5 - 1 Chapter 5: Spreadsheet Engineering PowerPoint Slides Prepared By: Alan Olinsky Bryant University Management Science: The Art of Modeling with Spreadsheets, 2e S.G. Powell K.R. Baker © John Wiley and Sons, Inc.

5 - 2 Spreadsheet Engineering  Builders use blueprints or plans. Without plans structures will fail to be effective.  Advanced planning in any sort of design can speed up implementation.  Spreadsheets are no different from other arenas of design. Engineering and advanced planning aids effectiveness.

5 - 3 Spreadsheet Design  An efficient process minimizes time spent.  An effective process yields results that meet users’ requirements.  Good design helps analysts spend the majority of their effort improving decisions, rather than building and fixing models.

5 - 4 The Phases of Spreadsheet Modeling  Designing  Building  Testing

5 - 5 Influence Chart Insert Figure 5.1 here

5 - 6 Designing a Spreadsheet  Plan  Modularize  Start small  Parameterize  Design for use  Keep it simple  Design for communication  Document important data and formulas

5 - 7 Plan  “Measure twice, cut once”  Will decrease time spent correcting mistakes  Turn computer off and think before beginning  Begin with a sketch Physical layout of major elements Rough indication of calculation flow  Anticipate model’s ultimate uses

5 - 8 Modularize  Group like items and separate unlike items.  Separate Data Decision variables Outcome measures Detailed calculations  Influence diagrams aid with this design.  Formulas should generally reference cells above and to the left.

5 - 9 Start Small  Sketch full design but do not build all at once.  Isolate one module then build and test that module.  Local mistakes are much easier to detect than when they are part of the global model.

Parameterize  Place parameters in a single location away from calculations.  Formulas should only contain cell references, not numerical values.  Assists in: Identifying parameters Sensitivity analysis Documentation

Design for Use  Anticipate who will use spreadsheet What type of questions will be asked?  Make it easy to change common parameters.  Make it easy to find key outputs. Group in one place  Include graphs of outputs.  Record numerical values of base case outputs.

Keep It Simple  Complex spreadsheets: Require more time and effort to build Are much more difficult to debug  Keep formulas short. Decompose complex calculations into intermediate steps.

Design for Communication  Spreadsheets’ lives are often longer than expected.  Use visual cues that reinforce model’s logic Use informative labels Use blank spaces Use outlines, color, bold fonts, as appropriate  Split windows can aid in viewing.

Document Important Data and Formulas  Record source for important parameters.  Explain important formulas.  Use Cell Comments to describe cell contents.  Consider a separate module to list assumptions.

Cell Comments  Insert – Comment to add documentation to a cell  Tools – Options – View gives different display options Comment & indicator – permanently display comment Indicator – red triangle indicates comment, display when cursor in cell None – neither comment nor indicator visible

Workbook Design  Use separate sheets to group similar kinds of information.  Design workbooks for ease of navigation.  Protect workbooks from unwanted changes during use.

Example: Northern Museum Capital Campaign Insert Figure 5.6. Influence chart for Northern Museum model

Use Separate Sheets to Group Similar Kinds of Information  Workbooks should be designed to make a model easy to understand and use.  Individual worksheets should each have a well- defined purpose and be given descriptive names.  They should also appear in a natural order.  Assumptions, calculations and results should be placed on separate worksheets whenever possible to allow users to view assumptions and results without being distracted by the details of the calculations.

Guide to Sheets  Insert Figure 5.7. National Museum model: Guide to sheets

Design Workbooks for Ease of Navigation and Use  Any form of structural help for users is beneficial.  Use revealing names for individual sheets. Double-click on name tab at bottom of spreadsheet to edit name

Outlining  Insert Figure 5.8. National Museum model: Outlining

Design a Workbook as a Decision Support System  A decision support system is an integrated information system that provides data, analytics, and reporting capabilities over an extended period of time to multiple users.  Effective decision support systems are designed to present information in a manner that is most useful to decision makers.  Use graphs instead of tables of numbers.

Protect Workbooks From Unwanted Changes During Use  Lock cells not to be changed.  Use worksheet protection.  Use data validation.

Locking Cells  To lock all cells: Select entire worksheet Select Format – Cells – Protection and check the box for locked  To unlock variable cells: Select desired cells Select Format – Cells – Protection and uncheck the box for locked

Example of Locking Cells  Figure 5.9. The Protection tab in the Format Cells window

Protecting Worksheets  Tools – Protection – Protect Sheet  At top of Protect Sheet window check box for Protect worksheet  If check only Select Unlocked Cells User will be able to only select and modify unlocked cells.  If check Select Locked and Unlocked Cells User will be able to select any cell but only modify unlocked cells.

Example of Protecting Worksheet  Insert Figure The Protect Sheet window

Data Validation  Controls input values  Highlight cells then click Data – Validation  Three tabs Settings: Restrict inputs (e.g., range of cell values) Input Message: Create message when cursor on cell Error Alert: Alert for invalid entry

The Data Validation Window  Insert Figure The Data Validation window

Example: Error alert produced by Data Validation  Insert Figure Error alert produced by Data Validation

Building a Workbook  Follow a plan.  Build one module at a time.  Predict the outcome of each formula.  Copy and paste formulas carefully.  Use relative and absolute addressing to simplify copying.  Use the Function Wizard to ensure correct syntax.  Use range names to make formulas easy to read.  Choose input data to make errors stand out.

Copying and Pasting Formulas  Copying (rather than retyping) reduces the potential for typographical errors.  Copying can also be a source of bugs. e.g., wrong range copied

Relative and Absolute Addressing  Necessary for efficient copying  An address such as B7 is relative. In cell A6, B7 represents one row down and one column to the right. If copied, new formula will refer to new cell that is one row down and one column to the right.  An address such as $B$6 is absolute. Cell will not change if formula is copied. Use for parameter values.

Function Wizard  The button f x brings up the function wizard.  Contains a complete list of all Excel functions  Selecting a function will bring up a window showing needed inputs.  Function value will be shown in window automatically

Range Names  Any cell or range of cells may be named.  Name or cell reference may be used in formulas. Names easier to debug and use  Require extra work to enter and maintain  Select Insert – Name – Define to assign a name.  Pull-down window at top left of spreadsheet. Shows all named cells for workbook Can be used to enter individual cell names

Testing a Spreadsheet  Check that numerical results look plausible.  Check that formulas are correct.  Test that model performance is plausible.

Check That Numerical Results Look Plausible  Make rough estimates.  Check with a calculator.  Test extreme cases.

Check That Formulas Are Correct  Check visually.  Display individual cell references.  Display all formulas.  Use the auditing tools.  Use error checking.  Use error traps.  Use auditing software.

Checking Formulas Visually  Visually check formulas in each cell.  Most effective when range names used  Tends to be tedious

Displaying Individual Cell References  Press F2 or double-click on cell of interest.  Reveals formula with color-coded cell references  Stronger visual clues than manual checking

Display All Formulas  Hold down control key and press tilde key.  All formulas are displayed  Makes for easier scanning  Aids in detecting deviations from patterns  Reverse by repeating Control – Tilde

Using the Auditing Tools  Identifies predecessors and successors of cells  Select Tools – Auditing – Show Auditing Toolbar to display auditing toolbar.  Trace Precedents Colored arrows to predecessors  Trace Dependents Colored arrows to successors

Error Checking  Tab under Tools – Options  Available in Excel 2002 and later versions  Equivalent of grammar checking in word processing  Cells with possible errors are flagged with colored triangle

Errors Checked Under Automatic Error Checking  Evaluates to error value  Text date with 2 digit years  Number stored as text  Inconsistent formula in region  Formula omits cells in region  Unlocked cells containing formulas  Formulas referring to empty cells

Use Error Traps  Error traps are formulas added to a spreadsheet that warn the user of potential errors.  They can check for errors in input data or for errors in formulas.  Any number of error traps can be added to a workbook to improve its safety.  It is important that the results of these error checks be clearly visible to the user.  One way to do this is to create an overall error trap that checks whether any one of the individual traps is true, and returns a warning.

Use Auditing Software  A number of Excel add-ins are available for auditing spreadsheets.  These add-ins typically provide a set of tools for detecting errors and displaying model structure graphically.  We describe one such tool, Spreadsheet Professional, in section 6.

Test That Model Performance Is Plausible  Model should react in a plausible manner to a range of inputs  The user should be content with trends in output based on varying inputs.  Sensitivity testing (Chapter 6) is an important tool to test plausibility.

*Auditing software: Spreadsheet Professional  Spreadsheet Professional is an add-in to Excel that assists the end user in building, testing, documenting and using spreadsheets.  It provides: Building tools Testing tools Documenting tools Usage tools

Spreadsheet Professional: Building Tools  Standard format  Build bar  Translation bar  Spreadsheet Painter  Spreadsheet Formula Tracer

Spreadsheet Professional: Testing Tools  The Spreadsheet Checker tests cells one-by- one for violations of any of 25 test conditions.  The Spreadsheet Reports tool runs a batch test looking for violations in the entire workbook (or any selected worksheets) and writes the results to another workbook.

Spreadsheet Professional: Documenting Tools  The following eight reports are provided: Summary: Background information on the workbook and its worksheets. Range names: Lists all range names and external references. Maps: Codes cells as labels, numbers, or formulas (described above). Translation of calculations: Translates calculations into English. Blank input worksheets: Provides a blank form for collecting all inputs. Current input values: Reports the current value of all inputs. General tests: Examines the workbook for problematic conditions, such as manual calculation. Calculation tests: Tests each formula for violations of 25 test conditions (described above).

Spreadsheet Professional: Usage Tools  Spreadsheet Professional also provides several productivity tools:  Sensitivity analysis tool, which is similar to the Data Sensitivity tool described in Chapter 6.  Breakeven tool, which is similar to Excel’s Goal Seek tool, also described in Chapter 6.  Spreadsheet Comparison tool, which allows a cell- by-cell comparison of two spreadsheets to find the differences.

Summary  Spreadsheets deserve careful engineering. Most spreadsheets contain errors. Users are over confident about their models.  Rules for spreadsheet modeling: Designing a spreadsheet Designing a workbook Building a workbook Testing a workbook

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