More examples in Decision Trees/Decision Trees

Development Decision Tree Example

A decision tree like this determines whether to develop a new product or consolidate based off of the net costs for each option.





Text in this example:

Consolidate
$30,000
New Product
$350,000
Develop a New Product
or Consolidate?
$500,000
$500,000 - S150,000
= $350,000
$100,000
$100,000 - $80,000
= $20,000
Rapid Development
cost = $80,000
Through Development
cost = $150,000
$10,000
$10,000 - $0
= $10,000
$60,000
$60,000 - $30,000
= $30,000
Strengthen Products
cost = $30,000
Reap Products
cost = $0.00

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