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What is a decision tree?

A decision tree (or tree diagram) is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

Decision trees are commonly used in operations research, specifically in decision analysis, to help identify a strategy most likely to reach a goal.

A decision Tree consists of 3 types of nodes:-

  1. Decision nodes - commonly represented by squares
  2. Chance nodes - represented by circles
  3. End nodes - represented by triangles

Decision trees:

  • Are simple to understand and interpret.
  • Have value even with little hard data. Important insights can be generated based on experts describing a situation (its alternatives, probabilities, and costs) and their preferences for outcomes.
  • Use a white box model. If a given result is provided by a model, the explanation for the result is easily replicated by simple math.
  • Can be combined with other decision techniques.


Solved examples on decision tree

Examples of Decision Trees



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