A decision tree is a machine-learning model that maps questions about data features to a prediction. It supports supply-chain forecasting by turning learned relationships among demand, price, promotion, brand, and history into an interpretable sequence of decisions. section 15.2.2
Follow the tree as a sequence of operational steps:
- Treat each feature-based yes/no question as a node, such as whether demand in Q–1 exceeds 300. section 15.2.2
- Split observations according to the chosen question, creating smaller subsets. section 15.2.2
- Choose questions that reduce prediction error and make the resulting subsets as homogeneous as possible. section 15.2.2
- Continue through the branches until reaching a leaf containing the final prediction. section 15.2.2
A demand-forecasting path
A trained tree asks: Is demand in Q–1 greater than 300? Yes. Is average price greater than 20? No. Is price in Q+1 below 25? No. The path ends with a predicted demand of 550. section 15.2.2












