1. Spreadsheet Engineering “Training in spreadsheet modeling improves both the efficiency and effectiveness with which analysts use spreadsheets” Steve Powell, Dartmouth College Steve Powell, Dartmouth College

2. The Modeling Process n Frame the problem n Diagram the problem Influence chartsInfluence charts n Build a model n Analyze for insights

3. Problem Framing n What’s included, what’s excluded? n What can we assume? n What do we know? n What are our objectives? n What are our decisions or options? n What are the constraints?

4. Example Problem 1 n Determine the price we should set for our product so as to generate the highest possible profit this coming year.

5. Influence Charts n Use to break through modeler’s block n Help organize the approach to modeling n Begin model documentation n Picture the connections between the inputs and outputs without defining the math logic

6. Building Influence Diagrams n Start with a key output What single measure will decision-maker use to assess the success of the project?What single measure will decision-maker use to assess the success of the project? n Decompose the output measure into a small set of variables that determine it directly n Take each influencing variable and repeat this process of decomposition until all outputs are defined n Make sure that each variable appears only once

7. Symbols Needed in Influence Diagrams Objective/ Key Output Variable Fixed Input Parameter Random Input Parameter Decision

8. Model Building: Spreadsheet Design Guidelines n When organizing the data, common input variables should be presented together and labeled n Model results should be clearly labeled and emphasized n Physical results should be separated from the financial results n Units of measure should be documented where appropriate n Figure 3.18 of text

9. Model Documentation n Do not embed constants; Place in separate module of worksheets with appropriate labels and color shading n Attach cell notes/comments n Use text boxes n Use range names