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Chapter 12 Introduction to Simulation Using Risk Solver Platform 1
Chapter 12
Introduction to Simulation Using Risk Solver Platform
This material is made available to instructors and students using Spreadsheet Modeling and Decision Analysis, 5e by Cliff T. Ragsdale, published by South-Western, a division of Cengage Learning. No part of this work may be reproduced or used in any form or by any means – graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information systems storage and retrieval systems – without the written permission of the publisher (Tel (800) 730-2214, Fax (800) 730-2215, http://www.Cengage.com).
COPYRIGHT © 2009 ALL RIGHTS RESERVED.
12.0 INTRODUCTION
Chapter 1 discussed how the calculations in a spreadsheet can be viewed as a mathematical model that defines a functional relationship between various input variables (or independent variables) and one or more bottom-line performance measures (or dependent variables). The following equation expresses this relationship: Y = f(X1, X2, ..., Xk)
In many spreadsheets, the values of various input cells are determined by the person using the spreadsheet. These input cells correspond to the independent variables X1, X2, ..., Xk in the previous equation. Various formulas (represented by f( ) above) are entered in other cells of the spreadsheet to transform the values of the input cells into some bottom-line output (denoted by Y above). Simulation is a technique that is helpful in analyzing models in which the value to be assumed by one or more independent variables is uncertain.
This chapter discusses how to perform simulation using a popular commercial spreadsheet add-in called Risk Solver Platform, created and distributed by FrontLine Systems. A limited-life (15-day) trial version of Risk Solver Platform and related products may be downloaded from FrontLine's web site at www.solver.com. A non-expiring educational version of Risk
Chapter 12
Introduction to Simulation Using Risk Solver Platform
This material is made available to instructors and students using Spreadsheet Modeling and Decision Analysis, 5e by Cliff T. Ragsdale, published by South-Western, a division of Cengage Learning. No part of this work may be reproduced or used in any form or by any means – graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information systems storage and retrieval systems – without the written permission of the publisher (Tel (800) 730-2214, Fax (800) 730-2215, http://www.Cengage.com).
COPYRIGHT © 2009 ALL RIGHTS RESERVED.
12.0 INTRODUCTION
Chapter 1 discussed how the calculations in a spreadsheet can be viewed as a mathematical model that defines a functional relationship between various input variables (or independent variables) and one or more bottom-line performance measures (or dependent variables). The following equation expresses this relationship: Y = f(X1, X2, ..., Xk)
In many spreadsheets, the values of various input cells are determined by the person using the spreadsheet. These input cells correspond to the independent variables X1, X2, ..., Xk in the previous equation. Various formulas (represented by f( ) above) are entered in other cells of the spreadsheet to transform the values of the input cells into some bottom-line output (denoted by Y above). Simulation is a technique that is helpful in analyzing models in which the value to be assumed by one or more independent variables is uncertain.
This chapter discusses how to perform simulation using a popular commercial spreadsheet add-in called Risk Solver Platform, created and distributed by FrontLine Systems. A limited-life (15-day) trial version of Risk Solver Platform and related products may be downloaded from FrontLine's web site at www.solver.com. A non-expiring educational version of Risk