The Relevance of Decision Tree to Organisations in Nigeria

Abstract

The objective of this study was to explore decision tree as a viable tool for decision making through viable graphical demonstrations, identifying and measuring assumptions within given environmental limits and ranking of priorities or options is a modern tool that can be simplistically implemented or made complex with statistical probabilities and with consideration that action taken would be comprehensive and dynamically evolving. Business decisions are usually conclusions of a two-way thinking or more. The ideal situation can be varied to get a basic scenario or the best scenario and this can be captured graphically or visually by the decision tree model which is an all-encompassing management decision tool. A Desk review research method was employed in this expository study. The study found out that decision tree models, though is an internal decision making tool, the usage can be externalized and included in financial statements and other reports as part of the sensitivity analysis and as a build-up of the financial package, investment decisions, sensitivity analysis, cost analysis and financial ratio analysis as key business areas The study concluded that the usage of decision trees in modern management is limitless and can be in a simpler form without mathematical colouration or laced with probabilistic statistical effects.