Decision Tree Package

The Lumenaut Decision Tree package provides a range of tools that enable the user to easily and quickly build decision tree models for many real life situations natively in Excel. The user can quickly model real life decision processes in Excel and select the decision path that produces either the highest or lowest outcome. By making better informed decisions, companies can select the optimum path for their business.

The Lumenaut Decision Tree Analysis package is used in many industries from Oil & Gas, Automotive, Pharmaceutical& Chemical, Health Care, Energy, Mining, to name but a few, to help make more analytically driven decisions.

Introduction to Lumenaut Decision Tree Analysis

Most decision processes in business, engineering and science can be modeled using the Lumenaut Decision Tree Analysis Package, the tree below represents a simple model to decide whether to drill for oil or not. The key variables are drilling costs ($-125,000), expected probability of striking oil (10%) and value of strike ($1,670,000). In this model, the decision is to drill for oil.

Click for full set of analysis

But what about the sensitivity of the input variables? A One-Way and Two-Way sensitivity analysis can be carried out on individual model variables to identify change points in the model, the tables and chat below indicates the result of a two way analysis on Drilling Costs and Probability of Striking Oil.

Click for large view Click for large view

Click for large viewTornado charts shows the percentage change in the payout or Expected Monetary Value (EMV) for each variable in the sensitivity analysis and the Spider Charts shows the relationship between the percentage change in the variables and the final payout - opposite.

Click for large view

 

 

The The risk profile and cumulative risk profile for the tree is given opposite, note only two payout's one at 90% probability and the other at 10% probability. 

Additional functions are available such as Exponential Utility which are used to translate actual values into a measurement of utility to the decision maker. Net present value (NPV) enable tree decisions to be made in today's dollars taking into account the cost of capital over the entire time period the decision tree covers.

A very useful introductory tutorial to decision trees is available here html/pdf

 

Try Lumenaut for Free for 15 days, just download and install.

 

 

Key Highlights for the Lumenaut Decision Tree Package

  1. Fully integrated into Excel, input cells act just like a normal spreadsheet cell and can be linked to other cells or automatically adjusted via macros or other Excel Add-ins
  2. Powerful one and two way sensitivity analysis enables rapid assessment of decision tree pivot points. Results presented in clear easy to read table and chart format.
  3. Tornado and Spider Charts
  4. Risk profile charts showing breakdown of decision options payout's and probabilities of occurrence.
  5. Tree maximum width is 28 nodes by 16,000 nodes high.
  6. Very reasonably priced.

Lumenaut Decision Tree Application

Nick Thomsen and Robert Olsen used Lumenaut's Decision Tree in their study on Investment Uncertainty in the West Danish Electricity Market.

The chose Lumenaut because it was user friendly and contained all the decision tree and sensitivity analysis functions they required for their in depth study.

 

Here is a short list of some of the institutions that are currently using Lumenaut.


The University of Western Ontario
University of Montreal
University of Western Ontario
Universidad de los Andes
INCAE Business School
Carnegie Mellon
Columbia University
Cornell University
Duke
Fuqua School of Business
Haas School of Business
Harvard Business School
Olin School of Business
Pepperdine University
Tufts University
University of California
University of Michigan
University of Virginia
Chinese University of Hong Kong
Indian Institute of Management
Indian Institute of Technology
Kochi University of Technology
Kyoto University
University of Tokyo
National University of Singapore
Middle East Technical University
Victoria University of Wellington
Aarhus Business School
University of Mannheim
University of Zurich
Edinburgh University
Imperial College London
University of Manchester
University of Oxford
Warwick Business School

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