Decision Trees Quiz

What are the key inputs into a decision tree for business decision-making?

• Cost, probability of success, and end payoffs

• Employee satisfaction, market trends, and cost

• Customer feedback, advertising reach, and sales

• Product quality, brand reputation, and cost

In the decision tree example, what are the two ways the business can launch its product?

• Online marketing and direct sales

• Advertising and sales promotions

• Public relations and influencer marketing

• Trade shows and email campaigns

What is the cost of launching the product through advertising in the example?

• 5 million pounds

• 15 million pounds

• 10 million pounds

• 20 million pounds

What is the probability of high demand when using advertising in the example?

• 0.9

• 0.7

• 0.5

• 0.3

What is the probability of low demand when using sales promotions in the example?

• 0.3

• 0.1

• 0.5

• 0.7

What is the final payoff for high demand when using sales promotions?

• 5 million pounds

• 20 million pounds

• 40 million pounds

• 50 million pounds

What is the expected value (EV) formula used in decision trees?

• Probability times cost

• Probability times final payoff

• Final payoff divided by probability

• Cost minus final payoff

How is the net gain calculated in decision trees?

• Multiplying cost by expected value

• Dividing expected value by cost

• Subtracting cost from expected value

• Adding cost to expected value

What is the net gain for the sales promotion course of action in the example?

• 40 million pounds

• 31.5 million pounds

• 36 million pounds

• 31 million pounds

What is the expected value of low demand when using advertising?

• 50 million pounds

• 35 million pounds

• 20 million pounds

• 6 million pounds