Business Modeling and Decision Making

Overview:  With risk, uncertainty and trade-offs always in play, tough management decisions are a daunting challenge for even the most seasoned managers. Just sitting in a conference room, discussing the issues, and eventually selecting what is believed to be the best course of action rarely yields the best result.  And as a result, competitive advantage can be lost and the bottom line can suffer.

In this three-day intensive short course, attendees will learn how to take a more structured approach to decision making using techniques that are at once sophisticated, yet relatively easy to learn and apply to real-world, complex business problems.  By the end of the course, attendees will appreciate how spreadsheet modeling tools can be used to develop solutions to important business problems that ultimately lead to making better business decisions.  Attendees will learn specific tools and techniques that will enable them to explicitly account for inherent elements of risk, uncertainty and trade-offs.  They will have the ability to build models, to analyze them in depth through formalized approaches, and to do “what if?” sensitivity analysis to gain insight into why chosen solutions make the most business sense.  They will be better able to structure complex problems, evaluate and prioritize alternatives, allocate scarce resources, and justify and defend decisions.  It is expected that by the end of the course, the attendees will be able to generate a list of specific opportunities where what they have learned can be fruitfully applied to the challenges they face and to use what they have learned to begin making better decisions.

Who should take this course: The course will be of interest to anyone who faces challenging business decisions of real economic consequence.  This includes personnel in positions dealing with business analysis, financial analysis, planning, marketing, engineering, project management, business development, procurement, customer service and consulting.  Senior managers will enhance their ability to address complex and challenging business decisions in a structured fashion while their staff will be equipped with specific technical tools to analyze the decisions and identify issues senior management might want to consider.

Aspects of decision making covered are:

• Becoming a power user of Excel
• Using spreadsheets to model problems so that the best solution can be found
• Identifying objectives and alternatives
• Minimizing cost or maximizing profit subject to constraints on available resources such as capital or workforce, or constraints on the need to meet demand, product quality, or government regulations
• Handling risk and uncertainty inherent in the factors that influence cost or profitability (for example, demand, price, availability, time, growth rate)
• Gaining business insight and testing assumptions through sensitivity analyses

Method of instruction:  Topics will be explored by learning how to use the above techniques to solve a wide variety of business problems such as:

• Optimizing operations
• Competitive bidding strategies
• Facility location
• Procurement (choosing the best vendor)
• Staffing
• Scheduling
• Preventive maintenance
• Mergers and acquisitions
• Pricing
• New product development
• Inventory management
• Assessing long-term customer value

What have past students said about the course?

• “Excellent text and an instructor who is thoroughly prepared and stimulating!”
• “This was a great course. Spreadsheet modeling and simulation have become mainstays of today’s  business world.”
• “This course is very practical for real-world applications. I would strongly recommend it for others in the energy business (or any other business for that matter).”
• “Concepts learned are very practical. I can apply them to my job.”
• “The course is very useful for business analysts and engineers.”
• “I have the highest praise for the instructor and his teaching methods. He was passionate in teaching the students and put forth a tremendous amount of effort in making sure we learned the material.”

What kinds of decisions will I be able to address with what I learn in the class?

• You are the manager of a division of a company with many new project ideas for the coming year. Your division has funds for some but not all of the projects.  You know the cost of each of the potential projects and you know the return of each.  Which projects do you undertake to maximize the value to your company without going over the budget?  What if each of these projects uses a different level of workforce and the total workforce available for all projects is limited?  What if the projects are tied together in some way, for example, if you take on project A, you must also do project B, or if you do project C, you cannot do project D?

• Considering this same problem, what do you do if you are not sure of exactly what the cost and return of each project will be, that is, you only have a range of possible values?

• You are manager of a production facility making a product with seasonal demand.  How do you make the best use of your inventory capacity to schedule your production over the coming months given what you know about the demand pattern, the cost of holding inventory and the rate of increase in production costs over the coming months?

• You are seeking to locate a distribution center to supply your customers who are spread out over a wide geographic area.  You know the location and demand of your customers and you know the cost of land in various locations where you might locate the warehouse, as well as the travel times between potential distribution center sites and your customers.  Where is the best place to locate your distribution center?

• Considering the same problem, what do you do if you are not sure of the demand at each customer location?

• You have a plant where you buy raw materials, blend them into a finished product, and then sell the finished product.  You lease the space where this operation takes place.  If you are uncertain as to how much of the raw materials you will be able to get and what the demand for the finished product will be, how much space should you lease?