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Tornado Example

This document describes how to create a tornado diagram in Excel to analyze the sensitivity of an output cell to changes in parameter values. The user is prompted to specify: (1) the output cell, (2) a range of parameter cells affecting the output, (3) parameter labels, (4) low parameter values, (5) high parameter values, and (6) an empty range to store tornado diagram data. The procedure calculates the output with low/high values and sorts the results to identify which parameters have the greatest impact when changed. An example is provided.

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Sally Lucia
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52 views

Tornado Example

This document describes how to create a tornado diagram in Excel to analyze the sensitivity of an output cell to changes in parameter values. The user is prompted to specify: (1) the output cell, (2) a range of parameter cells affecting the output, (3) parameter labels, (4) low parameter values, (5) high parameter values, and (6) an empty range to store tornado diagram data. The procedure calculates the output with low/high values and sorts the results to identify which parameters have the greatest impact when changed. An example is provided.

Uploaded by

Sally Lucia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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311534427.

xls

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When this workbook (TORNDIAG.XLS) is open, you can make a tornado diagram
in any workbook by the menu command sequence Tools>TornadoDiagram.

The TornadoDiagram procedure will ask you to specify six ranges in your workbook:
(1) A single cell containing output for sensitivity analysis in the tornado diagram.
(2) A range of parameter cells, in one column, that affect this output cell.
The values of these parameter cells should be your best estimates of these parameters.
(3) A range, the same size as (2), containing labels for these parameters.
(4) A range, the same size as (2), containing low alternative values for these parameters.
(5) A range, the same size as (2), containing high alternative values for these parameters.
(6) An empty range, with 4 columns and one more row than (2), to store data for the tornado diagram.
In this data range, the TornadoDiagram procedure will write:
a label for each parameter in column 1,
the output cell value when the parameter is at its low value (with others at best estimate) in column 2,
the output cell value when the parameter is at its high value (with others at best estimate) in column 3,
the absolute value of the difference between columns 2 and 3 in column 4.
The TornadoDiagram procedure will sort this range by column 4, and then make the tornado diagram.
EXAMPLE
(1) Output Cell (profit)
Formula of cell A21. =(A23-A26)*A24*A25-A27
225
(2) Parameters (3) Labels
(4) Low Parameter Values (5) High Parameter Values
175 Selling Price
140
200
12 Market Size
8
20
0.25 Our Share
0.18
0.35
40 Variable Cost
30
60
180 Fixed Costs
150
300
(6) Tornado Table
Parameters:
Output A21 with low valu Output A21 with high val Output Differences:
Market Size
90
495
405
Our Share
111.6
387
275.4
Selling Price
120
300
180
Fixed Costs
255
105
150
Variable Cost
255
165
90

Tornado Diagram
Market Size
Our Share
Selling Price
Fixed Costs
Variable Cost
0

100

200

300

400

500

600

Tornado Diagram
Market Size

311534427.xls

Our Share
44
45
46
47
48
49

A
Selling
Price

Fixed Costs
Variable Cost
0

100

200

300

400

500

600

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