Introduction

This course is concerned with using decision trees to simplify and formulate business decisions, typically using financial information. As decisions affect the future well-being of an organisation, they almost always rely on some form of forecast information. In this course, you will consider the subject of uncertainty in a financial context and meet a few ways of dealing with it, including a basic introduction to probability. This will help you to understand a common approach to dealing with financial information known as an ‘expected value’.

Once you have a basic understanding of probability, you will then use that knowledge in the context of a powerful and sophisticated technique referred to as a ‘decision tree’. This technique allows you to consider, simultaneously, a variety of possible outcomes and to find the optimal decision for the organisation.

This OpenLearn course is an adapted extract from the Open University course B874 Finance for strategic decision-making.