Project 7
Forecasting Values With What-If
Analysis: Using Data Tables, Scenarios,
Goal Seek, and Solver
Jason C. H. Chen, Ph.D.
Professor of
Management Information Systems
School of Business Administration
Gonzaga University
Spokane, WA 99258, USA
Chen@gonzaga.edu
Excel Skills






Create a one-variable data table
Create a two-variable data table
Create scenarios
Use goal seek to determine the monthly contribution
required to product a specific retirement amount
Use solver to determine optimum values
Use the trend worksheet function to predict future
sales
2
Key Terms

adjustable cells


Constraints


The cells that will change to produce a solution
when using Solver. The adjustable cells must be
related to the target cells.
A method for restricting values in a Solver model.
data table

A range of cells that shows how changing certain
values in a formula changes the result.
3
Key Terms

Goal Seek


input cell


A method for finding the input value that a formula must have
to return a specified result. When using Goal Seek, Excel
varies the value in a cell that you specify until a formula
that's dependent on that cell returns the result you want.
The cell in a worksheet in which a list of input values from a
data table is substituted.
Scenario

A named set of input values that you can substitute in a
worksheet model.
4
Key Terms

Solver


An Excel tool for determining the maximum or
minimum value of one cell by changing other cells.
target cell

In Solver, the cell that will display the optimal
value is called the target cell.
5
Objectives






Create a one-variable data table
Create a two variable data table
Use Goal Seek to constrain vales in a what if
analysis
Use the TREND function to predict future
sales
Create and save multiple scenarios
Use Solver to determine which value
produces a desired result
6
Running Case

Mr. Traylor now wants to know
whether the Selections, Inc. finance
department will be able to use Excel
to analyze existing data to determine
future performance..
7
Project Challenge


First, they want to post to the corporate
intranet a simple worksheet for employees to
look at different investment scenarios for
their 401K retirement plans.
Second, he wants to know if Excel can predict
next quarter’s sales, based upon the existing
data. Then, he wants to see how constraining
expenses will impact profits. Finally, he wants
to somehow save these scenarios so he can
present this data to the e-commerce
management team.
8
Forecasting Future Values


With a One-Variable Data Table
With a Two-Variable Data Table
9
Task 1: To Create a One-Variable Data Table
0. Open a new file
1. Rename the first worksheet tab Base
Retirement Plan
2. Enter the text constants in column A and
cell B12. Change the format of all text values
in column A to Bold.
3. Select the range A5:B5, and click the
Merge and Center button
on the
Formatting toolbar. Select cells A11:B11 and
merge and center the selection.
4. Type 1000 in cell B6 and 250 in cell B7.
Format both entries to currency two
decimals places.
5 Type 5% in cell B8.
10
Task 1: To Create a One-Variable Data Table (cont.)
6. Type 35 in cell B9. Create a
custom format for the cell that
displays the text Years after
the value.
How do you create a custom
format?
6. (cont). Select the cell B9,
click Format, Cells, and
click the Number tab (it
may already be selected).
b) Select Custom as the
format category, and
enter 00 “Years” in the
Type: text box. Click OK
to accept the format.
11
Task 1: To Create a One-Variable Data Table (cont.)
7.
Apply the All borders
format to the ranges
A5:B9 and A11:B18.
8.
Type =b8 in cell
A13. Type the
percentage
displayed in cells
A14:A18
12
Task 1: To Create a One-Variable Data Table (cont.)
9. Place the insertion point in cell
B13. Type =FV(B8/12,
B9*12, -B7,-B6) as the
formula in this cell.
10. Save the workbook as
Retirement Calculator.xls
FV(rate, periods, payment) it returns the future value of an
investment based on periodic, constant payments, and a constant
interest rate
13
Task 1: To Create a One-Variable Data Table (cont.)
11. Select the range A13:B18.
Click Data, Table, as
shown.
12. Type b8 in the Column
input cell: text box of the
Table dialog box. Click
OK.
14
Task 1: To Create a One-Variable Data Table (cont.)
13. Adjust the width of
columns A and B to
display all values. Format
cells B14:B18 to currency
with 2 decimal places.
14. Save the workbook.
15
Task 2: To Create a Two-Variable Data Table
1.
Rename the Sheet2
worksheet tab as Adjusted
Retirement Plan
2. Copy cells A1:B18 of the
Base Retirement Plan
worksheet, and paste the
selection into the Adjusted
Retirement Plan
worksheet, beginning at
cell A1.
3. Change the width of
Columns B through F to
14.00
4. Highlight the range A13:A18
and drag the selection
down one row as shown.
16
Task 2: To Create a Two-Variable Data Table (cont.)
5. Highlight cells B14:B18 and
press [Del] (not Edit, Delete)
to delete the formulas.
6. Move the the formula in cell
B13 to cell A13, and apply
bold formatting. (use Edit,
Cut, then Paste)
7. Apply the All Borders format to
the range A11:F19
17
Task 2: To Create a Two-Variable Data Table (cont.)
8. Type Monthly Contribution in cell B12 and merge and center the label
through cell F12.
9. Merge and center the label in cell A11 through cell F11.
18
Task 2: To Create a Two-Variable Data Table (cont.)
10. Type 100, 150, 200, 250, and 300 in cells B13, C13, D13, E13, and
F13 respectively. Format these values as currency, with no decimal
places, and as Bold.
19
Task 2: To Create a Two-Variable Data Table (cont.)
Row (b7)
Col.(b8)
11. Select the range A13:F19. Click Data, Table.
12. In the Table dialog box, type b7 as the row input cell and b8 as the
column input cell, as shown. Click OK.
The Two-Variable data table substituting the interest rate (b8) and monthly
contribution (b7) values in the FV formula.
20
Task 2: To Create a Two-Variable Data Table (cont.)
The Two-Variable data table substituting the interest rate (b8) and monthly
contribution (b7) values in the FV formula.
13. Format all resulting values as currency, with two decimal places.
14. Save your workbook.
21
Goal Seek and What-If
Analysis


Using Goal Seek to constrain values in a
What-If analysis
Determine what monthly contribution will
yield a specific retirement amount after 35
years
22
Task 3: Use Goal Seek to Determine the Monthly
Contribution Required to Produce a Specific Retirement
Amount
1.
2.
Click Tools, Goal Seek
In the Goal Seek dialog box,
type a13 in the Set cell: text
box, 500000 in the To
value: text box, and b7 in
the By changing cell: text
box.
3. Click OK. Goal Seek finds a
solution.
23
Task 3: Use Goal Seek to Determine the Monthly
Contribution Required to Produce a Specific Retirement
Amount (cont.)
3. Goal Seek finds a solution
(cont.)
4. Click Cancel to restore the
worksheet to its original
settings.
24
Check Point: What monthly contribution is required to
generate a retirement account of $1.5 million at 14%
interest?
25
Predict Future Sales based on Historic
Sales Data

TREND FUNCTION
26
Task 4: Use TREND Function to Predict Future Sales
1. Open the Selections R-E
Values.xls workbook.
2. Select the range of
worksheets from Boston
to Seattle.
3. Place the insertion point in
cell E5. Because you
have selected a range of
worksheets, the formula
you create will appear in
each worksheet in the
rang.
4. Click the Insert Function
button
on the
Standard toolbar. The
Paste Function dialog
box will appear.
27
Task 4: Use TREND Function to Predict Future Sales (cont.)
5. Click All in the function
category list, and scroll
the Function name; list
to display the TREND
worksheet function.
6. Click OK. The formula
Palette will appear.
7. Type b5:d5 in the KnownY’s box. Click OK. Excel
calculates the predicated
value.
28
Task 4: Use TREND Function to Predict Future Sales (cont.)
7. (cont.)
Type b5:d5 in the Known-Y’s
box. Click OK. Excel
calculates the predicated
value.
29
Task 4: Use TREND Function to Predict Future Sales (cont.)
8. Copy this formula to cell
E6, and to cells
E12:E16
30
Task 4: Use TREND Function to Predict Future Sales (cont.)
9. Click cell F5. Modify the
formula so it sums cells
B5:E5 (used to be
B5:D5)
Copy the formula to the
other cells in the
workbook range that
calculate the total for
each revenue or expense
item (i.e., F6:F7 and
F12:F16)
31
Task 4: Use TREND Function to Predict Future Sales (cont.)
10. Rename the 1st Quarter
Summary worksheet tab
Sales Summary.
11. Use the Fill handle to
copy the formulas from
the range E5:E11 to
F5:F11. Click cell A1.
12. Save the workbook. The
Sales Summary
worksheet should display
the totals for April.
32
Working with Scenarios


A scenario is a set of values that Microsoft
Excel saves and can substitute automatically
in your worksheet.
Use scenarios either


to forecast the outcome of a worksheet model, or
Restore a worksheet to existing values.
33
Task 5: To Create Scenarios
1. Open the Solver Data.xls
workbook.
2. Click the Boston
worksheet tab to make it
the active sheet.
3. Click Tools, Scenarios.
4. The Scenario Manager
dialog box will appear. As
you can see, there are
no scenarios in the
workbook.
Click Add.
34
Task 5: To Create Scenarios (cont.)
5. The Edit Scenario dialog box will now
appear. Name the scenario Boston
Projected, and enter the range
B12:D16 (or select range using
mouse) in the Changing Cells: textbox.
Click OK.
35
Task 5: To Create Scenarios (cont.)
6. The Scenario Values dialog box will
appear. This verifies the data that will
be saved as a part of the scenario.
Because these are the values in the
range B12:D16, click OK.
36
Task 5: To Create Scenarios (cont.)
7. The Scenario Manager will appear
again, and the scenario you just
created will appear in the list. Click the
Close button.
8. Repeat the procedure listed above to
create four additional scenarios,
named Dallas projected, Denver
Projected, Indianapolis Projected, and
Seattle Projected.
9. Save the workbook.
Now that you have created five scenarios that will return each worksheet
to its beginning state, you are ready to forecast optimum expense values
for each worksheet.
37
SOLVER


A common task in conducting a what-if
analysis is to see how constraining certain
values in a worksheet will affect other values.
You can use Excel’s Solver to determine the
maximum or minimum value of one cell by
changing other cells.



Target cell
Adjustable cells
constraints
38
Task 6: To Calculate Optimum Values Using Solver
1.
Click the Boston worksheet
tab to make it the active
sheet.
2. Click Tools, Solver.
(if Solver is not available, click
Tools, Add-ins then select
Solver Addin, the click
OK)
3. You will control the total
expenses by changing the
variable expense figures. Enter
the values shown in the figure in
the appropriate areas of the
Solver dialog box.
39
Task 6: To Calculate Optimum Values Using Solver (cont.)
3. (Repeated)
You will control the total
expenses by changing the
variable expense figures.
Enter the values shown in
the figure in the appropriate
areas of the Solver dialog
box.
40
Task 6: To Calculate Optimum Values Using Solver (cont.)
4. You will now add four constraints to
the solution. Click the Add button.
For the first constraint, you will limit utilities
to a total of $3500 for the Quarter. Enter
the values as shown in the Figure. Click
Add.
5. For a second constraint, set the value of
cell E14 less than or equal to 36000. Click
Add.
6. For the third constraint, set the value of
cell E15 less than or equal to 4200. Click
Add.
7. For the final constraint, set the value of
cell E16 less than or equal to 18000. Click
OK.
41
Task 6: To Calculate Optimum Values Using Solver (cont.)
8. Click Solve. The Solver
Results dialog box appears.
9. Click the Save Scenario
button. Name the scenario
Boston Optimized and
click OK.
10. Click ok in the Solver
Results dialog box. The
solution is displayed in the
Figure.
42
Task 6: To Calculate Optimum Values Using Solver (cont.)
Notice that Excel has
altered the data according
to each constraint you
specified.
11. Save and close the
workbook.
43
44
45
Solution – Data Tables & Goal
Seek
46
Using the TREND Function
47
Solver
48
Project 7
Forecasting Values With What-If
Analysis: Using Data Tables, Scenarios,
Goal Seek, and Solver