What If Analysis Outline

1 Spreadsheet Modeling Dr. Grayson

Data Table

See Walkenbach p. 279-282 (chapter 13) |See also chapter 22

{see Walkenbach files in Chapter 13 | loan data tables.xls}

One-way data table {see also Ch 6 & 7 in Powell and Baker}

For a one way table you can one input variable that can take on
different values and one or multiple output variables that reflect the
changes in the input variable.

In this example we want to observe the impact of different interest
rates (cell B2) on the outcome variables of payment amount (B6),
total payment (B7) and total interest (B8).



Worksheet: 1-way


Steps:

We begin by constructing the outline of the table. Put the different
interest rates across row 10 (they could also be down a column).
Enter a link to the outcome variables in cells B11:B13 and put
corresponding labels in column A.

Highlight the range B10:I13.

Select Data | Table | Row Input box: enter B2
Click OK

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Result:





XY Scatter Diagrams are a good way to visually understand data table
outcomes.

Highlight A10:A13 + CTL Key & Highlight C10:I13
Select Insert | Chart | XY Scatter (as shown)



Follow Wizard and label appropriately. Scale X-axis to better fit data.


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Loan Interest Rate Impact
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
7.00% 7.50% 8.00% 8.50%
Annual Interest Rate
D
o
l
l
a
r
s
Payment Amount:
Total Payments:
Total Interest:



Creating a two-way data table

A two-way data table can have two input variables and one output
variable.

In this example we want to understand the impact of different interest
rates (B2) and different loan amounts (B1) on the payment amount
(B6).



Worksheet: 2-way


We begin by constructing the outline of the table. Across row 10
(C10:I10) we put the varying values for interest rates. Down column
B (B11:B16) we put varying values for the loan amount. At the top
left corner intersection of these ranges we place a cell reference to the
cell in our model that is our outcome variable (in this case in cell B10
enter =B6).

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Highlight B10:I16

Select Data | Table | Row Input box: enter B2 & Column Input box:
enter B1




Click OK


Result:




Again, XY Scatter charts are a good analysis tool.

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Loan Payment as Function Loan Amt & Int Rate
$270.00
$280.00
$290.00
$300.00
$310.00
$320.00
$330.00
$340.00
$350.00
$360.00
$370.00
$9,000.00 $9,500.00 $10,000.00 $10,500.00 $11,000.00 $11,500.00
Loan Amt
L
o
a
n

P
a
y
m
e
n
7.00%
7.25%
7.50%
7.75%
8.00%
8.25%
8.50%


Lets highlight the loan amounts that are more than $300 using
conditional formatting:






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Scenario Manager

See Walkenbach p. 509-514 (chapter 22)

{see Walkenbach files in Chapter 22 | production model.xls}

We are limited in data tables to at most two input variables. The
Scenario Manager is an alternate way to automate what-if with
identifying sets of values for input variables and storing each grouping
by name as a scenario.

In this example we examine three scenarios (best case, worst case
and most likely) for the input variables of hourly cost and materials
cost to see their impact on three outcome variables of product profit
(product A, B and C).



The scenarios we want to examine are as follows:

Scenario Hourly Cost Materials Cost
Best Case 30 57
Worst Case 38 62
Most Likely 34 59

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Select Tools | Scenarios

You will see:



Click on Add Scenario | Provide a Name and identify the changing cells
(input variables)



Enter values for the variables



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Continue this process until all scenarios have been identified



Now you are ready to create a report. Click on Summary and identify
the range for the output cells:



A report is generated:




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Goal Seek

See Walkenbach p. 516-518 (chapter 23)

{see Walkenbach files in Chapter 23 | mortgage loan.xls}

Goal Seek is what if in reverse. We determine the value we need in an
input variable to obtain a particular result in an outcome variable.

Using the mortgage loan worksheet we keep the variables down
payment, loan term and interest rate constant. We want to know the
purchase price that we can afford to have a monthly payment of
$1,500.





Select Tools | Goal Seek



There are three entries. The first two relate to the outcome variable
we identify the cell reference and the desired value. The third entry is
the input variable that is, what variable will be manipulated to obtain
the desired outcome result.
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Click OK.



We see that a purchase price of $237,316 will give us a loan payment
of $1,500 given that all other input variables in this model are held
constant.