To create a decision tree using PrecisionTree, first select the New menu
Decision Tree command on the PrecisionTree menu or click the Create
New Decision Tree icon on the PrecisionTree toolbar. For the oil
drilling example, you’ll create a standard cumulative decision tree.
PrecisionTree also allows you to create a linked tree, where branch
values are linked to a model in your spreadsheet, and a formula tree,
where the payoff for each path through the tree is determined by
calculating a user-defined formula. In Chapter 4: Modeling
Techniques, you’ll see how to create the same oil drilling model as these
other types of trees. The different types of trees each have a different
method for calculating the payoffs from the decisions represented in the
tree.
When the Create New Decision Tree icon is clicked, a single branch
representing the ―root‖ or start of your tree is created at a location in the
worksheet you select. The Model Settings dialog is then displayed,
showing the name of this new tree, along with the settings for the tree.