Part 2. MM4XL Tools > 1. Strategic Tools > Decision Tree > 3. Anatomy of a Decision Tree > 1. Naive Trees > Multiplicative Tree

Decision Tree

Multiplicative Tree

When using multiplicative trees, the value in the cell under the tree root (cell A8 in the picture below) is multiplied according to the percentage values in the upper cell of each branch. For instance, the value 21200 in cell B4 is obtained by multiplying 212000 times 10% (A8*B3). The value in C2 is found by multiplying 21200 in cell B4 times 23% in C1, and so on. The end values show the overall size of one branch in percentage.

The example is a population of 212,000 individuals. 10% like the new product concept and 23% are ready to buy it. The overall percentage of people who like it and are ready to buy is equal to 2.3% of the original 212,000, as shown in cell D2.

Multiplicative trees can be useful to summarize target segmentations, geographic splits, sources of sales, development paths, alternative decisions, and more.

Decision Tree Software for Business and Management Model Making

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