1. Decision Support Systems (DSS)
Programs used to help managers solve complex business problems
A model representing a quantitative business problem
Problem can range from a desired product mix to sales forecasts to sales analysis to risk analysis
Used to examine financial outcomes using “what if” analysis
This Example
DSS is a cash flow model for a small business
Thrift Store Expansion

2. College Town Thrift Shop
Owner of a Thrift shop that caters to college students
Thinking of expanding your business by buying an adjacent store front.
You will need to finance the purchase with a business loan
Bank requires a projection of your profit and cash flows for the next two years before it will loan you the money to expand
Thrift Store Expansion

3. College Town Thrift Shop
Forecast Factors:
2013 Sales
Cost of Goods Sold per Sales dollar
Estimate of the state of the Economy
Recession and High Inflation Outlook
Recession and Low Inflation Outlook
Economic Boom and High Inflation Outlook
Economic Boom and Low Inflation Outlook
Business loan payment
Thrift Store Expansion

4. Thrift Store Expansion
Organization of a DSS Model using an Income and Cash Flow Statement Framework
Constants Section
Holds values that are needed for the spreadsheet calculations
Inputs Section
Will be typed in by the user to play basic “what if” analysis
Summary of Key Results Section
Summarizes important information
Calculations Section
Used for intermediate calculations
Income and Cash Flow Statements Section
Financial or accounting “body” of the spreadsheet
Thrift Store Expansion

5. Thrift Store Expansion
Steps
Create a skeleton and add any constants
Fill in the easy formulas
Fill in the hard formulas
Thrift Store Expansion

6. Thrift Store Expansion
Constants Section
Values given to you and usually do not change, but can if needed.
For example, you might decide to borrow more than $100,000.
Thrift Store Expansion

7. Thrift Store Expansion
Inputs Section
Allows you to play basic “what if” analysis on the factors you have identified earlier
Thrift Store Expansion

8. Summary of Key Results Section
Summary sections are usually placed near the top of a spreadsheet to allow managers to see a quick “bottom line summary
(Copied from the Income and Cash Flow Statements section at the bottom of the sheet.)
Summary sections can make it easier to select cells for charting
Thrift Store Expansion

9. Calculations Section (Expansion and No Expansion)
Used to compute intermediate values which makes the calculations in the Income and Cash Flow Statements less complicated.
Thrift Store Expansion

10. Evaluating the outcomes for your DSS Model
Recession and High Inflation Outlook
Recession and Low Inflation Outlook
Economic Boom and High Inflation Outlook
Economic Boom and Low Inflation Outlook
You could create 3 more copies of your spreadsheet to evaluate the four different scenarios, or you could use Scenario Manager.
Thrift Store Expansion

11. Thrift Store Expansion
Scenario Manager
Used to run the model for all the requested outcomes and presents a tabular summary of the results.
Presents a tabular summary of the results that is useful for reports, presentations, etc.
Thrift Store Expansion