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Decision Tree Analysis in Excel

There has been a growing trend in organizational and business management that involves decision-making, based upon accurate data analysis. Every organization requires reliable decision and data analysis tools. Fortunately, a spreadsheet program in Excel, which is an integral part of Microsoft Office, is greatly helpful in this regard.

How To Create Decision Tree Analysis in Excel?

Decision Tree Analysis in Excel

Wondering, how to create and use a Decision Tree in excel? Well, these can be easily drawn with the help of Microsoft Excel program. Excel is an incredible tool used by majority of organizations for their data analysis requirements. It has user-friendly features. These include an array of diagrams and graphics to help commercial companies in making a wise data-driven decision.

You can start out with a decision base cell and then draw arrows and lines to create new cells. You can now easily discover how to use it to help you summarize goals of any particular business. Listed below are simple steps that will enumerate how you can efficiently and quickly build a Decision Tree diagram, right in your Excel worksheet.

You can create Decision Tree diagrams in an Excel worksheet. You can then enter your formulas and values like you would usually do in this worksheet.

Here’s how you can do it in Excel 2007, Excel 2010:

1. Open a workbook in MS Excel.
2. Go to ‘Insert’ tab and then click on ‘SmartArt’ button.
3. A window ‘Choose SmartArt Graphics’ will appear.
4. Click on ‘Hierarchy, choose a hierarchy design and then click ‘OK’.
5. Enter the decision title next to your first bullet point.
6. Type the name of each new option in the bullet points under a decision bullet.
7. Evaluate each new option and ascertain whether the objective is achieved, if there is any uncertainty or if any other decision needs to be taken.
8. Insert boxes if another decision is to be taken and circle for any uncertainty.
9. If there is an outcome, nothing is required to be done. A box can be added by simply pressing “Enter” and then press “Tab” after bullet points where you wish to add a box.
10. To change shapes to a circle, right click on that shape and select the new shape.
11. Enter the probabilities in the cell that is closest to where the lines and circles join. These probabilities will represent the percentage that is expected to occur.
12. Enter an estimated value such as a dollar value in the closest cells where the lines and boxes are joined. These will represent the estimated values of any decision taken.

Top 6 Things To Consider When Creating Decision Tree Analysis in Excel:

1. Begin with the higher level options.
2. Next, break every option into an appropriate high-level step.
3. At every step, you should determine which options you should follow and then assign percentage probability or likelihood to every alternative or branch.
4. When these alternatives have been correctly developed, the last step is assigning a dollar value for the final step in this branch.
5. Next, you can roll up every option into their value via statistical data.
6. The result is the estimated total for every option.

Another incredibly simple way of doing it, is to download a tree plan from online Microsoft office. Start using Microsoft office online program from where you can download it.

1. Open excel and go into the help menu
2. Search ‘tree diagram’
3. Click on ‘TreePlan’, select ‘Decision Tree Add-in For Excel’

There are several tools available that can create a Decision Tree. However, many are fairly expensive and are suitable for the most robust analysis. An Excel can be easily set up to build it. All you need to do, is to put in some efforts to build the format for the first time.

Top 3 Free Decision Tree Add-in for Excel!

You can now easily create it in Excel that helps you research, analyze a financial, legal or business problem. An analysis tool will allow you to choose an optimal path by calculating the expected value of every strategy. Additionally, you can examine the uncertainty and risk associated with every strategy.

Here’s a List Of The Top 3 Free Decision Tree Add-in for Excel:

SolutionTree at : www.stricklensolutions.com
TreePlan at : www.treeplan.com
PrecisionTree at : www.palisade.com

Top 2 Benefits Of Using Excel Decision Tree Add-in:

1. Optimal Path Calculation

The add-in will automatically calculate the optimal path via your Decision Tree. Whenever you update a node value, the custom function will determine the best alternative. It will allow ‘folding back’ maximum expected values for the complete it. Thus, decision analysis gets really easy as a result of this.

2. Copy, Cut And Paste Functionality

With the excel add-in, creating a complex Decision Tree is simple. You can copy or move any branch from one node to other. You can also choose to copy a formula or just the value, just like the way you do it in Excel. Also, you can paste the branch onto a different tree within the same workbook or onto a new one.

Top 3  Best Decision Tree Software!

These programs are small and fairly easy to use. They will allow you to optimize a sub node, add branches and more. There are several free excel templates that will allow you to incorporate the functions of Microsoft Excel through a software.

Listed below are the best decision tree software:

1. www.treeage.com‎
2. www.smartdraw.com
3. visionarytools.com

A free software often offers fairly basic and limited functionality. However, depending on your analytical requirement, some of these can be perfectly adequate. Several programs are in fact add-ins for Excel. These will enhance the functionality of the Excel program and allow you to generate higher Decision Trees. Some carry an entire host of extra features. These are great for all those who like to play around with data.


A Decision Tree in excel software can be used in several areas such as business, computing, medicine etc. It is considered to be an extremely popular algorithm, especially within the business and computing world. It is considered to be one of the most helpful tools for data analysis.

{ 1 comment… add one }
  • stevelaudig May 23, 2015, 11:34 pm

    thanks a ton. I am a retired US lawyer now teaching English in China. If you think I can return the favor, please ask. cheers.


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