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29 Cards in this Set

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Compare break-even analysis and sensitivity analysis.
Break even analysis is a type of what-if analysis that concentrates on an activity at or around the point at which a product breaks even.

Sensitivity analysis is another type of what-if analysis that attempts to examine how sensitive the results of an analysis are to changes in the assumptions.
How does a data table help you to perform what-if analysis?
Data tables allow you to organize and present the results of multiple what-if analyses.
What is the difference between a one-variable data table and a two-variable data table? When would you use each type of data table?
A one variable data table has only one input cell and many result cells. Use a one-variable data table to see how different interest rates affect a loan payment, for example.

A two-variable data table has two input cells, but only one result cell. Use a two-variable data table to see how two factors—different interest rates and loan terms—affect a loan payment, for example.
What are the two major steps involved in creating a data table in Excel?
Two major steps are:
1. Set up the structure for the data table
2. Instruct Excel about how the data table’s structure relates to the input section of the worksheet.
In a two-variable data table, what do the first column and first row of the table contain?
The first row and column of a two-variable data table contain the data inputs.
When should you create a scenario instead of a data table? Give an example of a business situation that could best be analyzed with scenarios.
Scenarios are best created using sets of input value assumptions, such as best-case, likely case, and worst-case outcomes. Scenarios can be used to look at the results of various types of marketing campaigns for instance.
Why are defined names important when you create scenarios.
Defines names make creating the scenarios clearer and easier to use. Descriptive names can also make your scenario reports easier to understand and use.
What types of reports can you create for scenarios? Which type shows results only?
You can create two types of reports for scenarios: a scenario summary and a scenario PivotTable. The scenario summary shows the results only.
What type of what-if question can a simulation answer?
Sensitivity analysis
Explain how you must vary the setup of a two-variable data table to run a simulation.
When using a two-variable data table to run a simulation, one set of input values in the data table’s structure must be a sequence of numbers that represents the number of iterations of the simulation. Only one spot remains in the table’s structure for the set of input values. You use RAND and VLOOKUP functions to randomize a value.
What are the limitations of using Goal Seek?
When you use Goal Seek, you are limited to entering values in a single cell to reach a goal in another related cell.
How many changing cells can you use in a Solver model?
With Solver, you can change the values in as many as 200 cells at one time to reach a goal in the target cell.
What are the three required parameters of a Solver model and what do they represent?
The three required parameters of a Solver model are: the target cell that you want to maximize, minimize, or set to a specific value; the changing cell(s) that produce the desired results in the target cell; and the constraint(s) that limit how to solve the problem.
What are two advantages of creating a constraints table in a worksheet that includes a Solver model?
Constraint tables have the advantage of organizing the constraints and making them visible in the worksheet at any time without the limitation of having to open the Solver Parameters dialog box. It also allows you to use cell references for constraint values.
What is the advantage of linking the constraints in the Solver Parameters dialog box to values in a constraints table in the worksheet?
Changing a constraint value is easier with a Constraint table because you can change the values in the constraints table as necessary without having to edit them individually in the Change Constraint dialog box.
What is the difference between a policy constraint and a physical constraint? Give one example of each type of constraint.
A policy constraint is based on company history and to some extent, inertia. Physical constraints are physical reasons why something is not possible. An example is restricting the number of gallons of milk that a customer can buy at a sale price (a policy limit) versus the actual inventory of milk available in the store (a physical limit).
What is an objective function?
a mathematical formula that relates the decision variable or change cells to the desired outcome
What are the five comparison operators that you can use in Solver?
The 5 comparison operators are <=, >=,=, binary, and integer.
When should you include integer constraints in a Solver model? What is the disadvantage of using an integer constraint?
You should use the integer constraint in a Solver model if you are looking for a whole number as the solution. Such as how much inventory to produce. A disadvantage to requiring an integer is that it adds a lot of computational complexity and may slow down the process.
What is a scenario in Solver?
A scenario saves the result of a Solver model so that you can load it later.
What are the three types of Solver reports? What information is described in an answer report? What is a binding status and a not binding status? What is slack?
Three types of solver reports are: Answer, Sensitivity, and Limits. An answer report includes detailed information about the target cell, changing cells, and constraints in the Solver model. A binding status indicates that the constraint has a final value that is equal to the value of the constraint. A not binding status indicates that the constraint does not have a final value that is equal to the value of the constraint. Slack is the difference between the final value and the constraint.
What is an infeasible solution? What steps can you take to attempt to change an infeasible solution into a feasible solution?
An infeasible solution results when Solver cannot determine the combination of decision variables that satisfies all of the constraints. You should look for data-entry errors in the Solver Parameters dialog box, review the constraints, and try loosening a constraint value or several.
What is an unbounded solution?
An unbounded solution occurs in situation in which the feasible solution is unrestrained or unlimited on some dimension.
What is the difference between a linear and a nonlinear function?
A linear function results when a decision variable is multiplied by a constant, such as price, It results in a straight line. A non linear function is a function that results in a curve when graphed and cannot be described linearly.
What requirements exist for cells in two arrays?
Identical size and parallel.
Describe how the SUMPRODUCT function works?
SUMPRODUCT sums a series of products (the result of a multiplication task) in ranges of identical sizes, called arrays that are parallel to each other in a worksheet.
Describe the steps for saving a Solver model. What is the advantage of saving a Solver model?
Click Solver button on the Data tab, click Options button, Click Save Model button. It is good to save the Solver model because when you copy the worksheet it does not copy the Solver model, you may also have to save several Solver models in a worksheet to track your progress solving a specific problem.
What is an assignment problem?
An assignment problem is an optimization problem in which there is a one-ti-one relationship between a resource and an assignment or job.
How does the binary comparison operator work?
Binary comparison checks to make sure that the value is either 0 or 1.