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Mgt425 question 3

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# Please I need this assignment within 72 hours,

# Should not have a plagiarism,

# Follow the “General Instructions” in the Assignment

College of Administrative and Financial Sciences

Assignment-3
Spreadsheet Decision Modelling (MGT425)
Due Date: 06/12/2025 @ 23:59
Course Name: Spreadsheet Decision
Modelling

Student’s Name:

Course Code: MGT425

Student’s ID Number:

Semester: First

CRN:
Academic Year: 2025-2026 (First Semester)

For Instructor’s Use only
Instructor’s Name:
Students’ Grade: / out of 10

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY
❖ The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder. Assignments submitted through email will not be accepted.
❖ Submissions without this cover page will NOT be accepted
❖ Students are advised to make their work clear and well presented; marks may be reduced
for poor presentation. This includes filling your information on the cover page.
❖ Students must mention question number clearly in their answer.
❖ Late submission will NOT be accepted.
❖ Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
❖ All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
❖ Maximum marks for this assignment are 10 marks.

Course Learning Outcomes-Covered
1.Find some structured ways of dealing with complex managerial decision problems. (CLO1,
Question-1)
2.Explain simple decision models and management science ideas that provide powerful and (often
surprising) qualitative insight about large spectrum of managerial problems. (CLO 2, Question-2,
Question-3)
3.Demonstrate the tools for deciding when and which decision models to use for specific problems
(CLO3, Question-4)

Assignment Instructions:
Answer the following Questions:

Assignment Questions: (Marks 10)
Question 1: In today’s data-driven business environment, business analysts play a crucial role in
shaping the organizational strategies and outcomes. Consider a business scenario where decisions
are made without analysing the data. What potential risks and challenges an organization might
face, and how could these be mitigated by the business analysts through effective data analysis?
(250-300 Words) (2.5 marks).
Question 2: What ethical responsibilities do business analysts must keep in mind when collecting,
analysing, and presenting data. How can misuse or misinterpretation of data impact stakeholders
and damage organization’s credibility? (250-300 Words) (2.5 marks).
Question 3: How are advancements in communication technologies and the rise of remote work
reshaping the dynamics between centralized and decentralized decision-making in contemporary
organizations? (250-300 words) (2.5 marks).
Critical Thinking Question
Question 4: Reflecting on the concept of analysis paralysis- where excessive information gathering
leads to indecision- consider a significant decision you have made recently such as
purchasing/renting a home or land. Describe the steps you took to reach your decision. In what
ways could collecting too much information have led to analysis paralysis during this process, and
how might this have impacted your final choice? (250-300 Words) (2.5 marks).

Answers:

1.
2.
3.
4.

STEPHEN G. POWELL

KENNETH R. BAKER

MANAGEMENT
SCIENCE

CHAPTER 1 POWERPOINT
INTRODUCTION

The Art of Modeling with Spreadsheets

Compatible with Analytic Solver Platform
FOURTH EDITION

WHAT IS MODELING?
• Creating a simplified version of reality
– Maps

• Working with this version to understand or control some
aspect of the world

Chapter 1

TYPES OF MODELS
• Mental
• Visual
• Physical
• Mathematical
– Algebra
– Calculus
– Spreadsheets

Chapter 1

WHY STUDY MODELING?
• Models generate insight which leads to better decisions.
• Modeling improves thinking skills:
– Break problems down into components
– Make assumptions explicit

• Modeling improves quantitative skills:
– Ballpark estimation, number sense, sensitivity analysis

• Modeling is widely used by business analysts:
– Finance, marketing, operations

Chapter 1

MODELS IN BUSINESS: TYPES
• One time decision models (usually built by the decision
maker)
– Will be the primary focus in this text

• Decision support models
• Embedded models
– A computer makes the decision without the user being
explicitly aware

• Models used in business education

Chapter 1

BENEFITS OF BUSINESS MODELS
• Modeling allows us to make inexpensive errors.
• Allows exploration of the impossible
• Improves business intuition
• Provides timely information
• Reduces costs

Chapter 1

ROLE OF SPREADSHEETS
• Principal vehicle for modeling in business
• Mathematics at an accessible level
– Versus calculus, algebra

• Correspond nicely to accounting statements
• “The Swiss Army knife of business analysis”

Chapter 1

SPREADSHEETS:
“THE SWISS ARMY KNIFE OF BUSINESS ANALYSIS”
• Prior to the 1980s, modeling was performed only by
specialists using demanding software on expensive
hardware.
– Spreadsheets changed all this in the 1990s

• The “second best” way to do many kinds of analysis
– Many specialized decision tools exist (e.g., simulation
software, optimization software, etc.).

• The best way to do most modeling
– An effective modeler should know its limitations and when
to call in specialists.

Chapter 1

RISKS OF SPREADSHEET USE
• Spreadsheets contain internal errors, and more errors are
introduced as these spreadsheets are used and modified.
• A sampling of errors with serious ramifications:
– Sorting a spreadsheet improperly
– Careless naming of spreadsheet files
– Copy-and-paste error in a spreadsheet
– Erroneous numerical input in a spreadsheet
– Numbers entered as text in a spreadsheet
– Shifting a spreadsheet so the wrong numbers appear in
the wrong columns
– Incorrect references in a spreadsheet formula
Chapter 1

WHY ARE ERRORS SO COMMON?
• Traditional computer programming is carried out largely
by trained professionals.
• It uses elaborate and formalized development methods.
• Very few corporations (and even fewer individuals)
employ even the most basic design and inspection
procedures.

Chapter 1

CHALLENGES FOR SPREADSHEET USERS
• End-user spreadsheets frequently have bugs.
• End-users are overconfident about the quality of their
spreadsheets.
• Development process is inefficient
• Most productive methods for generating insights not
employed

Chapter 1

END USER INEFFICIENCIES
• Lack of planning causes extensive rework
• No prototyping; too much complexity too soon
• Users rarely spend time debugging
• Users rarely seek review
• Do not use Excel’s best tools for clearest insights (even
advanced users)

Chapter 1

BASIC KNOWLEDGE FOR SPREADSHEET MODELING
• Basic algebra
– e.g., quadratic, exponential, logarithmic functions

• Simple logic
– e.g., IF statements or MAX functions

• Basic probability
– e.g., distributions and sampling

• Basic familiarity with Excel
– e.g., entering and formatting text, using functions

Chapter 1

REAL WORLD

PROBLEM
STATEMENT

MODEL WORLD

FORMULATION

ASSUMPTIONS
and
MODEL
STRUCTURES

ANALYSIS

SOLUTION

INTERPRETATION
— translation
— communication

RESULTS
and
CONCLUSIONS

THE REAL WORLD AND THE MODEL WORLD

Chapter 1

MODEL FORMULATION
• Decisions
– Possible choices or actions to take

• Outcomes
– Consequences of the decisions

• Structure
– Logic that links elements of the model together

• Data
– Numerical assumptions in model

Chapter 1

FIVE ASPECTS OF MODELING ACTIVITY
• Problem context
– Situation from which modeler’s problem arises

• Model structure
– Building the model

• Model realization
– Fitting model to available data and calculating results

• Model assessment
– Evaluating model’s correctness, feasibility, and acceptability

• Model implementation
– Working with client to derive value from the model
Chapter 1

HABITS OF EXPERT MODELERS
• Experts:
– Frequently switched among the five aspects of modeling
– Spent 60% of activity time on model structure with
frequent switches between model structure and model
assessment.
– Used model structure as the organizing principle around
which the related activities were arrayed

• Conclusion: Craft skills are as essential as technical skills
in effective modeling.

Chapter 1

RANKING OF MODELING SKILLS
• Creativity, sensitivity to client needs, persistence
• Communication, teamwork skills, etc.
• Technical expertise
• Knowledge of the industry or problem-type
• Above ranking confirms the importance of craft skills

alongside technical skills in modeling.

Chapter 1

BEHAVIORS THAT LIMIT MODELING EFFECTIVENESS
• Over-reliance on given numerical data
• Taking shortcuts to an answer
• Insufficient use of abstract variables and relationships
• Ineffective self-regulation
• Overuse of brainstorming relative to structured problem
solving

Chapter 1

ORGANIZATION OF TEXT
• Spreadsheet engineering
– How to design build, test and perform analysis with a
spreadsheet model

• Modeling craft
– Effective abstraction, model debugging, and translating
models into managerial insights

• Data analysis
– Exploring datasets and basic techniques for classification,
prediction

• Management science
– Optimization
– Simulation
Chapter 1

SUMMARY OF TEXT PHILOSOPHY
• Modeling is a necessary skill for every business analyst.
• Spreadsheets are the modeling platform of choice.
• Basic spreadsheet modeling skills are an essential
foundation.
• End-user modeling is cost-effective.
• Craft skills are essential to the effective modeler.
• Analysts can learn the required modeling skills.
• Management science/statistics are important advanced
tools.

Chapter 1

COPYRIGHT © 2013 JOHN WILEY & SONS, INC.
All rights reserved. Reproduction or
translation of this work beyond that permitted in
section 117 of the 1976 United States Copyright Act
without express permission of the copyright owner is
unlawful. Request for further information should be
addressed to the Permissions Department, John Wiley
& Sons, Inc. The purchaser may make back-up copies
for his/her own use only and not for distribution or
resale. The Publisher assumes no responsibility for
errors, omissions, or damages caused by the use of
these programs or from the use of the information
herein.

STEPHEN G. POWELL
KENNETH R. BAKER

MANAGEMENT
SCIENCE

CHAPTER 2 POWERPOINT
MODELING IN A PROBLEM-SOLVING FRAMEWORK

The Art of Modeling with Spreadsheets

Compatible with Analytic Solver Platform
FOURTH EDITION

MODELERS’ ROLES IN THE PROBLEM-SOLVING PROCESS
• End user
– Identifies problems, develops model, uses model, and
implements results
– Often the modeler

• Team member
– Communication skills critical
– Whole team must understand model and assumptions

• Independent consultant
– Model is for a client
– Model must be consistent with client’s goals

Chapter 2

KEY TERMS: “PROBLEM” VERSUS A “MESS”
• A problem is a well-defined situation that is capable of
resolution.
• A mess is a morass of unsettling symptoms, causes, data,
pressures, shortfalls, opportunities, etc.
• Identifying a problem in the mess is the first step in the
creative problem solving process.

Chapter 2

PROBLEM STATEMENTS
• A statement in the form “In what ways might…?”
– Focuses on defining the problem to be solved
– Example: “In what ways might we increase revenues to
keep pace with costs?”

• Solutions will differ based on the problem statement, so:
– Pay close attention to the problem definition.
– Take any problem definition as tentative.
– Prepare to alter the definition if evidence suggests a
different statement would be more effective.

Chapter 2

CHARACTERISTICS OF WELL-STRUCTURED PROBLEMS
• The objectives of the analysis are clear.
• The assumptions that must be made are obvious.
• All the necessary data are readily available.
• The logical structure behind the analysis is well
understood.
• Example: Algebra problems are typically well- structured
problems.

Chapter 2

ILL-STRUCTURED PROBLEMS
• Objectives, assumptions, data, and structure of the
problem are all unclear.
• Examples:
– Should the Red Cross institute a policy of paying for blood
donations?
– Should Boeing’s next major commercial airliner be a small
supersonic jet or a slower jumbo jet?
– Should an advertiser spend more money on the creative
aspects of an ad campaign or on the delivery of the ad?
– How much should a mid-career executive save out of
current income toward retirement?

• Require exploration more than solutions.
Chapter 2

EXPLORATION
• With an inquiring mind and a spirit of discovery,
exploration involves:
– formulating hypotheses
– making assumptions
– building simple models
– deriving tentative conclusions

• It often reveals aspects of the problem that are not
obvious at first glance.

Chapter 2

DIVERGENT AND CONVERGENT THINKING
• Divergent thinking
– Thinking in different directions
– Searching for a variety of answers to questions that may
have many right answers
– Brainstorming

• Convergent thinking
– Directed toward achieving a goal or single solution
– Involves trying to find the one best answer
– Emphasis shifts from idea generation to evaluation

• Decision makers need to be clear as to which they use at
a given time, and balance the two.
Chapter 2

THE SIX-STAGE PROBLEM-SOLVING PROCESS
1. Exploring the mess
Divergent phase
Search the mess for problems and opportunities.

Convergent phase
Accept a challenge and undertake systematic efforts to respond to it.

2. Searching for information
Divergent phase
Gather data, impressions, feelings, observations; examine the situation from many
different viewpoints.

Convergent phase
Identify the most important information.

3. Identifying a problem
Divergent phase
Generate many different potential problem statements.

Convergent phase
Choose a working problem statement.
Chapter 2

THE SIX-STAGE PROBLEM-SOLVING PROCESS (CONT’D)
4. Searching for solutions
Divergent phase
Develop many different alternatives and possibilities for solutions.

Convergent phase
Select one or a few ideas that seem most promising.

5. Evaluating solutions
Divergent phase
Formulate criteria for reviewing and evaluating ideas.

Convergent phase
Select the most important criteria; use them to evaluate, strengthen, and refine ideas.

6. Implementing a solution
Divergent phase
Consider possible sources of assistance and resistance to proposed solution. Identify
implementation steps and required resources.

Convergent phase
Prepare the most promising solution for implementation.
Chapter 2

EXAMPLE: INVIVO DIAGNOSTICS
• A $300M pharmaceutical company built on the strength
of a single product that accounts for over 75% of
revenues.
• In 18 months, the patent for this product will expire.
• The CEO wants to explore ways to plug the expected
$100-$200M revenue gap as revenues from this product
decline.

Chapter 2

1. EXPLORING THE MESS
• What problems or opportunities do we face?
• Where is there a gap between the current situation and
the desired one?
• What are the stated and unstated goals?
• This stage is complete when we have:
– A description of the situation
– Identified (not gathered) key facts and data

Chapter 2

2. SEARCHING FOR INFORMATION
• What are the symptoms and causes?
• What measures of effectiveness seem appropriate?
• What actions are available?
• This stage is complete when we have:
– Found and organized relevant data
– Made initial hypotheses about problem causes and
solutions

Chapter 2

3. IDENTIFYING A PROBLEM
• Which is the most important problem?
• Is this problem like others we have dealt with?
• What are the consequences of a broad versus narrow
problem statement?
• This stage is complete when we have produced a working
problem statement.

Chapter 2

4. SEARCHING FOR SOLUTIONS
• What decisions are open to us?
• What solutions have been tried in similar situations?
• How are the various candidate solutions linked to
outcomes of interest?
• This stage is complete when we have produced a list of
potential solutions.
– Perhaps also a list of advantages and disadvantages

Chapter 2

5. EVALUATING SOLUTIONS
• How does this solution impact each of the criteria?
• What factors within our control could improve the
outcomes?
• What factors outside our control could alter the
outcomes?
• This stage is complete when we have produced a
recommended course of action along with justification.

Chapter 2

6. IMPLEMENTING A SOLUTION
• What are the barriers to successful implementation?
• Where will there be support and motivation, or
resistance and conflict?
• Are the resources available for successful
implementation?
• This stage is complete when we have produced an
implementation plan and begun execution.

Chapter 2

MENTAL MODELS (INFORMAL MODELING)
• Help us to relate cause and effect
– But often in a simplified, incomplete way

• Help us determine what is feasible
– But may be limited by personal experiences

• Are influenced by our preferences for certain outcomes
• Are useful but can be limiting
• Problem solvers construct quick, informal mental models
at many different points in the process.

Chapter 2

FORMAL MODELS
• Provide the same kind of information as mental models
– Link causes to effects, aid in evaluating solutions

• Require a set of potential solutions and criteria to
compare solutions to be identified
• More costly and time consuming to build than mental
models
• Make assumptions, logic, and preferences explicit and
open to debate

Chapter 2

INFLUENCE CHARTS
• A simple diagram to show outputs and how they are
calculated from inputs
• Tool of choice for complex, unstructured problems
• Identifies main elements of a model
• Delineates the boundaries of a model
• Recommended for early stages of any problem
formulation task
• Flexible, support frequent revision

Chapter 2

BUILDING AN INFLUENCE CHART
• Built from right to left
• Conventions on types of variables
– Outputs – hexagons
– Decisions – boxes
– Inputs – triangles
– Other variables – circles
– Random variables – double circles
– See Figure 2.3
Figure 2.3

Chapter 2

INFLUENCE CHART PRINCIPLES
• Start with outcome measure
• Decompose outcome measure into independent
variables that directly determine it
• Repeat decomposition for each variable in turn
• Identify input data and decisions as they arise
• Ensure each variable appears only once
• Highlight special types of elements with consistent
symbols

Chapter 2

EXAMPLE 1: A PRICING DECISION
• “Determine the price we should set for our product so as
to generate the highest possible profit this coming year.”
• See Figures 2.2a – 2.2f

Chapter 2

EXAMPLE 1: A PRICING DECISION

Chapter 2

EXAMPLE 1: A PRICING DECISION

Chapter 2

EXAMPLE 1: A PRICING DECISION

Chapter 2

EXAMPLE 2: THE SS KUNIANG1
• In the early 1980s, New England Electric System (NEES)
was deciding how much to bid for the salvage rights to a
grounded ship, the SS Kuniang. If the bid were successful,
the ship could be repaired and outfitted to haul coal for
the company’s power-generation stations. But the value
of doing so depended on the outcome of a U.S. Coast
Guard judgment about the salvage value of the ship.
• See Figure 2.6

1D. E. Bell, “Bidding for the S.S. Kuniang,” Interfaces 14 (1984): 17–23.

Chapter 2

EXAMPLE 3: AUTOMOBILE LEASING
• The primary challenge for companies offering a closedend lease is to select the residual value of the vehicle.
• See Figure 2.7

Chapter 2

INFLUENCE CHARTS WRAP-UP
• The goal is to develop a problem structure—not to solve
the problem.
• There is no one correct chart.
• Charts ignore all available numerical data.
• Charts rely on modeling assumptions that should be
recorded as made.

Chapter 2

CRAFT SKILLS FOR MODELING
• Successful modelers draw on both technical and craft
skills
• Technical skills
– Lead to a single correct answer
– Require no creativity, learned quickly
– Example: Calculating present values

• Craft skills
– Do not lead to a single answer
– Example: Designing a prototype

Chapter 2

CHARACTERISTICS OF CRAFT SKILLS
• Do not lead to a single answer
• Require creativity
• Harder to define and teach
• Develop slowly over time
• Involve modeling heuristics

Chapter 2

MODELING HEURISTICS
• Simplify the problem
• Break the problem into modules
• Build a prototype and refine it
• Sketch graphs of key relationships
• Identify parameters and perform sensitivity analysis
• Separate the creation of ideas from their evaluation
• Work backward from the desired answer
• Focus on model structure, not data collection

Chapter 2

SIMPLIFY THE PROBLEM
• “Model simple, think complicated”
• Simplification
– The essence of modeling
– Increases transparency – aids with buy-in
– Requires a focus on key connections and central trade-offs
– Involves making assumptions

Chapter 2

BREAK THE PROBLEM INTO MODULES
• Keep components as independent as possible.
• Each component is simpler to deal with than the whole.
• Development of components provides structure to the
modeling process.

Chapter 2

BUILD A PROTOTYPE AND REFINE IT
• A prototype is a working model.
• It should:
– Take data and inputs from the user
– Produce key outputs in response

• A prototype:
– Will be refined later
– Is, by definition, simple

Chapter 2

CHARACTERISTICS OF A COMPLETED PROTOTYPE
• The problem is decomposed into modules.
• We have built a simple model for each module.
• The modules work together to produce results.
• We have provided a tentative answer to the client’s
major questions.

Chapter 2

PROTOTYPES
• Keep the entire problem in the mind of the modeler
• Provide a roadmap for future work
• Support sensitivity analysis
– Where would my model benefit most from additional
work?

Chapter 2

SKETCH GRAPHS OF KEY RELATIONSHIPS
• Graphs express relationships visually
– Not mathematically or verbally

• Allows for looking at a problem from different viewpoints
• Externalizes the analysis
– Moves it from the mind to an external artifact (the graph)

Chapter 2

Decisions

Outcomes
MODEL

VISUALIZATION OF THE MODELING PROCESS

Chapter 2

USEFUL FUNCTIONS FOR MODELING

Chapter 2

IDENTIFY PARAMETERS AND PERFORM SENSITIVITY
ANALYSIS
 Price1 and Price2 below represent a family of relations.
o Price1 = a – b*(Quantity)
o Price2 = a*(Quantity)b (b
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