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Recitation5-Excel_Modeling - Excel Modeling Practice...

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Excel Modeling Practice Michigan State University ITM 309 Spring 2011 Decision Support Systems: Excel Modeling I Recitation #5: Excel Modeling February 09/10 Objective: Be familiar with the concept of creating Excel models to support decision-making Today’s in class will help you to complete Part I of Assignment #3. Scenario: Harry and Tyler operate Jitters, a drive-through coffeeshop in East Lansing. Interested in entering the mail-order coffee business, they print a catalog of their products and carry out a direct mailing campaign to launch the new business. The cost of printing the catalog is $20,000, plus $0.10 per catalog. The cost of mailing each catalog is $0.15. In addition, the company will include direct reply envelopes in the mailings. This can be used by customers to send in their orders. Each direct mail envelope that is used by a respondent costs Jitters $0.20. The average size of a customer order is expected to be $40, and the company’s variable cost per order averages around 80% of the order’s value. The company plans to mail 100,000 catalogs. Task: You are an intern with Jitters and have been asked to develop a decision support system (DSS) to model the direct mailing campaign. The Excel model should allow the
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