Decision Analysis in Excel (IND520)

Content

The course uses the spreadsheet program Excel, a powerful and commonly used tool for quantitative analysis. We analyze different examples of business- and microeconomic decision problems. Focus will be on develping spreadsheet models that are logically corret and easy to read, in addition to sensitivity analysis. Mathematical methods for problem solving will not be part of the course. The main topics are optimization models, simulation models, decision trees and data analysis.

The lectures are streamed and available online. Access will be given to university computers at specified computer rooms. The course allows students to use their own computers with the Excel software (add-ins) used in the course. This software is available by purchasing a new course textbook. The software does not work optimally on mac computers, and to practice and follow the lectures with your own computer you need a pc with Windows operating system. If you do not have access to this, you have to use one of the school (stationary) computers.

Learning outcome

Knowledge

After completing the course, the student should know:

• Linear, integer and non-linear mathematical programming relevant to business decision problems
• Conditions under which different models can be used and their limitations
• Basic knowledge of solution algorithms
• Economic interpretations of model solutions
• Sensitivity and robustness analysis of solutions
• Analysis of decision under uncertainty, Bayes law
• Simulation analysis

Skills

After completing the course, the student should be able to:

• Use Excel
• Set up a spreadsheet model of a business decision problem in Excel
• Solve for the optimal solution of the problem in Excel
• Give economic interpretations of the model solutions and what they imply for the costs and constraints facing businesses in decision problems
• Analyze decision trees for decision problems under uncertainty
• Perform basic simulation analysis in Excel

General competence

After completing the course, the student should be able to communicate:

• How a business decision problem can be formulated as a mathematical decision problem
• The different types of models available and the conditions under which they apply
• How the models can be practically implemented and solved
• The fundamental economic constraints and trade-offs businesses face in their decision problems

Required prerequisite knowledge

Recommended prerequisites

Exam

Coursework requirements

Course teacher(s)

Course coordinator:

Head of Department:

Method of work

Open for

Course assessment

Literature