Stochastic decision tree analysis on an electronic spreadsheet

This paper discusses an application of Lotus spreadsheet to a problem in stochastic decision tree analysis. This type of analysis combines the ideas from decision tree approach and risk analysis. We use a risk analysis package (ŗRISK) with Lotus 1-2-3 and perform the stochastic decision tree analysis on a classical problem due to Magee [1]. Results obtained indicate that the stochastic decision tree approach provides a more useful aid to decision makers than the traditional “best-estimate” approach.