Scheme for public presentation Essay

The chief purpose of this survey is to place the most influential variables of determination trees. First, we are traveling to explicate a few things about what determination trees are, where they came from, where they are used and what types of determination trees exist. Advantages and disadvantages is besides an indispensable portion of this survey. Then we are traveling to show some illustrations from the concern universe.

Introduction

Decision trees come from the Decision theoryA . Decision theory is a theory about determinations. The topic is non a really incorporate one. On the contrary, there are many different ways to speculate about determinations, and hence besides many different research traditions. Decision theory provides the necessary cognition with related analytical techniques in order to assist aA determination makerA to take among a set of alternativesA and their possibleA effects. The chance to happen each possible effect is known. Therefore, each option is connected with a chance distribution, and a pick among chance distributions. When the chance distributions are unknown, one speaks about and can take the best option. Decision theory recognizes that the scope produced by utilizing aA certain standard has to be consecutive with the determination shaper ‘s aims. Decision theory can be used to conditions of certainty, A hazard, A orA uncertainness. This theory is used in economic sciences, psychological science, doctrine, mathematics and statistics. It A is concerned with placing theA values, uncertainnesss and other issues relevant in a givenA determination. The consequences are considered to beA rational and optimum. Decision theory is related to the A game theory. There are certain phases in determination theory:

Designation of the job

Obtaining necessary information

Production of possible solutions

Evaluation of such solutions

Choice of a scheme for public presentation

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COMPARISON OF DECISION THEORY

Decision Theory consists of three subcategories, determination standards, determination trees and game theory. Decision standards represent a distribution of consequences

harmonizing to the assorted provinces of nature.A The chances are considered

known or can be calculated. Decision trees are used in more complex state of affairss, we are traveling to analyse determination trees farther. Game theory purposes to analyse and measure assorted “ strengths determinations ” under competitory conditions. The chief characteristic of the game theory over the other

determination jobs is that the organic structure of the determination ( “ Player ” of the job ) maximizes a map of payment that depends on the determinations of the other

rivals ( participants ) .A So the benefit of a participant may be

face-to-face with the benefit of another player.A As a consequence, a determination that seems sensible, can take to catastrophe.

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DEFINITION OF DECISION TREES

Decision Trees are utile tools that help people choose between several actions. They provide a extremely effectual construction where person can research the options that he has and can look into the possible results of taking those options. They besides help you to equilibrate the hazards and wagess associated with each possible action. Those features make them peculiarly utile for taking between different schemes, undertakings or investing chances, peculiarly when the resources are limited. A determination tree classifies the informations points with a series of inquiries about the characteristics associated with the points. Each inquiry consists a node, and every internal node points to all possible replies. The inquiries are formed hierarchy and are encoded as a tree. In many jobs determination trees play an of import function.

Algorithm

the algorithm used to cipher and maximise the addition in determination trees is:

The algorithm is based onA Occam ‘s razor and is consideredA heuristic. Occam ‘s razor is formalized utilizing the construct ofA information information:

WhereA :

E ( S ) A is theA information information of the subsetA SA ;

nA is the figure of possible values of the property inA SA ( information is referred to one merely take property )

degree Fahrenheit ( J ) A is the frequence ( proportion ) of the valueA jA in the subsetA S

log2A is theA binary logarithm

Information is used in order to make up one’s mind which node will be split following by the algorithm. So, the higher the information, the higher the possibility to better the categorization.

( hypertext transfer protocol: //en.wikipedia.org/wiki/ID3_algorithm )

types of determination trees

Classification Tree

In instances, where there are different pieces of information, we can utilize a categorization tree. We can mensurate and find the most predictable result. Solving a categorization determination tree we use a binary method of classs and subcategories to specify the different variables of an alternate consequence. This sort of tree can be used in chance and statistics.

Regression Tree

This type of determination tree is used when you are utilizing different information to specify merely one individual preset result. During the procedure of building this tree the different pieces of informations are divided into subdivisions and so into sub groups. This sort of tree is used chiefly in existent estate computations.

Tree Boost

When we want to better the truth of the determination doing procedure we are utilizing tree encouragement. We can take merely one variable and so cipher and minimise all the possible errors. This minimisation can supply us with more specific information. This sort of tree is used chiefly in accounting and mathematics.

Decision Tree Forests

Decision tree woods consist of several different determination trees that were grouped in order to cipher a more certain result. Sometimes, the determination tree woods are used to gauge the general result of a peculiar event based on what all the different determination trees subsequent.

Categorization and Regression Tree

This type of determination tree is used to foretell the consequence of an event with the helper of dependent factors to do the most logical decision. To make this we can utilize both interim indexs ( what has happened ) and existent clip indexs ( what happens now ) or even specific cut classs to analyze the expected consequence. This is used chiefly in scientific discipline.

K Means Clustering

K Mean consists the least accurate method of determination trees. Using this procedure combines all the different factors that you have identify antecedently where you conclude that all of the bunchs are the same. This hypothesis can do some of the predicated decisions to be enormously different. This tree is used chiefly in studies and surveies on the field of genetic sciences.

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How to utilize determination trees

Decision Tree starts with a determination that you need to do. You can get down pulling a little square to stand for the determination on the left manus side of a piece of paper. From this box you draw out lines towards the right for each possible solution, and in order non to acquire confused you can compose a short description of the solution along the line. At the terminal of each line, you put each consequence. If the consequence of taking that determination is unsure, you should pull a little circle. If the consequence is another determination that you need to do, you draw another square. Squares represent determinations, and circles represent unsure options. Write the determination above the square or circle. Get downing from the new determination squares on your diagram, pull out lines stand foring the options that you could choose. From the circles draw lines stand foring possible consequences. Again make a brief note on the line stating what it means. Continue making this until you have drawn out as many of the possible decisions and determinations as you can see from the original determinations.

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Planing a determination tree

The symbols in a determination tree are geometric forms used to specify the different actions that can originate during a procedure. Although flow charts can include besides text descriptive the symbols on the chart have a different form in order to give ocular cues to the reader and understand the chart. Normally, without even reading the text, a user can rapidly make the general procedure based chiefly on the order of the symbols..The determination nodes are normally represented by squares. The opportunity nodes are represented by circles and the terminal nodes are represented by trigons.

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Examples

EXAMPLE 1:

An industry is traveling to spread out its installations in order to accomplish a bigger height of productiveness and a smaller cost.As they noticed the turning demand of their merchandises, they are anticipating to maintain it for the following years.According to the anticipations of the selling section even if the production section empoyees disagree with this appraisal, they beleive that the house have to analyze the scenario of low demand.

Solution:

The values are calculated as follows:

Final Branch

Fiscal Consequence

A. Building of large unit and turning demand for the 7-year period.

Profits:500.000*7years= ( 3.500.000 )

Minus unit cost 2m =1,5 m

B. Building of large unit and decreased demand for the 7-year period.

Profits:100.000*7 old ages = ( 700.000 )

subtractions unit cost 2m = ( loss )

C. Building of little unit, turning demand the first 2 old ages, determination to spread out and continuously turning demand for the following 5 old ages.

Net incomes: 300.000 * 2years = 600.000

*5 years= ( 3,6m )

Minus Unit cost 1m

Minus expand cost 1,5m=1,1m

D. Building of little unit, turning demand the first 2 old ages, determination to spread out and continuously reduced demand for the following 5 old ages.

Profits:300.000 *2 years= 600.000

100.000 *5years= ( 1,1m )

Minus Small unit cost 1m

Expand cost

= -1,4m ( loss )

E. Building of little unit, turning demand the first 2 old ages, determination to non spread out and continuously turning demand for the following 5 old ages.

Net incomes: 300.000*2years=

300.000*5years= ( 2,1m )

Minus Small unit cost 1m

=1,1m

F. Building of little unit, turning demand the first 2 old ages, determination to non spread out and decreased demand for the following 5 old ages.

Profits:300.000*2years=

150.000*5years= ( 1,35m )

Minus Small unit cost 1m

=350.000

G. Building of little unit, low demand the first 2 old ages, determination to non spread out and continuously low demand for the following 5 old ages.

Profits:150.000*7 years= ( 1,05m )

Minus Small unit cost 1m

=50.000

( Pandelis Ipsilandis, 2006 )

EXAMPLE 2:

The proprietor of a computing machine shop is inquiring what he should make with his concern over the following 5 old ages. The proprietor sees three options. The first is to enlarge his current shop, the 2nd is to turn up at a new site and the 3rd is wait and make nil. The expand or move does non take a batch of clip so the shop does non lose gross. In instance that nil is done and strong growing occure at the first twelvemonth, so enlargement will see once more. Waiting more than a twelvemonth will let competition to travel and enlargement will no longer be an option.

Strong growing because of increased population has a 55 per centum chance.

Strong growing because of increased population gives one-year return of $ 195,000 per twelvemonth. Weak growing mean one-year return of $ 115,000.

In instance of enlargement, strong growing gives one-year return of $ 190,000 and weak growing gives $ 100,000.

In instance of no alterations, there will be $ 170,000 returns per twelvemonth in strong growing and $ 105,000 if there is weak growing.

Expansion costs $ 87,000.

New site costs $ 210,000.

If there is strong growing on bing site and there is an enlargement at the 2nd twelvemonth, the cost will be $ 87,000.

Operational costs are equal.

Solution:

The values are calculated as follows:

Num

Option

Gross

Cost

Value

1

MOVE TO NEW LOCATION, STRONG GROWTH

$ 195,000*

5yrs

$ 210,000

$ 765,000

2

MOVE TO NEW LOCATION, WEAK GROWTH

$ 115,000*

5yrs

$ 210,000

$ 365,000

3

EXPAND STORE, STRONG GROWTH

$ 190,000*

5yrs

$ 87,000

$ 863,000

4

EXPAND STORE, WEAK GROWTH

$ 100,000*

5yrs

$ 87,000

$ 413,000

5

Make Nothing NOW, STRONG GROWTH,

EXPAND NEXT Year

$ 170,000*1yr+

$ 190,000*

4yrs

$ 87,000

$ 843,000

6

Make Nothing NOW, STRONG GROWTH,

DO NOT EXPAND NEXT Year

$ 170,000*

5yrs

$ 0

$ 850,000

7

Make Nothing NOW, WEAK GROWTH

$ 105,000*

5yrs

$ 0

$ 525,000

( Jay Heizer & A ; Barry Render,2011 )

Advantage

Decision Trees are reasonably easy to understandA about for everyone. That is really of import because they can be used in many different types of jobs. Decision Trees are mapped nicely to a set of concern rulesA . As we said and before because of their relaxation in understanding they can be applied to existent problemsA excessively. In determination trees we ca n’t do any anterior premises about the informations, while we are able to treat both numerical and categorical informations. They are utile tools for operational determination devising. Using determination trees enables effectual usage of backdata, while chance allows flexibleness. Last but non least, determination trees encourage clear thought and planning.

( decision_tree_primer_v5 )

DisadvantagesA

Despite, the many advantages determination trees have, there are some disadvantages. First of all determination tree algorithms are unstable and those trees that are created from numeral datasets can be complex. Besides the end product property must be categorized while there is limited to one end product property. Furthermore sometimes in determination trees analysis there is reliant on the truth of the informations used and when we have qualitative input we have to give complete image. The fact that we can gauge lone chances is besides another disadvantage. Last but non least determination trees can be used merely for existent clip informations jobs.

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Decision

In drumhead, as we besides saw in the illustrations above, determination trees assist companies in doing decisions.A This concerns the demand to alter a state of affairs that is commanding the chance of a alteration. This alteration concerns the transmutation of the current state of affairs to another, more desirable.A The disposal should take the determination whether to put this alteration, every bit good as what the most appropriate method for doing the alteration is. It is non ever easy to obtain the right determination because there are no regulations available, the necessary information is non available either and officers do non hold the necessary accomplishments, cognition and techniques to A procedure. To do the right determinations there should be the right people, supported by appropriate information and utilizing the appropriate method.A Today, engineering can supply important aid in decision-making and do determination trees or other techniques of determination theory more suited for everyone.