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# Tools for Business Decisions - Exercises 1

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### Tools for Business Decisions - Exercises 1

1. 1. 27C0100 Tools  for  Business  Decisions Exercises kari.silvennoinen@student.hse.ﬁ
2. 2. Exercise  guidelines • Exercises  are  due  always  on  the  following   Monday – Return  the  exercises  to  the  box  on  the  ﬁrst  ﬂoor  in   Chydenia • Working  in  pairs  is  recommended • Do  not  return  just  printouts  of  Excel  sheets,   report  your  results • Please  use  English  in  your  answers – You  can  answer  in  Finnish  if  you  feel  like  it kari.silvennoinen@student.hse.ﬁ 2
3. 3. DiﬃculOes  with  exercises? • Excel  has  a  quite  comprehensive  help  system   with  examples  on  how  diﬀerent  things  work • Google  is  your  friend   (or  go  to  kyweb  forums,  or  form  a  Facebook   group…) • mikko.sarkkinen@hse.ﬁ  will  help • kari.silvennoinen@student.hse.ﬁ  will  also  help kari.silvennoinen@student.hse.ﬁ 3
4. 4. Case  1  –  Merton  Truck  Company • Due  February  4th,  2010 • Available  in  the  course  binder • Return  to  the  box  on  1st  ﬂoor  at  Chydenia • Report  your  results,  do  not  hand  in  just  a   printout  of  Excel  sheets kari.silvennoinen@student.hse.ﬁ 4
5. 5. The  Zen  of  Modeling  in  Excel 1. Start  formulaOon  with  pen  and  paper – The  2-­‐dimensional  table  in  Excel  will  narrow  your   thinking 2. Remember  to  separate  data  and  formulas – You  will  thank  yourself  for  doing  that  when  you  start   hunOng  for  mistakes 3. FormulaOng  the  problem  will  take  most  of  your   Ome – Fixing  problems  with  the  model  will  take  the  rest.   Solving  takes  just  fracOons  of  seconds. kari.silvennoinen@student.hse.ﬁ 5
6. 6. Spreadsheet  error  rates Number  of   Number  with   Percentage  with   Study spreadsheets errors errors Coopers  &  Lybrand,  1997 23 21 91% KPMG,  1997 22 20 91% Lukasic,  1998 2 2 100% Butler  (HMCE),  2000 7 6 86% Total 54 49 91% • Other  studies  show  that  the  error  rate  per  cell  is  between  0.38%   and  21% • The  probability  of  an  individual  spreadsheet  containing  an  error  is   between  78%  and  97% • Public  horror  stories  at:  hjp://www.eusprig.org/stories.htm kari.silvennoinen@student.hse.ﬁ 6
7. 7. • The  following  examples  are  available  as  an   Excel  ﬁle  at  hjp://bit.ly/lbd1001   kari.silvennoinen@student.hse.ﬁ 7
8. 8. MarkeOng  Research A  client  has  asked  to  conduct  1000  interviews  to  ascertain   consumer  reacOon  to  a  recently  marketed  product.  The   contract  with  the  client  requires  to  interview: 1. At  least  400  households  with  children 2. At  least  400  households  without  children 3. Evening  interviews  should  be  at  least  as  many  as  day   interviews 4. At  least  40%  of  the  interviews  for  households  with   children  would  be  conducted  in  the  evening 5. At  least  60%  of  the  interviews  for  households  without   children  would  be  conducted  during  evening   kari.silvennoinen@student.hse.ﬁ 8
9. 9. MarkeOng  Research • Diﬀerent  type  of  interviews  vary  in  cost • What  is  the  interview  plan  that  would  saOsfy   customer  requirements  at  minimum  cost? Household Cost    /  Interview Day Evening W  children 20  € 25  € w/o  children 18  € 20  € kari.silvennoinen@student.hse.ﬁ 9
10. 10. Product  Mix Floataway  Tours  has  420  000  €  that  may  be  used  to   purchase  new  rental  boats  for  hire  during  the  summer.   The  boats  can  be  purchased  from  two  diﬀerent   manufacturers.  Floataway  Tours  would  like  to  purchase  at   least  50    boats  and  would  like  to  purchase  same  number   of  boats  from  Sleekboat  as  from  Racer  to  maintain   goodwill.  At  the  same  Ome,  Floataway  Tours  wishes  to   have  a  total  seaOng  capacity  of  at  least  200. PerOnent  data  concerning  the  boats  are  summarized  on   the  next  slide.  Formulate  this  problem  as  a  linear   program. kari.silvennoinen@student.hse.ﬁ 10
11. 11. Floataway  Tours Boat Builder Cost Maximum   Expected  daily   seaOng proﬁt Speedhawk Sleekboat 6000  € 3 70  € Silverbird Sleekboat 7000  € 5 80  € Catman Racer 5000  € 2 50  € Classy Racer 9000  € 6 110  € kari.silvennoinen@student.hse.ﬁ 11
12. 12. Blending  Problem Frederick’s  Feed  Company  receives  four  raw  grains   from  which  it  blends  its  dry  pet  food.  The  pet  food   adverOses  that  each  0,5  kg  can  meets  the  minimum   daily  requirements  for  vitamin  C,  protein  and  iron.   The  cost  of  each  raw  grain  as  well  as  the  vitamin  C,   protein  and  iron  units  per  kg  of  each  grain  are   summarized  on  the  next  slide. Frederick’s  is  interested  in  producing  the  0,5  kg   mixture  at  minimum  cost  while  meeOng  the   minimum  daily  requirements  of  6  units  of  vitamin  C,   5  units  of  protein  and  5  units  of  iron. kari.silvennoinen@student.hse.ﬁ 12
13. 13. Frederick’s Grain Vitamin  C  units/ Protein Iron Cost kg units/kg units/kg €/kg 1 9 12 0 0,75 2 16 10 14 0,90 3 8 10 5 0,80 4 10 8 7 0,70 kari.silvennoinen@student.hse.ﬁ 13