Lookup, master-detail or junction — answered by ownership, cascade delete, and roll-ups.
The three questions
Does the child make sense without the parent? Should deleting the parent delete the child? Do you need roll-up summaries? Master-detail answers no, yes, yes; lookup answers the reverse.
Converting later is possible, painful
You can switch lookup to master-detail only while every child has a parent, and the switch rewrites sharing. Decide up front; this is a one-way door that pretends not to be.
Practice in your org
- Open your Developer Edition org and follow along step by step
- Change one thing at a time and note what happens
- When something breaks, read the error before searching for it