Many disciplines, from science and mathematics to the legal and business professions, use decision trees to help determine the best course of action, both at the beginning and throughout the discovery process. These models have shaped the early planning of many discoveries and decisions, whether they were created in computer programs, using complex statistical algorithms, or simply scribbled on a piece of paper. The decision tree can help you decide how and when to do something, as well as what not to do, by starting with a basic choice and branching out into all possible “chance” outcomes and methods for achieving success.
The model’s three “nodes,” or pivot points, are represented by three symbols: squares, circles, and triangles. Each one stands for a different type of consideration that must be made on the way to a final decision. If you use them correctly, you’ll be able to figure out what each alternative’s “expected value” is.
The square symbol is used at the very beginning or apex of the decision tree, branching off in two or more directions to represent a decision point. It can also be used in other parts of the tree when additional decisions must be made. When chance is a factor, circles are used at other junctions, with branches representing the expected reactions or outcomes, such as fair, average, and bad. The path of chance has been exhausted when a triangle node caps a line segment in the tree, resulting in one of several final outcomes. This result could be monetary, statistical, or even involve the possibility of litigation.
The decision tree is frequently used by operations or manufacturing analysts to determine the likelihood of each possible course of action. Others employ it for more practical and straightforward reasons. A decision tree can be used by a writer to plot out the best outcome for each character in a book or film. The same person could create a decision tree to determine the best way to distribute monthly revenue.
As an example, a company may have a finite amount of excess revenue. To decide whether to reward loyal employees with raises or launch a new product, the company would start with a square, from which a line would extend to represent both options. Following that, more squares with branching lines are used to depict more decisions that must be made, such as cost-of-living raises versus 10% raises, and so on. Other intersections will have circles and more branching lines, which represent different levels of customer or employee satisfaction. Final lines are often capped with triangles, along with the course’s potential financial reward.