Skip to content
flowss
Start freeChecking your session
Decision tree templates

Decision Tree — Launch, License or Shelve a New Product

A two-stage launch decision with a year-2 capacity option: the rollback values launching in-house at $3,583k against $3,300k for licensing and marks adding a second line as optimal after strong demand, while the cumulative risk profile shows the 25% chance of a loss that licensing avoids. Illustrative values.

Decision treeBusiness & StrategyDecision tree syntax docs
Template previewDecision tree
X-200 industrial sensor — launch, license or shelve?X-200 industrial sensor — launch, license or shelve?Five-year NPV after tax, US$ thousands2 decisions · 3 chance nodes · 8 outcomes · maximise expected valueOPTIMAL FIRST CHOICELaunch in-house·EV $3,583kLicense to a channel partnerShelve the productRun one lineHigh volume0.4Low volume0.6$9,800knet $7,400kRoyalty volumeEV $3,300k$4,800k$2,300k$0Launch in-housecost $2,400k · net $3,583kStrong0.3Moderate0.45Weak0.25Add a second linecost $1,800k · net $10,625kHolds0.75Fades0.25Commercialise?EV $3,583kYear-1 demandEV $5,983kCapacity in year 2EV $10,625kDoes demand hold?EV $12,425k$14,500knet $10,300k · P 0.225$6,200knet $2,000k · P 0.075$5,600knet $3,200k · P 0.45$1,100knet −$1,300k · P 0.25DecisionChanceOutcomeOptimal strategyRejected alternativeRisk profile·cumulative probability by first choice0%25%50%75%100%−$2,000k$0$2,000k$4,000k$6,000k$8,000k$10,000k$12,000kfinal outcome, net of costsFIRST CHOICEEVLaunch in-house$3,583kσ $4,046k · P(loss) 0.25License to a channel partner$3,300kσ $1,225k · worst $2,300kShelve the product$0σ $0 · worst $0What the rollback showsBest first choice: “Launch in-house”, EV $3,583k — $283k ahead of the next best, “License to a channel partner” ($3,300k).If the path reaches “Capacity in year 2”: “Add a second line” ($10,625k) over “Run one line” ($9,800k).Following it, the outcome ranges from −$1,300k to $10,300k across 4 possible results, standard deviation $4,046k; a 25% chance of a loss.Note: Illustrative values for a fictional sensor maker; replace them with your own forecasts.

Make it your own.

title "X-200 industrial sensor — launch, license or shelve?"
subtitle "Five-year NPV after tax, US$ thousands"
currency $
unit k
risk-profile compare
note "Illustrative values for a fictional sensor maker; replace them with your own forecasts."

decision "Commercialise?"
  "Launch in-house" cost 2,400 -> chance "Year-1 demand"
    "Strong" p 0.30
      decision "Capacity in year 2"
        "Add a second line" cost 1,800 -> chance "Does demand hold?"
          "Holds" p 0.75 -> 14,500
          "Fades" p rest -> 6,200
        "Run one line" -> 9,800
    "Moderate" p 0.45 -> 5,600
    "Weak" p rest -> 1,100
  "License to a channel partner" -> chance "Royalty volume"
    "High volume" p 0.40 -> 4,800
    "Low volume" p rest -> 2,300
  "Shelve the product" -> 0