Problem
Most business problems may potentially have more than one solution. Each choice can lead to varying outcomes, some more likely than others. To illustrate this, consider the decision faced by Prospect plc, a (fictitious) property development business. The company owns a town center building site. This could be sold now for an estimated £1.6m. Alternatively the site could be developed with shops and a restaurant at a cost of £1.5m. The property could then be sold for £4m - provided that a bypass proposal is rejected by the local council. The odds of the bypass being rejected are judged at about 75:25 due to environmental objections. If, however, the bypass were to be built, much tourist trade would be lost and the value of the development would only be £2m. Which choice should Prospect plc make? A decision tree is a useful tool when analyzing choices of this kind.
• Analyze the arguments for and against the use of decision trees?