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GAMBOA - Assignment No.1 Decision Tree Analysis

Decision trees are a type of machine learning algorithm that can be used for classification and regression problems. They present information graphically with possible outcomes and probabilities to help decision makers evaluate scenarios. Some advantages of decision trees are that they are easy to understand, do not require large amounts of data, and can help determine best and worst outcomes. However, decision trees also have drawbacks like being unstable with small changes to data and being computationally expensive to train. Overall, decision tree analysis is a useful tool for evaluating options and making complex decisions, though it does not provide definitive answers and relies on available information.

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Daniela Amor Gamboa
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61 views

GAMBOA - Assignment No.1 Decision Tree Analysis

Decision trees are a type of machine learning algorithm that can be used for classification and regression problems. They present information graphically with possible outcomes and probabilities to help decision makers evaluate scenarios. Some advantages of decision trees are that they are easy to understand, do not require large amounts of data, and can help determine best and worst outcomes. However, decision trees also have drawbacks like being unstable with small changes to data and being computationally expensive to train. Overall, decision tree analysis is a useful tool for evaluating options and making complex decisions, though it does not provide definitive answers and relies on available information.

Uploaded by

Daniela Amor Gamboa
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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GAMBOA, Daniela Amor L.

2BSA-3

Assignment Nos. 2 Decision Tree Analysis

Please answer the following questions and submit on the deadline date.

1. What is a decision tree?


2. Highlight the importance of a decision in your daily life.
3. Explain the advantages and disadvantages of a decision tree.
4. What is the importance of a decision tree?

One of the greatest types of learning algorithms based on numerous learning


approaches is decision trees. They improve the accuracy, readability, and stability
of prediction models. Because they can tackle data-fitting difficulties like regression
and classifications, the techniques are also useful for fitting non-linear connections.
A decision tree does not provide management with the solution to an investment
problem; rather, it assists management in determining which alternative, at any given
choice point, will result in the highest predicted monetary return, given the facts and
alternatives available. The decision tree's distinguishing feature is that it enables
management to integrate analytical approaches like discounted cash flow and present
value methodologies with a clear depiction of the influence of future choice options
and occurrences. Management can consider multiple courses of action with better
simplicity and clarity using the decision tree. The interactions between current
decision options, unpredictable occurrences, and future decisions and their outcomes
become increasingly apparent. Clearly, decision trees are commonly used in
operation research but are also a popular tool in machine learning. It can also be used
in operations management. Another use of decision tree is it can be a descriptive
mean for calculating conditional probabilities. Lastly, it is also applied to
management science.
GAMBOA, Daniela Amor L. 2BSA-3

It is obvious that we decide each day of our lives, we are being put in between
choices many times, we even have dilemmas of choosing which is the better option,
and how will our decision affect our current and future situation. A decision tree's
advantage is that it lists all the possible outcomes as well as the revenue or loss
associated with each. The accessible data can then be used by the company's
management to make an informed choice regarding the project or investment they
are considering. The decision model's tree structure aids in reaching a conclusion for
any situation that is more complex in nature. The concept is applied in a variety of
fields, including corporate finance, philosophy, and economic forecasting. An
individual must decide whether to invest in a specific project using the decision tree
model. These models are frequently used by management because they present
information in a graphical fashion with possible probability associated with the
outcome.

The following are some of the advantages of decision tree methods:


• Decision trees can provide rules that are easy to understand.
• Classification is performed using decision trees, which do not require a lot of
computing.
• Both continuous and categorical variables can be handled by decision trees.
• Decision trees show which fields are most essential for classification or
prediction.

The following are some of the drawbacks of decision tree methods:


• In estimating jobs when the goal is to anticipate the value of a continuous
characteristic, decision trees are less suited.
GAMBOA, Daniela Amor L. 2BSA-3

• In classification problems with many classes and a small number of training


instances, decision trees are prone to errors.
• The training of a decision tree can be computationally expensive. Growing a
decision tree is a computationally intensive process. Each potential splitting
field must be sorted at each node before the optimal split can be found.
Combinations of fields are employed in several algorithms, and optimal
combining weights must be found. Pruning methods can be costly due to the
large number of candidate sub-trees that must be produced and compared.

The technique of decision tree analysis comes with both hazards and benefits.
The following are some of the benefits of decision tree analysis: simple and easy to
interpret decision trees; valuable without requiring large amounts of hard data;
assists decision makers in determining the best, worst, and expected outcomes for
various scenarios; and can be combined with various decision techniques. There may
be certain downsides to employing decision tree analysis. Unclear values can lead
to complex computations and uncertain consequences; decision trees are unstable,
and little data changes can lead to substantial structure changes; decision tree
information gain can be skewed; and decision trees are frequently wrong. The
influence diagram, a more compact, mathematical graphical representation of a
choice issue, is a popular alternative to decision trees.

Surely, the decision-tree idea does not provide definitive answers to managers
faced with uncertain investment decisions. We have not yet arrived to that point, and
it is possible that we will never do so. However, the notion is useful for
demonstrating the structure of investment decisions, and it can also be quite useful
in evaluating capital investment options. Decision tree analysis is useful for
resolving problems, identifying possible possibilities, and making complicated
GAMBOA, Daniela Amor L. 2BSA-3

decisions in areas such as cost management, operations management, organizational


strategies, project selection, and manufacturing procedures.

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