Microsoft Office Tutorials and References
In Depth Information
When you click OK, Excel creates a second Scenario Summary, but this time the output values come
from 2012, not 2013. After editing and formatting, the 2012 Scenario Summary should look like Figure C-29.
Scenario Summary for End of Year 2012
As you can see from these results, not expanding the business yields slightly better financial results at
the end of year 2012. As the original Scenario Summary points out, it will take two years for the business
expansion to start making more money when compared with not expanding. You can also revise the original
spreadsheet to copy the columns out to 2014, 2015, and beyond to forecast future income and cash flows.
However, note that the accuracy of a forecast gets worse as you extend it in time.
Managers must also maintain a healthy skepticism about the validity of their assumptions when
formulating a DSS model. Most assumptions about economic outlooks, inflation, and interest rates are really
educated guesses. For example, who could have predicted the economic meltdown in 2007? Business DSS
models for investments, new product launches, business expansion, or projects commonly look at three
possible outcomes: best case, most likely, and worst case. The most likely outcome is based on previous years
data already collected by the firm. The best-case and worst-case outcomes are formulated based on some
percentage of performance that falls above or below the most likely scenario. At least these are data-driven
forecasts, or what people in the business world call
So, how do you reduce risk when making financial decisions based on DSS model results? It helps to
formulate the model based on valid data, and to use conservative estimates for success. More importantly,
collecting pertinent data and tracking the business results after deciding to invest or expand can help reduce the
risk of failure for the enterprise.
When you start working on the Scenario Manager spreadsheet cases later in this topic, you will need to know how
to manipulate summary sheets and their data. Some of these operations are explained in the following sections.
Rerunning Scenario Manager
The Scenario Summary sheet does not update itself when you change formulas or inputs in the spreadsheet.
To get an updated Scenario Summary, you must rerun Scenario Manager, as you did when changing the
outputs from 2013 to 2012. Click the Summary button in the Scenario Manager dialog box, and then click OK.
Another summary sheet is created; Excel numbers them sequentially (Scenario Summary, Scenario Summary
2, etc.), so you do not have to worry about Excel overwriting any of your older summaries. That is why you
should rename each summary with a description of the changes.
Deleting Unwanted Scenario Manager Summary Sheets
When working with Scenario Manager, you might produce summary sheets you do not want. To delete an
unwanted sheet, move your mouse to the group of sheet tabs at the bottom of the screen and right-click the
tab of the sheet you want to delete. Click Delete from the menu that appears (see Figure C-30).