DSO-547: Spreadsheet Modeling

for Business Insights

Introduction

Hiroshi Ochiumi

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I. Course Overview

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Central Theme

 Learn the art and skills of logical

reasoning with formal models -- how to
think and think better.
(Context: Business World)

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Course Objectives

 Modelers with Excel Skills Who Can:

 Transform business situations into well defined

quantitative/ analytic problems
 Develop spreadsheet-based optimization models
 Build Monte-Carlo simulation models using Crystal Ball.
 Sensitivity Analyses
将业务情况转化为定义良好的定量 / 分析问题
开发基于电子表格的优化模型
使用水晶球建立蒙特卡洛模拟模型。
敏感性分析
Note:
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Knowledge/Skill Sets

Modeling
Skills EXCEL
Skills

Functional Area
Applications
功能区域的应用程序

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Classes of Problems/Models/Tools

Managerial Models and Time

Problems Excel Add-ins Plan
Optimization
Resource Allocation
Excel Solver 7+ Wks
分配
优化 Excel 解算器
Simulation
Risk Analysis Crystal Ball 5 Wks

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EXCEL Skills
 Basic Excel
 Formula – logical, mathematical
 Formatting – conditional formatting, naming range
 Graphs
 Data
 Data Analysis
 Regression
 Statistics
 公式 - 逻辑，数学
 格式化 - 条件格式化，命名范围
 图
 数据
 数据分析
 回归
 统计数据

 Special Functions/Tools
 Solver 解算器
 Crystal Ball
 Spreadsheet Engineering 电子表格工程 7
 Defining Modules
Functional Area Applications
 Finance:
Capital Budgeting, Portfolio Optimization, Bond
& Option Pricing
 Marketing:
Sales forces planning, pricing, forecasting,
media budgeting, New product planning…
 Operations:
Production planning & scheduling, Capacity
Planning, Manpower planning
 Strategy:
Strategic equilibriums, Real options and
investment planning…
财务 : 8
Textbook

(relevant chapters from)

Business Analytics: The Art of

Modeling With Spreadsheets
5th ed.
Stephen G. Powell
Kenneth R. Baker
John Wiley and Sons, Inc.

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Organization of the Book

 Basics:
 Modeling basics and craft 工艺 skills
 Effective abstraction, model debugging, and translating models
into managerial insights
 有效的抽象，模型调试，并将模型转化为管理洞察力
 Excel basics & spreadsheet engineering
 How to design, build, test, and perform analysis with a
spreadsheet model
 Advanced management science models
 Optimization 优化
 Simulation 模拟

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Grading

• Homework Assignments
• Midterm Exam
• Final Exam
• Class Participation

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Pedagogy 教育学

 Lectures
 Hands on spreadsheet 电子表格 modeling
 Lots of examples
 Homework assignments

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Expectations

 Read the assigned material

 Participate in class discussion
 Complete the assigned exercises

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 DSO547 is for you

 “I want to learn how we can use Excel to

model/formulate a business problem, and
solve it.”
 “I want to be able to evaluate risks
associated with uncertain business
projects.”
 “I want to be able to conduct sensitivity
analyses to evaluate the robustness of
my proposed solution.”
 “ 我想学习如何使用 Excel 来建模 / 制定一个
商业问题，并解决它。”
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
 DSO547 is not for you

 “I hire people to do these things.”

 “Why would I want to do it myself?”

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II. Basics of Modeling

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Questions

 What does modeling mean? Excle

 What are the standard types of models?
 What are the benefits of modeling for
managers?
 What is the modeling process?
 What role does Excel play?

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What is Modeling?

 Creating a simplified representation of

reality
 Working with this version to understand
or control some aspect of the world
 创造一个简化的现实表现
 用这个版本来理解或控制世界的某些方面

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Types of Models

 Mental: time to school, hiring criteria

 Visual: map
 Physical: robot, airplane wing model
 Analytical: population growth model

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Benefits of Modeling

 Improves thinking skills

 Break problems down into components 组件
 Make assumptions 假设 explicit 明确

 Saves costs
 Relative to alternatives 备选方案 (e.g.,
surveys)
 Avoiding expensive errors

 Allows exploration of the impossible

 Improves business intuition 直觉
 Serves as a means of communication
 提高思维能力
 将问题分解成组件 20
Example: A Simple Profit Model
(Influence Chart)

Profit

Revenue Cost

Unit price Quantity sold

Unit cost Quantity Fixed

produced costs

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Relationships

 Profit = revenue - cost

 Profit = (unit price)(quantity sold) - cost

 Profit = (unit price)(quantity sold) -

[fixed cost + (unit cost)
(quantity produced)]

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Developing a Mathematical Model
第一节课结束
Profit

R C
Revenue Cost

Unit price Quantity sold

p S
Unit cost Quantity Fixed
Profit = R - C produced costs
= pS - (cQ + F) c
Q F
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Spreadsheet Model

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The Creative Problem-Solving
Process (Chapter 2)

1. Exploring the mess

Search mess for problems and opportunities.
Accept a challenge and undertake systematic efforts to
respond to it.
2. Searching for information
Gather data, impressions, feelings, observations; examine
situation from many different viewpoints.
Identify most important information.
3. Identifying a problem
Generate many different potential problem statements.
Choose a working problem statement.

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(Cont.)

4. Searching for solutions

Develop many different alternatives and possibilities for
solutions.
Select one or a few ideas that seem most promising.
5. Evaluating solutions
Formulate criteria for reviewing and evaluating ideas.
Select the most important criteria. Use criteria to evaluate,
strengthen, and refine ideas.
6. Implementing a solution
Consider possible sources of assistance and resistance to
proposed solution. Identify implementation steps and
required resources.
Prepare most promising solution for implementation.
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