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Evans Analytics1e PPT 02

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0% found this document useful (1 vote)
388 views36 pages

Evans Analytics1e PPT 02

Notes

Uploaded by

Munish Raja
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 36

Copyright © 2013 Pearson Education, Inc.

publishing as Prentice Hall 2-1


 Basic Excel Skills
 Excel Functions
 Spreadsheet Add-ins for Business Analytics
 Spreadsheet Modeling and Spreadsheet
Engineering

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publishing as Prentice Hall 2-2
 Many commercial software packages can be used
for Business Analytics.
 Spreadsheet software, such as Microsoft Excel, is
widely used across all areas of business.
 Spreadsheets provide a flexible modeling
environment for manipulating data and
developing and solving models.
 This chapter provides a summary of the basic
features in Microsoft Excel for solving problems in
Business Analytics.

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publishing as Prentice Hall 2-3
 Opening, saving, and printing files
 Navigation
 Selecting ranges
 Inserting/deleting rows and columns
 Entering and editing text, data, and formulas
 Formatting data (number, currency, decimal)
 Working with text strings
 Performing basic arithmetic calculations
 Formatting text
 Modifying the appearance of a spreadsheet

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Ribbon in Excel 2010 for Windows
 Tabs - Home, Insert, Page Layout, Formulas, …
 Groups - Font, Alignment, Number, Styles, …
 Buttons and Menus
- Buttons appear as small icons.
- Menus of additional choices are indicated by
small triangles.

Figure 2.1
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Excel Formulas
 Common mathematical operators are used
c
a− bP + would be entered into Excel as:
5
d
=a− b*P^5 + c/d
 Cell references can be relative or absolute.
 Using a dollar sign before a row or column label
creates an absolute reference.
 Relative references: A2, C5, D10
 Absolute references: $A$2, $C5, D$10

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publishing as Prentice Hall 2-6
Example 2.1
Implementing Price-Demand Models in Excel
Two models for predicting price using demand
Linear
D = a – bP
=B4 – B5*A8
(in cell B8)
Nonlinear
D = cP-d
=E4*D8^-E5
(in cell E8) Figure 2.2

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publishing as Prentice Hall 2-7
Example 2.1 (continued) Implementing Price-
Demand Models in Excel

Figure 2.5

D = a – bP (linear)
D = cP-d (nonlinear)

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-8
Copying Excel Formulas
Cells can be copied in many ways.
 Use the Copy button in the Home tab, then Paste
 Use Ctrl-C, then Ctrl-V
 Drag the bottom right corner of a cell (the fill
handle) across a row or column
 Double click on the fill handle of a cell and its
value (or formula) is copied to the cells below if
there is data in an adjacent column

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-9
Example 2.2 Copying Excel Formulas by Dragging

Figure 2.3

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publishing as Prentice Hall 2-10
Example 2.2 (continued)
Copying Excel Formulas by Dragging

Figure 2.4

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publishing as Prentice Hall 2-11
Example 2.2 (continued)
Copying Excel Formulas by Dragging

Figure 2.5

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publishing as Prentice Hall 2-12
Other Useful Excel Tips
 Split Screen
 Paste Special
 Column and Row Widths
 Displaying Grid Lines and Column Headers for
Printing
 Filling a Range with a Series of Numbers

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publishing as Prentice Hall 2-13
Basic Excel Functions
 =MIN(range)
 =MAX(range)
 =SUM(range)
 =AVERAGE(range)
 =COUNT(range)
 =COUNTIF(range,criteria)

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publishing as Prentice Hall 2-14
Example 2.3 Using Basic Excel Functions

=MIN(F4:F97)
=MAX(F4:F97)
=SUM(G4:G97)
=AVERAGE(H4:H97
)=COUNT(B4:B97)
=COUNTIF(D4:D97,”=O-Ring”)
=COUNTIF(H4:H97,”<30”)
Figure 2.6

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-15
Functions for Specific Applications:
 =NPV(rate,value1,value2,…)
 Net present value (or discounted cash flow)
measures the worth of a stream of cash flows,
taking into account the time value of money.
F is the cash flow ($)
i is the discount rate
t is the number of time
periods into the future,
where t = 0, 1, …, n
Copyright © 2013 Pearson Education, Inc.
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Example 2.4 Using the NPV Function
=NPV(rate,value1,value2,…)
Cell B8:
=NPV(B6, C4:H4) – B5

Figure 2.7

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Insert Function:
 Click the fx button or
choose Insert Function.
 You may type in a
description or search.

Figure 2.8

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publishing as Prentice Hall 2-18
Logical Functions:
 =AND(condition1, condition2, …)
 =OR(condition1, condition2, …)
 =IF(condition, value if true, value if false)
 You may nest up to 7 IF functions, replacing the
value if false with another IF function.
 Conditions may include the following:
= equal <> not equal to
> greater than >= greater than or equal to
< less than <= less than or equal to
Copyright © 2013 Pearson Education, Inc.
publishing as Prentice Hall 2-19
Basic Excel Functions:
 =COUNTIF(range,criteria)

Figure 2.9

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publishing as Prentice Hall 2-20
Example 2.5 Using the IF statement
=IF(condition, value if true, value if false)
Cell K4: =IF(F4 >= 10000, “Large”, “Small”)

Figure 2.10

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Lookup Functions:
 These functions are useful for finding specific data
in a spreadsheet.
=VLOOKUP(lookup_value, table_array, col_index_num)
=HLOOKUP(lookup_value, table_array, row_index_num)
=INDEX(array, row_num, col_num)
=MATCH(lookup_value, lookup_array, match_type)

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publishing as Prentice Hall 2-22
Example 2.6 Using the VLOOKUP Function

Figure 2.11

=VLOOKUP(10007, $A$4:$H$475,3)
returns the payment type of Credit.

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-23
Example 2.7 Using the INDEX and MATCH Functions

Figure 2.12
=MATCH(1369,$C$4:$C$475,0)
returns 12 (the first instance of 1369 is the 12th item)
=MATCH(1369,$C$4:$C$475,1)
returns 14 (the last instance of 1369 is the 14th item)

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-24
Example 2.7 (continued) Using INDEX and MATCH

 =INDEX($A$4:$J$475, MATCH(1369,$C$4:$C$475,0),7)
returns 63,000 (the 12th value in the 7th column)
 =SUM(INDEX($A$4:$G$475,MATCH(1369,$C$4:$C$475,0),7):INDEX($A
$4:$G$475,MATCH(1369,$C$4:$C$475,1),7))
returns 163,800 (the sum of the 3 costs for item 1369)

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-25
 Microsoft Excel (Windows only) provides a
number of add-ins for Business Analytics:
- Analysis Toolpak
- Analysis Toolpak VBA
- Solver

 Frontline Systems provides:


- Risk Solver Platform
- Premium Risk Solver Platform
- XLMiner add-in

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-26
 Spreadsheet Engineering is the process of
developing good, useful, and correct spreadsheet
models.
 Spreadsheet models characterize the relationship
between inputs and outputs.
 It is important not to use input data in model
formulas, but to instead reference the spreadsheet
cells that contain the data.

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-27
Example 2.8
Spreadsheet Model for the Outsourcing Decision

Figure 2.13

Total manufacturing cost = $50,000 + $125 x Q


Total outsourcing cost = $175 x Q
Copyright © 2013 Pearson Education, Inc.
publishing as Prentice Hall 2-28
Example 2.9 Pricing Decision Spreadsheet Model

Figure 2.14

Sales = -2.9485 x price + 3,240.9


Total Revenue = price x sales

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publishing as Prentice Hall 2-29
Spreadsheet Quality
 Verification is the process of ensuring that a model
is accurate and free from logical errors.
 Below are three approaches to spreadsheet
engineering that can improve spreadsheet quality:
1. Improve the design and format of the
spreadsheet itself.
2. Improve the process used to develop a
spreadsheet.
3. Inspect your results carefully and use
appropriate tools available in Excel.

Copyright © 2013 Pearson Education, Inc.


publishing as Prentice Hall 2-30
Example 2.10 Modeling Net Income on a Spreadsheet
 Gross profit = sales – cost of goods sold
 Operating expenses = administrative expenses
+ selling expenses
+ depreciation expenses
 Net operating income = gross profit
 – operating expenses
 Earnings before taxes = net operating income
– interest expense
 Net income = earnings before taxes – taxes

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publishing as Prentice Hall 2-31
Simple Spreadsheet Model
for Computing Net Income

Figure 2.15
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Data-Model Format for Computing Net Income

Figure 2.16

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Pro Forma Income Statement Format for
Computing Net Income

Figure 2.17

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publishing as Prentice Hall 2-34
Analytics in Practice:
Spreadsheet Engineering at Proctor & Gamble
Problem: How to manage safety stock inventory.
Solution: The Western European BA group created
a spreadsheet model that eventually
grew into a suite of global inventory models.
- It displayed all important data on one screen.
- Allowed users constant access to current data.
- Helped supply chain managers make better
decisions regarding safety stocks.
Copyright © 2013 Pearson Education, Inc.
publishing as Prentice Hall 2-35
 Absolute address
 Discount rate
 Net present value (discounted cash flow)
 Pro forma income statement
 Relative address
 Spreadsheet engineering
 Verification

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