If a decision tree shows the possible profits associated with each of several alternative decisions, what is the optimal decision strategy?
A)the strategy that has the maximum profit as one of its possible outcomes
B)the strategy that results in the highest expected value of profit
C)the strategy for which the sum of leaf-node values is a maximum
D)the strategy that minimizes the variance in profit
E)the strategy that minimizes the risk of obtaining the lowest possible profit

Question

Quizplus · Accepted Answer

The optimal decision strategy in decision tree analysis is the one that results in the highest expected value of profit. This approach takes into account the probability of each outcome and the profit associated with it, providing a more comprehensive assessment of the potential profitability of each decision.

If a Decision Tree Shows the Possible Profits Associated with Each