Module 2 Quiz Notes.docx - Module 2 Quiz Notes Why study...

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Module 2 Quiz Notes Why study Modeling? - Modeling generates insight; an improved understanding of the situation or problem at hand - Can improve our quantitative reasoning skills Business Analysist: people who routinely build and analyze formal models in their professional lives 4 types of models 1. One-time decision models: used to solve a current problem but then never used again; usually built by decision makers themselves under time pressures; this type of model involves the user intensively because the model is usually tailored to a particular decision-making model 2. Decision-support models: computer systems that tie together models, data, analysis tools, and presentation tools into a single integrated package intended for repeat use; used in research and development planning in pharmaceutical firms, etc.; after a one time model gets established it can be adapted for broader and more frequent use within a company; benefit of studying modeling is to recognize possible improvements in the design and operation of decision support systems 3. Models embedded in computer systems: those contained within computer systems that perform routine, repeated tasks with little or no human involvement; inventory replenishment decisions are made by automated computer systems 4. Models used in business education: highly simplified or stylized in order to preserve clarity a. Benefits: i. Allows us to make inexpensive errors ii. Allows us to explore the impossible iii. Modeling can improve business intuition iv. Provides us with information in a timely manner v. Modeling can reduce costs Spreadsheets - Spreadsheet models do have limitations, but they allow us to build more detailed and more complex models than traditional mathematics allows - Spreadsheet is the second-best way to do many kinds of analysis and therefore is the best way to do most modeling - The practical alternative to other analysis Spreadsheet engineering: good training in spreadsheet modeling Risk of using spreadsheets: most users of spreadsheets rely on them every day and assume their models are error free; relying on flawed spreadsheets is very risky
- 10% of spreadsheets are error free There are 4 major problems area for spreadsheet users: 1. End user spreadsheets frequently have bugs 2. End users are overconfident about the quality of their own spreadsheets 3.

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