In other threads, Covers have discussed the issue of auditors making recommendations and potential conflict of interest. Maybe the auditor was just making a suggestion on an approach to solve a problem but was not necessarily requesting that it be done.
A decision tree is a tool used to choose between multiple paths of action. Usually it is set up like a flow chart with yes/no as shown in Dave's example or it can look more like a tree with branches showing each possible action as you move through the process.
If you can show your process as a series of decisions that need to be made than a decision tree may help simplify what needs to be done in your process. With the limited information provided, it is difficult to determine if you have a decision process. It is not relevant whether you are designing the product or designing the process, the decision tree can be used for either.
If you don't believe it is a value added tool, then you do not have to do it just because of the auditor's suggestion.