporating relevant information on different consequences from medical actions.
