5 - 1 Lecture 3: Spreadsheet Engineering

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.

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.

5 - 4 The Phases of Spreadsheet Modeling Designing Building Testing

Example

Problem

Influence Diagram

Advertising Budget Model SGP/KRB 1/1/2006 PARAMETERS Q1Q2Q3Q4Notes Price$40.00 Current price Cost$25.00 Accounting Seasonal Data analysis OHD rate0.15 Accounting Sales Parameters 35 Consultants 3000 Sales Expense Consultants Ad Budget$40,000 Current budget DECISIONSTotal Ad Expenditures $10,000 $40,000sum OUTPUTS Profit$69,662 CALCULATIONS Quarter Q1Q2Q3Q4Total Seasonal Units Sold given formula Revenue price*units Cost of Goods cost*units Gross Margin subtraction Sales Expense given Advertising decisions Overhead rate*revenue Total Fixed Cost sum Profit GM -TFC Profit Margin 9.97%12.25%7.62%12.58%10.91%pct of revenue

Excel Model