Quantitative Decision Making Tools: Decision Trees, Payback Analysis & Simulations


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question 1 of 3

You work in an IT company that, so far, has only produced relatively cheap computers. Your company is trying to decide whether or not to introduce a new line of products. Why would a decision tree be useful?

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1. Which of the following best defines payback analysis?

2. Why are simulations useful?

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About This Quiz & Worksheet

To pass this multiple-choice quiz, make sure you understand what a decision tree is and know how to figure out a payback time frame. After you complete the quiz questions, you'll get your scores instantly.

Quiz & Worksheet Goals

Show what you know about the following:

  • How a decision tree works
  • What payback analyis is
  • Meaning of the term 'simulation'
  • Reason to use decision-making tools
  • Determining the payback time frame in a given example

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you can read information regarding what a payback analysis is and what it takes into account and interpret it correctly
  • Reading comprehension - ensure that you draw the most important information from the related quantitative decision-making tools lesson
  • Problem solving - use acquired knowledge to solve payback time frame sample problems

Additional Learning

Be sure to read or watch the lesson called Quantitative Decision Making Tools: Decision Trees, Payback Analysis & Simulations to discover more about these methods. Some objectives this lesson covers are listed below:

  • Understand the purpose of decision-making tools
  • Identify the most common types of tools managers use
  • Explain how to use a decision tree toward a challenge
  • Describe when a particular investment is a good one
  • Appreciate how to use a simulation to gain the advantage