2504_Ch6-1_sp11

2504_Ch6-1_sp11 - Chapter 6 Part 1 of 2 Using Excel to...

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Chapter 6, Part 1 of 2: Using Excel to Support Business Decisions Chapter 6, Part 1 Skills Distinguish between subjective and objective decision model designs. Select the appropriate type of decision model for a business problem. Apply sensitivity analysis (what-if) models to business scenarios. Store scenarios of a sensitivity analysis model for viewing or printing. Produce data tables to summarize inputs and outputs of a decision model. Apply custom number formats to cells. Apply weighted criteria analysis (using decision matrices) to a subjective business decision. Chapter Vocabulary decision matrix (weighted criteria analysis) o decision alternatives o criteria o weighted criteria o score or rating for each criterion o SUMPRODUCT function o RANK function sensitivity/what-if analysis scenario manager scenario scenario summary data table o one-variable data table o two-variable data table custom number format Introduction to Chapter 6: Using Excel to Support Subjective Decisions (See the slides Ch6_Intro_sp11.pptx that are posted along with these class notes.) Steps to Create a Decision Matrix: 1. Identify the decision alternatives 2. Identify the criteria: Choose qualities to evaluate for the alternatives considered. 3. Rank each decision criterion: Assign a weighted value to each quality that is to be evaluated. 4. Define a scale for scoring the criteria: Set up a rating scale such as 1-5 or 1-10. Highest numbers will be used for rate criteria better suited to the project. 5. Score each criterion based on its suitability to the project. 6. Set up a matrix for calculating the score of each alternative compared. Include: a. Alternative list b. Weight for each alternative c. Score for each criteria for each alternative (use ranking scale) d. Multiply score by weight e. Sum all weighted scores for each alternative 1
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Chapter Demonstration 1: Decision Matrix (a.k.a Weighted Criteria Analysis) 1. Open a new workbook and name it CarDecision.xlsx . 2. Design a decision matrix in the new workbook to evaluate qualitative aspects of the new car you plan to purchase. a. Choose at least three cars you are considering for purchase. List the cars in contiguous cells in either a column or a row. b. Consider and list qualities that are important in your selection. . (If you listed the decision alternatives in a column, enter the qualities in a row, like column headers. If you entered the qualities in a row, enter these weights in the left most column, like row headers.) 3. In a column or row (depending on where your qualities are) adjacent to the qualities list, enter a relative weight value for each quality. For example, if fuel efficiency is your most important factor affecting you purchase, it may be given a higher weight, say 10, whereas a quality that last less impact, such as color, may be given a lower relative weight of 1 or 2. 4.
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This note was uploaded on 11/21/2011 for the course ACIS 2504 taught by Professor Mtgriffin during the Spring '08 term at Virginia Tech.

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2504_Ch6-1_sp11 - Chapter 6 Part 1 of 2 Using Excel to...

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