# 02 - BUS336 In building spreadsheets for deterministic...

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BUS336

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In building spreadsheets for deterministic models, we will look at:    ways to translate the black box representation     into a spreadsheet model.    recommendations for good spreadsheet model    design and layout    suggestions for documenting your models    useful features of Excel for modeling and     analysis
The Pies are then processed and sold to local grocery stores in order to generate a

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Step 2:  Formulation Model Using “Black Box” diagram, specify cost parameters The next step is to develop the logic inside the black box. A good way to approach this is to create an Influence Diagram. Pie Price Unit Cost, Filling Unit Cost, Dough Unit Pie Processing Cost Fixed Cost An Influence Diagram pictures the connections between the model’s exogenous  variables and a performance measure (e.g., profit). Exogenous Variables
To create an Influence Diagram: start with a performance measure variable. Further decompose each of the intermediate variables into more related  intermediate variables.    Decompose this variable into two or more intermediate variables that combine  mathematically to define the value of the performance measure. Continue this process until an exogenous variable is defined (i.e., until you  define an input decision variable or a parameter).

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performance  measure  variable Profit Start here: Decompose this variable into the intermediate variables Revenue and Total Cost
Profit Revenue Total Cost Now, further decompose each of these intermediate variables into more related  intermediate variables . ..

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Profit Revenue Total Cost Pies Demanded Pie Price Unit Pie Processing Cost Fixed Cost Processing Cost Ingredient Cost Unit Cost Filling Unit Cost Dough Required Ingredient Quantities
Step 3:  Model Construction Based on the previous Influence Diagram, create the equations relating the  variables to be specified in the spreadsheet.

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Profit Revenue Total Cost Profit = Revenue – Total Cost
Profit Revenue Pie Price Pies Demanded Revenue = Pie Price * Pies Demanded

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02 - BUS336 In building spreadsheets for deterministic...

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