ITC Session-1(22-June-2015)
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Transcript of ITC Session-1(22-June-2015)
Session-1:
Vivek Gupta,IT & Systems Group, IIM Lucknow
ph: 0522-6696610; 98391 30688
Email(s): [email protected]
Introduction to Problem Solving and Decision Making:
Concepts and Steps
An Exercise…A new community water tank is being planned for a village. Given the following:• An open-top, rectangular concrete tank to
hold 30 cubic meters (cbm) of water• Given the site constraints, the tank width will
be 2 meters• Building the tank costs
– $10 per square meter (sqm) for the base, and – $5 per square meter (sqm) for the sides
Course Objective(s)Emphasizes
• problem-solving, critical thinking, and analysis
to challenge students to find • efficient and effective solutions
to business situations using Excel
An opportunity to apply the skills that students learnImbibes students with skills to manage the inevitable "what if" scenarios that occur in business situationsSeveral business case problems (such as accounting, finance, marketing, and operations management) provide additional practice in a real-world context
Excel usage in other coursesProblem AreasCreating proforma income statements and balance sheet models
Accounting
Developing valuation and portfolio optimisation models
Finance
Analysing pricing issues, estimating customer lifetime or summarising market research survey
Marketing
Developing an aggregate planning model or analysing sales data to inventory strategy
Operations Management
Analysing employee performance or appraisal
HRM
……
Be able to automate Excel to maintain, organize, retrieve related data
Be able to use Excel to display, analyze, and manipulate numeric data to support decision making in business
Develop Appreciation of Excel Capabilities to solve Business Problems
Takeaway(s)
Introduction to Problem Solving and Decision Making:
Concepts and Steps
In any Problem-Solving Challenge, the Decision-maker must Balance…The usefulness of the solution • e.g., the power and credibility of insight,
with
The tractability of the approach • i.e., the analysis must be completed
within time and resource constraints
Modeling is the art of structuring and analyzing a decision problem within the given constraintsIts vitally important for Managers to arrive at compelling insights and recommendations that help build organizational commitment to action
The Fast Pace of Change Demands that Leaders make Quality Decisions despite a high degree of UncertaintyWell-constructed models facilitate these decisions by • capturing and clearly illustrating the
impact of the most critical factors, and• facilitating high-quality discussion
focused on the most important risks and tradeoffs
Improving Problem-solving Skills through Modeling Experience will Improve your Ability to Lead…An organization through a wide variety of decision-making challenges• from rapid-fire problems requiring ‘quick
and dirty’ analysis to • strategic conundrums requiring
extensive risk vs. return investigation
General Model of a Problem-Solving Approach
Recognize and identify the problem
Describe and analyze the problem
Analyzing the Problem
Analyzing the ProblemData gathering
• Consider credibility, reliability, and accuracy
Pre-processing• Manipulate data into
appropriate format
Cleansing• Identify and correct data
corruption
Filtering• Remove data that isn’t
useful or necessary
Problem StatementSome missing piece of
information is identified that is required to solve the
problem or make a decision
Analyzing the Solution
Understanding the ProblemWhat data is needed and what data or information is already known?
Is the data or information reliable and accurate?
What is the likely range of potential solutions?
What types of output are required? (e.g., single value, table, printed report, Web page)
Formulating a Solution PlanPlan how to use Excel by considering the steps you need to take to solve the problem• Numerical calculation• Determining if data meet
specific criteria• Organizing information or
results in a specific format• Combining several of
these steps
Place data in well-organized,easy to understand layouts
Implementing the SolutionInput data
Process data• Depends on the
problem and the proposed solution
Configure desired output
Implementing the Solution:What a Manager Must Know
Spreadsheets• How to correctly write formulas and functions and
use spreadsheet tools
Databases• What kind of information is stored in the database
and how it is organized
Business documents and presentations• How to organize and articulate the information so
that it meets the needs of your audience And …
Evaluating the SolutionCheck the results to ensure they are correct
Three Squirrels and a Pile of NutsThree squirrels gather a pile of nuts, and decide to
store the pile outside their house overnight.
Exactly the same thing happens to the second squirrel, who wakes up, eats one of the nuts, steals exactly one-third of the pile that's left, and goes back to bed.
Then precisely the same thing happens to the third squirrel: She eats one nut, hides away one-third of the pile, and goes back to bed.
In the morning, the three squirrels awake and apportion the pile. It divides exactly by three.
During the night, however, one of the squirrels wakes up hungry and decides to steal one-third of the pile (I'm only taking my fair share," he tells himself). But he has to eat one of the nuts in order to be able to take exactly one-third. He leaves two-thirds of the nuts behind and goes back to bed.
How many nuts were in the original pile?
Three Squirrels and a Pile of Nuts
Decision Making: Essence to Problem Solving
Simon Identify and define potential problems or opportunitiesInvestigate resource and environmental conatraints
Develop alternate solutions and evaluate their feasibility
Intelligence
Design
Choice
DecisionMaking
Huber
Intelligence
Design
Choice
Implementation
Monitoring
DecisionMaking
ProblemSolving
3 Types of DecisionsStructured• Involve
situations where the procedures to be followed can be specified in advance
– operational
Semistructured• Some decision
procedures can be specified in advance, but not enough to lead to a definite recommended decision
– tactical
Unstructured• Involve
situations where it is not possible to specify most of the decision procedures in advance
– strategic
Programmed vs. Non ProgrammedMade using a rule, procedure, or quantitative method• easy to computerize
Deal with unusual or exceptional situations• difficult to quantify• Rules/ relationships
are not well defined.
• inventory should be ordered when inventory levels drop to 100 units
» determining the appropriate training program for a new employee,
» deciding whether to start a new type of product line
What is Business Analytics?Analytics• “the extensive use of data, statistical and
quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions”
Business Intelligence (BI):• “a set of technologies and processes that
use data to understand and analyze business performance ”– includes both data access and reporting, and
analytics”
–(Davenport and Harris, Competing on Analytics, 2007)
We can achieve BA by Decision Support Systems
Data Warehousing
Data Mining
Knowledge Management Systems
30
Characteristics of a DSSProvides• rapid access to information• report and presentation flexibility
Handles• large amounts of data from different sources
Supports• drill-down analysis
Performs• complex, sophisticated analysis and comparisons
using advanced software packages
Supports• optimization, satisficing, and heuristic approaches
Using Decision Support Systems is an Interactive Modeling ProcessFour types of analytical modeling• What-if analysis• Sensitivity analysis• Goal-seeking analysis• Optimization analysis
What-If AnalysisEnd user makes changes to variables, or
relationships among variables, and
observes the resulting changes in the values of other variables
Sensitivity Analysis A special case of what-if analysis
The value of only one variable is changed repeatedly, and the resulting changes on other variables are observed• Typically used when there is uncertainty
about the assumptions made in estimating the value of certain key variables
Goal-Seeking AnalysisInstead of observing how changes in a variable affect other variables, goal-seeking sets a target value (a goal) for a variable, then repeatedly changes other variables until the target value is achieved
Optimization AnalysisA more complex extension of goal-seeking
The goal is to find the optimum value for one or more target variables, given certain constraints
Understanding Spreadsheet Terminology
Cell: intersection of each row and columnHas a unique name (e.g., A1)
Can contain:• Number• Text• Formula, which is a math equation (=B1+B2)
– Always begin with an = sign, and can include math operators (such as + or -), references to cells, and numbers
• Function, which is a named equation that shortcuts an otherwise complex operation– e.g., the AVERAGE function
Ribbon:• multi-tabbed toolbar system
containing buttons and other controls for issuing commands
Microsoft Office Button:• Opens the only real "menu" in
Excel 2007 -- the Office menu --which contains commands for saving, opening, and printing files.
Tabs: • Two meanings for this word. A tab
is an individual page of the Ribbon; however, it's also the word you click to display that page.
Quick Access Toolbar: • A highly customizable portion of
the interface; place shortcuts to your favorite buttons and commands here.
Insert Function button: • You can click this button to get
help creating functions.Formula bar:
• This is where the contents of a cell appear and where you can type or edit those contents.
Column headers:• Each column's letter is a header
for that column. You can click the column letter to select the entire column.
Microsoft Office Excel Help button:• Opens the Excel Help system
Scroll bars: • Use these to scroll within the
active worksheet.Zoom controls:
• Control the magnification at which you view the active worksheet.
Insert Worksheet tab: • Click this tab to insert another
worksheet.Worksheet tabs:
• Click one of these tabs to switch between worksheets.
Row headers: • Each row's number is a header
for that row. You can click the row number to select the entire row
The Ribbon replaces the menu system
Each Ribbon tab has named sections, called groups.• e.g., Home tab contains groups including Clipboard, Font,
Alignment, Number, Styles, Cells, and Editing.
Some of the groups have icons in their lower-right corners. These are dialog box launchers.
• They open dialog boxes containing more options for the settings in that group than the Ribbon provides.
The End
Or
The Beginning…