What is decision tree analysis?

Decision tree analysis is a decision-making method that visually represents possible development options as a tree with nodes and branches. Each node is a decision point or a random event, and branches are possible outcomes with probabilities and consequences.

This method helps to:

• Assess risks and benefits of each option.
• Structure complex decisions.
• Forecast the consequences of different actions.

An example of application: when choosing a supplier, a decision tree can be built where branches reflect the probability of delays, quality, and cost, and leaves represent the final costs and risks.

Thus, decision tree analysis helps managers make informed decisions, considering uncertainty and potential consequences.