A-Level Business: Decision Trees and Critical Path Analysis

This material trains the two quantitative decision-making tools that A level Business names alongside investment appraisal. For example, AQA A-level Business asks for the understanding and interpretation of decision trees, with expected values and net gains (section 3.2.2), and for network analysis: interpreting and amending network diagrams and identifying the critical path and total float (section 3.10.3). Pearson Edexcel topics 3.3.3 and 3.3.4 cover constructing and interpreting simple decision trees and critical path analysis with earliest start time, latest finish time and total float, together with the limitations of both techniques.

The decision-tree questions set every branch out in words. You will calculate expected values and net gains, find a missing probability and treat a loss as a negative outcome, compare three options including doing nothing, and then consider what the numbers cannot tell you: that an expected value never occurs on a single decision, that a guessed probability can reverse the recommendation, and that a small firm may rationally reject the option with the highest net gain because of its attitude to risk.

The network questions describe each project as a list of activities, durations and dependencies, the way many exam questions present them before asking for a diagram. You will work out the project's minimum duration and critical path, calculate a total float, find what a delay does to the finish date and to the critical path, and see how float lets a manager move resources. One question asks why a well-planned project still ran late.

The quiz has twelve questions with full working in each explanation. The flashcards cover the symbols, formulae and definitions, together with the value and limitations of each tool. The written work has eight longer tasks: a full two-option decision tree and its evaluation, a complete network with earliest start times, latest finish times and floats for seven activities, the effect of delays, the use of critical path analysis in opening a restaurant, the value of paying for market research, and an evaluation of whether scientific decision-making removes the need for judgement.

All businesses and figures are invented. The material is practice written by Zestly and is independent of any exam board.

  • Calculate expected values and net gains on a decision tree, including a missing probability and a loss
  • Choose between options on net gain and explain what expected value does and does not mean
  • Evaluate decision trees, including estimated probabilities, attitude to risk and qualitative factors
  • Calculate earliest start times, latest finish times and total float, and identify the critical path
  • Work out the effect of a delay on the project finish date and on the critical path
  • Evaluate critical path analysis as a planning tool

Practice material written by Zestly, based on the A level Business specifications, for example AQA A-level Business (7132) sections 3.2.2 and 3.10.3 and Pearson Edexcel A level Business (9BS0) topics 3.3.3 and 3.3.4.

Sample question

A garden centre has three options. Option A, a marketing campaign costing £30,000: 0.7 chance of high demand (£150,000) and 0.3 chance of low demand (£60,000). Option B, a second store costing £120,000: 0.5 chance of £400,000 and 0.5 chance of £100,000. Option C: do nothing (£0). On net gain alone, which should it choose?

See the answer

B, with a net gain of £130,000 against £93,000 for A

A: expected value = 0.7 × £150,000 + 0.3 × £60,000 = £105,000 + £18,000 = £123,000; net gain = £123,000 − £30,000 = £93,000. B: expected value = 0.5 × £400,000 + 0.5 × £100,000 = £250,000; net gain = £250,000 − £120,000 = £130,000. B has the higher net gain. £123,000 and £250,000 are the expected values before costs are subtracted. A lower cost or the presence of risk does not decide the question 'on net gain alone'.

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