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Spreadsheet through Examples

A spreadsheet package offers its user a screen interface with a large rectangular grid of cells,
formed by the intersection of several rows and columns. In solving a problem, a user can fill some
of these cells with input data consisting of numbers, text or dates, and some others with formulae
referring to the input cells directly or indirectly. The spreadsheet software (to be referred to as the
system) evaluates the formulae to generate the output. Most computational problems dealt with by
managers can be readily cast in a spreadsheet format. Even a non-technical user can experiment
with such spreadsheets easily and produce solutions to the corresponding problems. Spreadsheets
are quite popular among managers chiefly because spreadsheets are much more flexible than
conventional tools for modelling decision problems.

Spreadsheet software is important not only because it serves as a powerful computational aid, but
also because it enables decision-makers do what-if analysis in many decision contexts. Examples
for what if analysis are to analyse the effect of a change in exchange rate on the projected cash
flows of a joint venture; and, to project the effect of an increase in demand on the profit and loss
account of a company.

Further advantages of a spreadsheet package are its ability to serve as a front-end to facilitate user
input and output in a complex software system, and its ability to summarize, view, and retrieve
data in a variety ways

Spreadsheet is a generic term. There are several commercial packages that offer the spread sheet
features. Some of these are LOTUS 1-2-3, QUATTROPRO, and Microsoft EXCEL. In this note,
we present a number of decision problems and their solution through EXCEL.

By default, the features discussed refer to the EXCEL 2010 package, which is a part of Microsoft
Office Professional Plus 2010 operating under MS Windows 7 professional.

Most of the examples of the note remain the same as those in the earlier versions of the note; the
mail difference is that the earlier versions dealt with previous versions of EXCEL, and hence
some package related features are slightly different in this version of the note.

Initially, we describe a few important preliminary details regarding the Excel package. We
assume that the reader is familiar with the basic features of the Windows 95 system, with how to
invoke the Excel package, and how to save and retrieve files. It is not the intention of this note to
cover all the features nor all the built in functions of Excel. Only those aspects of Excel which
will be of interest to students of management, especially to the beginners, will be introduced. For
further details, we urge the reader to refer to the on-line help of the Excel system or to Excel
manuals.
I. Essential Features of Excel

I.1 Structure of an Excel File. An Excel file as seen in windows is a set of spreadsheets,
called worksheets. This set of worksheets is called a workbook. The name of a workbook is the
same as the name of the corresponding file in windows. The names of the worksheets are by
default sheet1, sheet2 etc.

As soon as the Excel system is invoked, the standard Excel window appears on your PC screen
with the following menu items on the menu bar: File, Edit, View, Insert, Format, Tools, Data,
Window, Help. The default workbook is Book1, and the default worksheet open is sheet1. You
can click on the menu item File to open an already stored workbook. Within an open workbook,
at the bottom of the window you can see a series of tabs one for each worksheet within the
workbook. Click on any of the worksheet tabs to open the corresponding worksheet. To change
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the name of a worksheet double click on its tab, and type the new name. You can enter different
types of data in different worksheets to structure your problem well. You can do computations
based on data in several different worksheets together.

Each worksheet is exhibited by default with horizontal and vertical borders. The horizontal
boarder exhibits a column label, formed with one or two alphabetic characters, and the vertical
boarder exhibits a row number for each row. A worksheet in Excel 2007 has totally 18,278
columns, denoted with labels A, B, C, …, Z, AA, AB, …,ZZ, AAA, AAB …, ZZZ; and,
10,48,576 rows, denoted with numbers 1,2, …, 65536. A cell of a worksheet is referred to with its
cell address, which is formed by the string column label of the cell followed by its row number.
Thus the address of the cell at the intersection of column BC and row 104 is BC104. From a
worksheet, say sheet1, if you want to refer to a cell, say AC35, of another worksheet, say sheet3,
use the reference as sheet name followed by exclamation mark followed by the cell address; that
is in the example the reference should be sheet2!AC35. Similarly, from a worksheet you can also
refer to a cell in a worksheet of another workbook; for such a reference use the string book name
in square brackets followed by worksheet name followed by the exclamation mark followed by
the cell address. Thus the reference [BOOK3]sheet4!A4 denotes cell A4 of the worksheet named
sheet4 in the work book named BOOK3.

The interactive screen consists of the spreadsheet grid and on the top the menu ribbon. It is in the
menu ribbon that all the menu options are listed and presented in the form of groups. For
performing several tasks the appropriate menu option has to be clicked. The ribbon consists at its
top the menu tabs. When tab is clicked beneath it appear several rectangular tiles, each consisting
of a set of menu options for a group of tasks. The name of each group appears at the bottom of the
corresponding tile. In some cases, when a menu option is clicked a dialog box appears to get
further information from the user. In this note, while describing a menu option, we mention the
tab label followed by the group label followed by the menu option as follows:

Tab label  Group lable  Menu option

I.2 Ranges and range names. A rectangular set of contiguous cells is called a range. Ranges
are quite useful to deal with several items together. A range is referred to by its range address,
which consists of the address of the top left cell of the range followed by the colon mark followed
by the address of the bottom right cell of the range. Thus the range address A1:C3 refers to the
range composed of the cells A1, A2, A3, B1, B2, B3, C1, C2, C3.

To make referencing a cell or a range easy, Excel allows you to assign a name to a cell or range
and use its name or its address to refer to it. To assign a name to a cell or a range follow the two
steps:

1 Click the menu option: Formulas  Defined Names  Define Name.

2 Type the name to be assigned in the name box; enter the range address or formula to
which the name applies in refers to box; and click the buttons OK.

Alternatively, select the cell or range which you want to name, and right click the mouse. In the
box of command that appears, click the option Name a Range.

Instead of specifying a range name on-line, you can type them in the spread sheet itself—in the
immeadiate left, or immediate right column of the cells to be named, or on the row immediately
above or below the cells. In such case, choose, the set of cells along with the cells containing their
names and use the menu option: Formulas  Defined Names  Apply Name. In the resulting
dialog box, you can specify the location of the names.
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Suppose you have assigned names to several ranges and have forgotten which name refers to
which range. You can see a table of range addresses and their corresponding names by clicking
the menu option: Formulas  Defined Names  Name Manager:

I.3 How to select a cell or range for data and formula entry

Before you can enter data into a cell or range the corresponding cell or range has to be first
selected. We describe here two different ways of selecting a cell or range.

Position the mouse pointer on the cell of your choice and click the left mouse button to select the
cell. After selecting a cell, you can type in your data ended by the pressing of the Enter key, to
enter the data into the selected cell. For selecting a range, instead of a cell, select the first, i.e. the
top left, cell of the range by clicking on it, and then keeping the left mouse button pressed, drag
the pointer over the other cells of the range, and then release the mouse button.

Except in small problems, or when the cell you want to choose is close to your present cell, the
above method is not particularly convenient. An alternative way of selecting a cell or range is by
specifying its address or name. In this method, first select the menu options Home  Editing
Find and Select  GoTo. In the resulting dialog box, type in the name and address of the cell
or range in the corresponding boxes, and then click OK. The specified range will automatically be
highlighted.

I.4 How to enter numbers, text, dates, and formulae

While entering a number, text, or date into a cell make sure you end the entry by pressing the
Enter key. Numbers and text can be straight away entered without causing any confusion. Dates
can also be entered straight away using any of the standard formats such as mm/dd/yy, mm-dd-
yy, or dd-mmm-yy. In most cases, the system has enough intelligence not to confuse between a
date and text, and a date and number. At times, however, there could be some confusion between
the day number and month number in interpreting a date. To avoid such a confusion, enter dates
always in the date format chosen through the control panel of the windows system. In Windows
95 system, this format can be set or changed through the menu options Start Settings Control-
Panel Regional Settings Date.

For entering a formula, you need to prefix the formula by the equal to (=) symbol. Suppose the
entry in cell A1 is 4 and you want to get into A2 the value twice that of A1. The formula that you
need to enter into A2 for this purpose is 2*A1. To enter the formula, select cell A2, and type in
=2*A1, followed by enter key. On finishing the above entry, what you see in A2 is not the
formula but its result, that is the value 4. The formula itself is shown in the formula bar, which is
situated above the horizontal border.

It is important to note that what is displayed in a cell is not necessarily identical in looks to what
you might have entered into the cell. The display is obviously governed by the contents of the cell
but the same contents can be displayed in various different formats. For example, depending on
the format chosen, the cell entry 1234.343 can be displayed in any of the following formats:

1234.343
1234.34
1234
$1234.34
$1,234.34

Further examples are: the entry 0.25 can be displayed as 25%, and the entry 1 as 1/1/1900.
Page 10 of 306 IIMA/CISG0104TEC

To choose or change the display format of a cell, the menu options to be chosen are:

Home  Number

Note however that no matter what the format of display of a cell, its contents remain unchanged,
until you explicitly edit the contents. It is the contents that will be used in evaluating a formula
that refers to the cell.

It is also possible to change the colour of the characters in a cell, background colour of the cell,
and the orientation of display of the entry in a cell; for these, first select the desired cell or range,
and then choose Home  Font for colour changes for foreground and background, and Home 
Alignment  Orientaion, for changing the orientation of display of the characters.

I.5 Array formulae. There are some formulae, which give as output multiple values. These
formulae are called array formulae. An example is a formula that computes the inverse of a
matrix. In such a case, the method of entry of the corresponding formula is different. First
highlight the range that is to contain the output of the formula; then, type in the array formula in
the first cell of this range, and end it by pressing the three keys Control, Shift and Enter together.

I.6 How to copy a formula from one range to another

Suppose you need to compute the profit

of a company for three consecutive years
in cells A3, B3, and C3 given the
corresponding revenues in cells A1, B1 A B C
and C1, and costs in A2, B2, and C2. The 1
formulae for profit to be entered in cell 2
A3 is =A1-A2; the formula in cell B3 is 3 =A1-A2 =B1-B2 =C1-C2
=B1-B2; and that in C3 is =C1-C2. A
beginner might enter these formulae
explicitly in each of the three cells. When
the formulae in adjacent cells are similar
in the sense that the formulae are the same except that the row labels and column numbers of the
cell references in the formulae differ correspondingly, there is an alternative way of achieving the
same effect as above. In this method, enter the formula explicitly only in the first cell of the range
of interest to you. Then copy this formula to the other cells of the range. Follow the steps below to
do the above copying:

Select the source cell, which is A3 in this example.

Select the menu options Home  Clipboard  Copy;
Select the destination of your copied formulae, which is the range B3:C3 in this example.
Choose the menu options Home  Clipboard Paste

At the end of the above steps, you will notice that the destination cells chosen above are filled
with formulae, which are the same as the source formulae in A3, with cell reference adjusted in a
corresponding way. For example, when the destination cell is in the same row as the source cell,
but one cell to its right, then all the column labels in the source formula will be replaced by the
next labels to get the destination formula, while the row numbers remain unchanged. When the
destination is in the same column and one cell above with respect to the source cell, all the row
labels in the source formula are decreased by one to get the destination formula while the column
labels remain unchanged. It is important to remember in the above process that you should not
attempt to cross the maximum possible values of row label, IV, and column number 65,536;
otherwise the error message #REF! would result.
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Consider another example in which the unit cost of production of an item is given in cell A1, and
the quantities of production on three consecutive days of the product in cells A2, B2 and C2. You
are required to find in cells A3, B3, and C3 the total cost of production of the product on the three
days respectively.

I.7 Relative and absolute referencing. Suppose, following the procedure of the previous
example, you enter in cell A3 the formula =A1*A2, and copy it into cells B3 and C3. As a result
of this copy operation you will notice that the formulae resulting in cells B3 and C3 would be
=B1*B2 and =C1*C2. These formulae are clearly wrong because the unit price should remain
constant during the three days. The correct formulae in cells B3 and C3 should be =A1*B2, and
=A1*C2 respectively. During the copy operation, the first cell reference in the source formula
should not change whereas the second reference should change. To accomplish this, type the
formula in cell A3 as
=$A$1*A2 or $A1*A2

Now copy this formula into cells B3 and C3 to get into them the formulae:

=$A$1*B2 and =$A$1*C2 or $A1*B2 and =$A1*C2

The use of $ sign in a cell reference is called absolute referencing of the cell, and the absence of it
is called relative referencing. $ in front of column component of the address makes column
absolute; in front of row component makes row absolute; and $s in front of both make both row
and column absolute.

Note that the value of a formula remains the same irrespective of whether you use relative or
absolute referencing for its cell addresses. For example, the formula =A1 will be evaluated to the
same value as the formula =$A$1, or =$A1, or A$1. Therefore, the mode of cell referencing in a
formula influences not the value of the formula, but the way the addresses get modified when the
formula is copied to other cells. Thus, a choice between the two modes of addressing becomes
relevant only when you intend to copy the formula to other cells; otherwise, you can simply use
relative referencing.

I.8 Attaching user comments to cells. You may find it useful to attach to a cell some notes,
explaining the formula behind the cell or simply explaining its contents. Such documentation
would be very essential in complex spreadsheets. A comment box can be attached to any desired
cell, a comment can be entered into it and edited. The comment box can be designed such that it
would appear only when the mouse pointer is placed on the cell. The steps to be followed for the
above purpose are:

Select the cell to which you want to attach a comment.

Right click the mouse.
From the menu options that appear select Insert a comment.
Enter the comment in the box that appears.
Click outside the box to close the comment and the box.

If you want to see the comments only when the mouse pointer is placed on the cell with a
comment and right click the mouse button; in the options that appear choose show/hide comment.,
select the

You can edit or delete the comment by once again right clicking on the cell and choosing the
appropriate menu item.

The above operations can also be performed through the menu ribbon; the corresponding options
are: Review  Comments
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Now, the note presents you with several examples through which you can learn some of the most
useful and interesting features of Excel. Each of the examples introduces you to a different set of
features. You are required to enter the suggested solutions into your own PC and make sure that
they work. Note that none of the suggested solutions is unique; for each problem several
alternative solutions exist. You are encouraged to think of the alternative designs, and test them
out.

It is the author‘s firm belief that the best way of learning Excel is to attempt various problems on
Excel, rather than trying to read books on Excel. The best reference on the features of Excel is the
Excel Help which can be accessed by pressing the F1 key while operating the package. The help
describes not only various features, but, wherever needed, gives examples. In other words, Excel
can be used to learn Excel!
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II. EXAMPLES
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II. EXAMPLES

II.1 Example 1. Weekly wage computation

Suppose you are given the following data related to a week on each employee of a company:

i. Employee code
ii. Hours worked during the week
iii. Basic wage in Rupees per hour
iv. Number of pieces produced

Further, the following data that applies to all employees is also given:

i. Standard rate of production in number of pieces per hour

ii. Extra pay (or, incentive pay) for each piece produced over and above the standard
production, in Rupees per piece

Design a spreadsheet to contain the above data, and to compute using this data the following:

i. For each employee, the regular pay for the week

ii. For each employee, the incentive wage, if any, for the week
iii. For each employee, the total pay for the week
iv. For all the employees put together, the sum of regular, incentive, and total pay
v. The sum of incentive pay as a percentage of the sum of total pay.

Figure-1a shows an Excel spread sheet for a sample of five employees. This sheet consists of four
areas:

i. Title of the sheet in rows 1 and 2

ii. The parameters section in the range A3:D5; this consists of the values of the two
parameters, standard rate of production, and incentive wage per extra piece produced.
iii. The employee data in the range A11:H15; the range A6:H 10, and the range A16:H16 are
used for column headings and dividing lines.
iv. Overall statistics on pay roll data in the range F17:H18.

Note that the data in columns titled EmpCode, Basic Wage, Hrs worked, and Pcs produced is to be
input by you. Similarly, the values of standard rate of production is to be input in cell D4, and that of
incentive wage rate in Rs per piece is to be input in cell D5. The other values are computed by the
software, through the formulae, shown in Figure-1b.

These formulae are devised based on the following rules:

i. Extra production = Maximum of {(actual production- standard production),0}

= Maximum of {actual number of pieces produced-hours
worked*standard rate of production),0}

ii.Regular pay = Basic wage in Rs per hour * hours worked

iii.Incentive pay = Extra production * incentive rate in Rs per piece

iv.Total pay = Regular pay + incentive pay.

The formulae shown in Figure-1b are self- explanatory. Consider the formula in cell E11, for
example. This formula is devised to compute the extra number of pieces produced by employee E1.
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From formula i shown above, we need to compute the maximum of two quantities; this is done by
the MAX function. Of the two quantities involved, the first one is the difference between actual
production, given in cell D11, and the standard production; the standard production in turn is
obtained by multiplying the standard rate of production, given in cell D4 with the number of hours
worked, given in cell c11. The formula for the first quantity is D11 - D4 * C11; however, note that
D4 is written in Figure-1b as $D$4, which is nothing but absolute referencing of that cell. The
absolute referencing is used so that when this formula is copied to corresponding cells of other
employees, the address of the parameter does not change. The second quantity inside MAX is the
constant 0. Thus, the entire formula in E11 is MAX((D11-$D$4*C11),0). This formula is copied to
cells in the range E12:E15 to obtain formulae for extra production for each of the other employees.

Figure-1a. A spread sheet for wage computation

A B C D E F G H
1 Wage Computation Example

2
3 Paramtrs:
4 1. Std Rt (Pcs/hr) 10
5 2. Incnt Rt (Rs/piece) 5
6
7 Emp Basic Hrs Pcs Extra Pay Pay Pay
8 Code wage worked produced productn regular incntv totl
9 (Rs/hr) (Rs) (Rs) (Rs)
10
11 20 40 440 40 800 200 1000
12 25 48 530 50 1200 250 1450
13 25 56 490 0 1400 0 1400
14 20 32 350 30 640 150 790
15 30 40 350 0 1200 0 1200
16
17 Totals: 5240 600 5840
18 Incntv/totl as %: 10.27

Figure-1b. Formulae in the spread sheet of Figure-1a

Cell Formula Comments

E11 =MAX(D11-$D$4*C11,0) Copied to E12:E15
F11 =B11*C11 Copied to F12:F15
G11 =e11*$D$5 Copied to G12:G15
H11 =F11+G11 Copied to H12:H15
F17 =SUM(F11:F15)
G17 =SUM(G11:G15)
H17 =SUM(H11:H15)
H18 =100*G17/H17
Page 16 of 306 IIMA/CISG0104TEC

Example 1.1 Weekly Wage Computation: Extension-1.

Suppose, the problem remains the same as in the previous case, with the following difference: the
basic wage in Rs/hour for a worker is not directly known. All employees are divided into five
types, A,B,C,D, and E. The basic wage varies from one type to another as shown in the following
table:

Employee Type Basic Wage in Rs/hour

A 20
B 25
C 30
D 40
E 45

For each employee in question, her or his type is given as input. With other rules remaining the
same before, compute the regular, incentive, and total wage for each employee and the grand total
incentive wage as percentage of the grand total of total wage.

The spreadsheet for this extension is shown in figures 1.1a and 1.1b.

This solution consists of one new step, namely to get the basic wage in Rs/hr by using the type,
given as input in column B. The basic wage is obtained in column C. To facilitate this step, the
table for Basic wage corresponding to each type is given in the range K7:L11. The basic wage for
a specific employee is obtained by looking up the this table, using the value in the type field as the
lookup value. The table lookup is accomplished through a formula. The formula for the first
employee is entered in cell C11; then it is copied to cells C12:C15 to get the formulae for the
remaining employees. This formula is:

=VLOOKUP(B11, $K$7:$L$11,2,FALSE)

The V in the VLOOKUP in the above formula denotes that the lookup table is vertical: the keys,
A,B,C,D, and E are in a column and so are the corresponding values for Basic Wage. The range
K7:L11 is called the lookup table, and its first column, the range K7:K11, is called the lookup
vector.

The first argument in the above formula denotes the lookup value: the lookup value, the type of
employee E11 is in cell B11, and hence the first argument of the above VLOOKUP function is
B11.

The second argument indicates the range of the lookup table, which is K7:L11. This address is
surrounded in $ symbols, because the range remains the same, even for other employees. Lookup
involves going down the first column of keys in the lookup table to find which of them is
matching with the given lookup-value. In this case, the lookup-value is E, and this is found to
match with the key of the fifth row of the lookup-table.

The idea of lookup is to take as result a value from the matching row; which column of the
matching row has the result is specified as the third argument. The third argument in this case is
2, implying that the result of the lookup is contained in the second column of the matching row,
that is the second column of the fifth row. So, the result of the vlookup is 45, which is the value
of the second column of the matching row of the lookup table.

Range lookup in VLOOKUP. What happens if the lookup value does not match with any of the
keys in the lookup table? In this case, lack of a match implies an error in the lookup value, and
hence an error needs to be indicated. However, in some other contexts, if no exact match is
obtained, one of the closest keys is taken as the matching value, and such a lookup is called
Page 17 of 306 IIMA/CISG0104TEC

range-lookup. Whether or not we need range-lookup is indicated as the fourth argument of the
VLOOKUP function: FALSE implying that range-lookup is not to be used (which means only
exact match is needed, and otherwise an error is to be reported), and TRUE implying that range-
lookup is to be used (which means that if exact match is not found an approximate match, as per a
rule, is to be found). In the present context, an exact match is needed and hence FALSE is given
as the fourth argument.

Range look up is also needed when the range of lookup keys is very large, and divided into
intervals. Each key given in the first column of the vlookup table corresponds to an interval, and
as a part of the search, first the interval into which the lookup value falls is determined, and then
from the corresponding row, the result is taken.

As the VLOOKUP formula is copied vertically downwards in the range C11:C15, it is enough if $
symbols are put only in front of the row numbers, that is, even the following specification would
work correctly:
=VLOOKUP(B11, K$7:L$11,2,FALSE)

The logic for the formulae in other columns is the same as before and hence we do not explain
them here.

HLOOKUP function. The lookup vector can also be horizontal, instead of being vertical. In that
case, you need to use the function HLOOKUP. The keys in a HLOOKUP table are in the first
row, the search first determines the matching column of the HLOOKUP table, and the result is in
a row of the matching column( specified as the third argument). The match can be exact ( that is
the fourth argument of HLOOKUP is FALSE), or it can be interval-based ( that is the fourth
argument is TRUE). In the case of range lookup, the key values in the first row are to be in the
ascending order, and the search takes place from left to right.

Figure-1.1 a Main Spreadsheet for example 1.1

A B C D E F G H I
1
2
3 Parameters:
4 1. Std. Rt (Pcs/hr) 10
5 2.Incntv. Rt (Rs/piece) 5
6
7 Emp Emp Basic Hrs Pieces Extra Pay Pay Pay
8 Code Type Wage Worked Produced Prodn Regular Incntv Total
9 (Rs/Hr) (Pcs) (Rs) (Rs)
10
11 E1 E 45 40 440 40 1800 200 2000
12 E2 D 40 48 530 50 1920 250 2170
13 E3 C 30 56 490 0 1680 0 1680
14 E4 B 25 32 350 30 800 150 950
15 E5 A 20 40 350 0 800 0 800
Page 18 of 306 IIMA/CISG0104TEC

Figure 1.1 b. Lookup Table in the Spreadsheet of Example 1.1

K L
6 Emp Type BasicWage
7 A 20
8 B 25
9 C 30
10 D 40
11 E 45

Figure 1.1c. Important formulae in the spreadsheet of example 1.1

The range to which the cells

Cell Formula formula is copied
C11 =VLOOKUP(B11,$K$7:$L$11,2,FALSE) C12:C15
F11 =IF(E11>$E$4*D11,E11-$E$4*D11,0) F12:F15
G11 =D11*C11 G12:G15
H11 =F11*$E$5 H12:H15
I11 =G11+H11 I12:I15
G17 =SUM(G11:G15) H17:I17
I18 =100*H17/I17
Page 19 of 306 IIMA/CISG0104TEC

Example 1.2 Weekly Wage Computation: Extension-2.

Consider another extension, independent of the previous extension, to example 1. Suppose that
the basic wage (rupees per hour) depends on a performance index (PScore) which is computed
and updated periodically for each worker. PScore forms one of the inputs to the problem. The
PScore is divided into several intervals and the basic wage of a worker depends on the interval to
which his/her PScore belongs. This relationship is defined by the following table:

Range of PScore Basic (Rs/hr)

PScore ≤ 10 20
10 < PScore ≤ 20 25
20 < PScore ≤30 30
30 < PScore ≤40 40
PScore > 40 60

You can assume that PScore is computed to two decimal places; it is never negative, and rarely
exceeds 40. Other inputs and outputs required remain the same as in the original version of the
problem (Example 1).

A solution to the above problem is given in the spreadsheet shown in Figures 1.2a and 1.2b. A
new feature in this spreadsheets is the conversion of PScore to basic wage. This is done through
the formulae in range C11:C15.

As can be guessed, these formulae used VLOOKUP. The lookup table is given in range K7 :
L11. Let us analyze the following formula in cell C11:

= VLOOKUP (B11, K$7 : L$11, 2, TRUE)

The arguments in the above formula have the meanings already explained in the previous
example. The only difference here is that the fourth argument is TRUE, which means that during
the lookup, range lookup procedure needs to be followed. Let us explain this using the data for
worker E1 whose PScore is given as 10.5 in cell B11. Therefore, the lookup value in VLOOKUP
is 10.5. This is compared with the keys in the first column of the lookup table from top-down till
a matching value is found, or till a key that exceeds the lookup value is encountered for the first
time. If an exact match is found, then the result is the value in the column number (of the
matching row) given by the third argument of the VLOOKUP. Else, the row previous to the key
that first exceeds the lookup value is taken as the matching row, and the result as before is taken
from the column specified by the third argument of the VLOOKUP. In the present case, as 10.5
is compared with the keys in the first column of table K7 : L11, the first key that exceeds 10.5
happens to be 20.01, which is in the third row of the lookup table. Therefore, the matching row is
taken to be row 2, one row prior to the row in which 20.01 occurs. In row 2, the result is in the
second column, which is 25. The basic of Rs 25/ hr is of course correct according to the problem
definition.

In a similar way, for the second worker, the matching row is the third row, and hence the result is
30. In general, the rule for finding matching row is as follows:

The matching row is that row whose key is the greatest key less than or equal to the lookup value.
The lookup table has to be formulated such that keys of successive rows are in ascending order,
and no key is duplicated. If the lookup value is greater than all the key values in the lookup table,
the last key is taken to be the greatest key less than or equal to the lookup value and accordingly
the last row becomes the matching row. On the other hand, if the lookup value is smaller than
even the first key, then the VLOOKUP fails to yield a result, and prints an error message.
Page 20 of 306 IIMA/CISG0104TEC

The formulae in other columns (see Figure 1.2 c) are similar to those in the other two versions of
the problem and hence are not explained further.

Figure 1.2a Spreadsheet of Example 1.2: Main area

A B C D E F G H I
1
2
3 Parameters:
4 1. Std. Rt (Pcs/hr) 10
5 2.Incntv. Rt (Rs/piece) 5
6
7 Emp PScore Basic Hrs Pieces Extra Pay Pay Pay
8 Code Wage Worked Produced Prodn Regular Incntv Total
9 (Rs/Hr) (Pcs) (Rs) (Rs)
10
11 E1 10.5 25 40 440 40 1000 200 1200
12 E2 20.5 30 48 530 50 1440 250 1690
13 E3 42 60 56 490 0 3360 0 3360
14 E4 35 40 32 350 30 1280 150 1430
15 E5 6 20 40 350 0 800 0 800

Figure-1.2b Spreadsheet of Example 1.2: Lookup Table

K L
7 0 20
8 10.01 25
9 20.01 30
10 30.01 40
11 40.01 60

Figure-1.2c Important formulae in the spreadsheet of example 1.2.

The range to which the cells

Cell Formula formula is copied
C11 =VLOOKUP(B11,$K$7:$L$11,2,TRUE) C12:C15
F11 =IF(E11>$E$4*D11,E11-$E$4*D11,0) F12:F15
G11 =D11*C11 G12:G15
H11 =F11*$E$5 H12:H15
I11 =G11+H11 I12:I15
G17 =SUM(G11:G15) H17:I17
I18 =100*H17/I17