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Introduction To Spreadsheets and Models - Module 2

This document contains 10 questions and answers related to spreadsheet modeling. It addresses topics like separating data from formulas, inserting variables to model things like expedited manufacturing costs or average unit costs, using named ranges and formulas, conducting sensitivity analysis without resetting assumptions, and limitations of deterministic models. The questions provide scenarios and ask the reader to identify the best cells to insert variables or outputs, mistakes made in sensitivity analysis, and limitations of deterministic modeling approaches.

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2K views

Introduction To Spreadsheets and Models - Module 2

This document contains 10 questions and answers related to spreadsheet modeling. It addresses topics like separating data from formulas, inserting variables to model things like expedited manufacturing costs or average unit costs, using named ranges and formulas, conducting sensitivity analysis without resetting assumptions, and limitations of deterministic models. The questions provide scenarios and ask the reader to identify the best cells to insert variables or outputs, mistakes made in sensitivity analysis, and limitations of deterministic modeling approaches.

Uploaded by

SRISHTI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Question 1

How would you improve the transparency of the spreadsheet model below by separating data
from formulas? For example, how would you rewrite the formula shown in C10 in a form that
would be both more transparent and also could be easily copied through the multi year period in
columns C through F?

Ans: =$B$4*(1+$B$5)
Question 2
The spreadsheet below models the costs and potential revenues of manufacturing speakers,
assuming that the full order is sold. In the spreadsheet, four different sets of cells have been
designated as A, B, C, and D.

Assume there is an expedited manufacturing option that results in a 50% reduction in time for
customers to receive their goods. However, that expedited service increases the cost of the order
by 25%.

Which designated set of cells is the logical place to insert that potential 25% cost increase as a
variable?
Ans: C

Question 3
Refer again to the spreadsheet in Q2. Again, assume there is an expedited manufacturing option
that results in a 50% reduction in time for customers to receive their goods, but that expedited
service increases the cost of the order by 25%.

Which designated set of cells is the logical place to insert a yes/no variable to indicate that the
order is to be expedited?

Ans: A

Question 4
Refer again to the spreadsheet in Q2. If we wanted to add a variable to this model to calculate
average unit cost as an important output to monitor, which designated set of cells is the logical
place to insert that output?

Ans: B

Refer again to the spreadsheet in Q2, and assume that the following range names have been
created: number_ordered (cell B5); discount51 (cell B11); discount101 (cell B12); and
cost_per_cabinet (cell B15).

What is a formula for cell B16 that would use these range names
Ans: =if(discount51=”true”,cost_per_cabinet*discount51, if
discount101=”true”,cost_per_cabinet*discount101,0))

Question 6
What is a useful source of data for projections and forecasts, such as sales forecasts or costs of
goods sold?

Ans: All of these are true


Question 7
Assume that you have a company that assembles final products from a large variety of
components that are supplied by factories located in various parts of the world. In the past you
have experienced disruptions in the flow of your supply of components as the result of bad
weather, such as a strong El Niño phenomenon, as well as other uncontrollable events. You
have back-up suppliers, but each have different capacities and delivery schedules. So you
created a model that includes sets of assumptions about changes in suppliers and delivery times
in the event of unusual disruptive events. The Excel tool specifically designed for your use in this
case is

Ans: Scenario Manager

Question 8
Joseph used the spreadsheet below to check the sensitivity of Innovative Speakers profit to
increases in prices of components by suppliers next year. First he raised the cost of cabinets by
20% in cell B12, then noted the profit change in B6. Next he raised the cost of diaphragms in
C12 by 20%, then noted the profit change. He repeated these steps for electronics and
assembly. What mistake is Joseph making?

Ans: Didn’t reset assumptions to original values


Question 9

In the model below, Amy used sensitivity analysis in a cashflow projection to check how her
assumptions affect her need to finance operations through credit or loans during the coming
year.

This question has two parts. First, think about which one outcome variable is most clearly related
to the need to plan for financing operations. Then identify which assumption she should make
sure she has estimated correctly, since the outcome variable is most sensitive to changes in that
assumption. The range B4:F6 show current best assumptions. Range B8:F18 show 10%
changes in the three assumptions. Provide as your answer the assumption variable you've
identified.

Ans: Return rate

Question 10
The primary limitation of deterministic models is that

Ans: They are often inaccurate representations of the variance in the real world

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