Excel Ease of Use
PrecisionTree is a true add-in to Microsoft Excel, integrating completely with your spreadsheet. Browse, define, analyze—while never leaving Excel. PrecisionTree nodes, branches, and arcs are placed directly in your model, and values appear in the formula bar. Context-sensitive right-click menus and the PrecisionTree toolbar make learning and navigating PrecisionTree a snap.
How PrecisionTree Works
Build a Decision Tree
Decision trees provide a formal structure in which decisions and chance events are linked in sequence from left to right. Decisions, chance events, and end results are represented by nodes and connected by branches. The result is a tree structure with the "root" on the left and various payoffs on the right. Probabilities of events occurring and payoffs for events and decisions are added to each node in the tree. With PrecisionTree, you’ll see the payoff and probability of each possible path through a tree.
You can add PrecisionTree functions to any cell in a spreadsheet and can include arguments that are cell references and expressions - allowing great flexibility in defining decision models. You can also collapse and restore branches to the right of any given node for simplicity and easier navigation through the tree.
Analyze Your Results
PrecisionTree determines the best decision to make at each decision node and marks the branch for that decision TRUE. Once your decision tree is complete, PrecisionTree’s decision analysis creates a full statistics report on the best decision to make and its comparison with alternative decisions.
PrecisionTree can create a Risk Profile graph that compares the payoffs and risk of different decision options. It displays probability and cumulative charts showing the probabilities of different outcomes and of an outcome less than or equal to a certain value.
See cumulative Risk Profile graph
PrecisionTree can also perform a sensitivity analysis by modifying the values of the variables you specify and recording the changes in the expected value of the tree. You can change one or two variables at a time. Results include sensitivity, tornado, spider, and strategy-region graphs.
Decision Analysis
Decision Analysis is a process that allows you to examine decisions in a structured and efficient manner. Using decision trees and influence diagrams lets you detail all of your possible options and identify the best decision to make. Decision Analysis uses powerful analytical techniques developed at Stanford, Harvard and other universities over the past thirty years. The most efficient way to build a Decision Analysis model is graphically using influence diagrams and decision trees. Both methods use symbols, or nodes, and lines connecting them. Influence diagrams quickly define the general structure of a decision model. Decision trees provide a more formal structure in which decisions and chance events are linked from left to right in the order they would occur. (For example, before you decide where to have a picnic, you need to determine the chance that it will rain.) The result is a tree structure with the "root" on the left and branches for each chance event or decision extending to the right. Probabilities of events occurring and payoffs for events and decisions are added to each node in the tree.
Benefits of Decision Analysis
Model decisions efficiently and effectively
Formally analyze decisions, clearly laying out your goals and options
Decision trees capture a chronological sequence of choices and possible events
Make well-informed decisions
Influence diagrams capture the general structure of a decision
Explain and document your reasoning to others
Using PrecisionTree
Decision Analysis is now available where you do your modeling - in Microsoft Excel. PrecisionTree is an "add-in", linking directly to Excel to add Decision Analysis capabilities. The PrecisionTree system provides all the necessary tools for setting up and analyzing decision trees and influence diagrams. And PrecisionTree works in a style you are familiar with - Excel-style menus and toolbars.
PrecisionTree Nodes
PrecisionTree allows you to build decision trees by defining nodes in Excel spreadsheets. Node types offered by PrecisionTree include:
- Chance nodes
- Decision nodes
- End nodes
- Logic nodes
- Reference nodes
You can add PrecisionTree functions to any cell in a spreadsheet and can include arguments that are cell references and expressions - allowing great flexibility in defining decision models.
Enter a Decision Tree Directly In Your Spreadsheet
In PrecisionTree, decision trees and influence diagrams are created directly in your spreadsheet. The example at the right shows square decision nodes, round chance nodes and triangular end nodes. For each branch in the tree there is a label, value, and if necessary a probability. For the Test chance node, for example, there are three possible results: No Structure, Open Structure or Closed Structure. Each branch has a value of 0, since there are no additional costs incurred or payments received based on the test results. The probability of each outcome occurring is 41%, 35% and 24% respectively. These values are typed directly in the spreadsheet.
See the Important Information Displayed in Your Decision Tree
With PrecisionTree, you'll see the payoff and probability of each possible path through a tree. The screen at right shows a section of an oil drilling decision tree. Each end node lists the payoff and probability for each path through the tree. In this example, the payoff returned depends on the cost of testing, the cost of drilling and the amount of oil found. PrecisionTree determines the best decision to make at each decision node and marks the branch for that decision TRUE. PrecisionTree displays a great deal of information about your decision tree, giving you quick access if you need to make changes in your model.
Once your decision tree is complete, PrecisionTree's decision analysis creates a full statistics report on the best decision to make and its comparison with alternative decisions.
Risk Profile
A decision analysis in PrecisionTree generates a Risk Profile. The Risk Profile compares the payoffs and risk of different decision options. The cumulative risk profile graph displays a cumulative distribution showing the probability of an outcome less than or equal to a certain value.
Sensitivity Analysis
Have you ever wondered which variables matter most in your decision? If so, you need PrecisionTree's sensitivity analysis options. During a sensitivity analysis, PrecisionTree modifies the values of the sensitivity variables you specify and records the changes in the expected value of the tree. For one-way sensitivity analyses, one variable is changed at a time. Reports generated by this analysis include one-way sensitivity graphs, tornado diagrams and spider graphs. The results of many one-way analyses can be compared on the same tornado diagrams and spider graphs. For two-way sensitivity analyses, two variables are changed simultaneously. Reports generated by this analysis include two-way sensitivity graphs and Strategy Region graphs (PrecisionTree Pro only). For those who need more sophisticated sensitivity analyses, PrecisionTree links directly to TopRank™, Palisade Corporation's What-If Analysis Add-in.
PrecisionTree and @RISK - Perform Risk Analysis on Your Decision Trees
@RISK, Palisade Corporation's Risk Analysis and Simulation Add-In, is a perfect companion to PrecisionTree. @RISK, available separately or bundled with PrecisionTree in the DecisionTools Suite, allows you to quantify the uncertainty in any spreadsheet model using probability distribution functions. Then, at the click of a button, @RISK performs a Monte Carlo simulation of your model, analyzing every possible outcome and graphically illustrating the risks you face.
Use @RISK to define uncertain (chance) events in your model as continuous distributions. Probability distributions can be applied to any uncertain value or probability in your decision trees and supporting spreadsheets. With this information, @RISK can run a complete Monte Carlo simulation of your decision tree, showing you the range of possible results that could occur.
Use PrecisionTree with the Entire DecisionTools® Suite
PrecisionTree was designed to work with our other DecisionTools Suite products @RISK, TopRank®, RISKview™, and BestFit®. Take any model you have analyzed in PrecisionTree and then use @RISK to perform a powerful Risk Analysis. Add @RISK probability distribution functions right in your existing decision tree. Take real-world data and use BestFit to find the distribution which best fits your data, or create your own distribution by drawing it in RISKview. Use them in @RISK to realistically represent uncertainty. Then run a full Monte Carlo simulation on your Decision Analysis model! You'll have a distribution of possible results, along with the likelihood of them occurring, for the optimal decision identified by PrecisionTree. Then bring in TopRank to run a detailed What-If Analysis on the same tree. The same spreadsheet model, three powerful analyses - all with the DecisionTools Suite. With the DecisionTools Suite, you will be prepared to face the risks in any situation!
Features:
- • Intuitive and easy to learn
- • Fully integrated with spreadsheet model
- • Build decision trees and influence diagrams directly in Excel
- • Graphs and reports customized using standard Excel features
- • Automatic formatting of influence diagrams and decision trees
- • Influence diagrams show results without being converted to a decision tree
- • Decision analysis results updated automatically as model is changed
- • Perform Sensitivity Analyses - one-way and two-way - on any value in decision tree or influence diagram
- • Use with @RISK for complete Monte Carlo simulation
- • Policy Suggestion Graph and Strategy Region Graph (Pro Only) Easy to edit trees and diagrams
- • Generate Risk Profile graphs
- • True add-in, featuring toolbar interface, menu, Excel commands
- • Standard Excel formulas used for modeling
- • Probabilities automatically normalized in chance nodes
- • Influence diagrams can describe asymmetric trees
- • Access node information in spreadsheet cells
- • Advanced features include logic nodes, reference nodes, custom VB • A utility functions, linked trees
- • True 32-bit application for Windows 98/NT
- • Designed to work with DecisionTools® Suite
