1. 5 - 1 Lecture 3: Spreadsheet Engineering

2. 5 - 2 Spreadsheet Engineering Builders use blueprints or plans. – Without plans structures will fail to be effective. Advanced planning in any sort of design can speed up implementation. Spreadsheets are no different from other arenas of design. – Engineering and advanced planning aids effectiveness.

3. 5 - 3 Spreadsheet Design An efficient process minimizes time spent. An effective process yields results that meet users’ requirements. Good design helps analysts spend the majority of their effort improving decisions, rather than building and fixing models.

4. 5 - 4 The Phases of Spreadsheet Modeling Designing Building Testing

5. Example

6. Problem

7. Influence Diagram

9. Advertising Budget Model SGP/KRB 1/1/2006 PARAMETERS Q1Q2Q3Q4Notes Price$40.00 Current price Cost$25.00 Accounting Seasonal0.91.10.81.2Data analysis OHD rate0.15 Accounting Sales Parameters 35 Consultants 3000 Sales Expense8000 9000 Consultants Ad Budget$40,000 Current budget DECISIONSTotal Ad Expenditures $10,000 $40,000sum OUTPUTS Profit$69,662 CALCULATIONS Quarter Q1Q2Q3Q4Total Seasonal0.91.10.81.2 Units Sold359243903192478915962given formula Revenue143662175587127700191549638498price*units Cost of Goods8978910974279812119718399061cost*units Gross Margin53873658454788771831239437subtraction Sales Expense8000 9000 34000given Advertising10000 40000decisions Overhead2154926338191552873295775rate*revenue Total Fixed Cost39549443383815547732169775sum Profit143242150797322409969662GM -TFC Profit Margin 9.97%12.25%7.62%12.58%10.91%pct of revenue

10. Excel Model