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Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Definition History Examples Spreadsheet and Business Analytics Professor Mouwafac Sidaoui Spreadsheet… What is a spreadsheet? "spread sheet" or spreadsheet was and is a large sheet of paper with columns and rows that organizes data about transactions for a business person to examine. shows all of the costs, income, taxes, and other related data on a single sheet of paper for a manager to examine when making a decision. electronic spreadsheet organizes information into software defined columns and rows. help a decision maker see the financial "big picture" for the company. Saturday, October 19, 2013 1 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Brief History of Spreadsheet… Spreadsheets have been used by accountants and Analysists for hundreds of years Computerized or electronic spreadsheets are of much more recent origin. Dan Bricklin is the "father" of the electronic spreadsheet. 1978, as a Harvard Business School student, he came up with the idea for an interactive visible calculator Bricklin and Bob Frankston co-invented software program VisiCalc [visible calculator]. Dan Bricklin & Bob Frankston Approximately ≈ 1980 Saturday, October 19, 2013 2 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui What came after VisiCalc? spreadsheet software was growing rapidly in the early 1980s VisiCalc were slow to respond Legal business distractions led to new development In 1983 IBM responded Mitch Kapor developed Lotus 123 and the application quickly became the new industry spreadsheet standard Saturday, October 19, 2013 3 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui What is Lotus 1-2-3? Lotus 1-2-3 made it easier to use spreadsheets and it added integrated charting, plotting and database capabilities. Lotus 1-2-3 established spreadsheet software as a major data presentation package as well as a complex calculation tool. Lotus was also the first spreadsheet vendor to introduce naming cells, cell ranges and spreadsheet macros. Lotus Life 1983, Lotus’ first year of operations, the company reported revenues of $53 Million and had a successful public offering. 1984, Lotus tripled in revenue to $156 Million. 1985, Lotus employees grew to over a thousand. This rapid growth led to a shakeout in the spreadsheet segment of the personal computer software industry. 1985, Lotus Development acquired Software Arts and discontinued the VisiCalc program. Saturday, October 19, 2013 4 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui What about Microsoft Excel? The next milestone was the Microsoft Excel spreadsheet. Excel was originally written for the 512K Apple Macintosh in 1984-1985. Excel was one of the first spreadsheets to use a graphical interface Excel spreadsheet with a graphical user interface was easier. Many people bought Apple Macintoshes so that they could Excel spreadsheet program. 1987, Excel was one of the first application released for Windows OS. 1989, Excel was Microsoft's flagship product In the late spring of 1995, IBM acquired Lotus Development and Microsoft Excel is the spreadsheet market leader. Key Dates in the history of Microsoft Excel 1985 Excel 1.0 launched. 1986-88 Microsoft releases versions 1.0.6 and 1.5. 10/31/87 Launch of Excel 2.0 for MS-DOS version 3.0 1989 Launch of Excel 2.2 for Macintosh. New version includes improvements in the calculation speed by 40% and added flexibility of different styles within a single document. 12/9/90 Excel 3.0 is launched. This version includes Workbooks and is one of the earliest Macintosh applications to offer Users Publish & Subscribe functionality. 4/1/92 Microsoft Releases Excel 4.0 for Windows 3.1. 11/1/92 Excel 4.0a for Windows 3.1. 12/14/93 Excel 5.0; This version includes improved Workbooks and the replacement for Excel Macro Language with Visual Basic. 7/27/95 Excel 7.0 for Windows 95/NT. Saturday, October 19, 2013 5 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Spreadsheet Historic Summary Visicalc was the first electronic spreadsheet on a microcomputer, It helped turn the Apple II computer into a popular and widely used system. Lotus 1-2-3 was the leading spreadsheet when DOS was the dominant operating system. Excel now has the largest market share on the Windows and Macintosh platforms A spreadsheet program is a standard feature of an office productivity suite. Since the advent of web apps, office suites now also exist in web app form. Other Spreadsheet Applications Open Office www.OpenOffice.org Apple iWork Numbers www.apple.com/iwork/numbers Google Docs Spreadsheet http://docs.google.com JMP, SAS Product www.jmp.com/software Tableau www.tableausoftware.com SPSS, IPM Product www.spss.com …many others… Saturday, October 19, 2013 6 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui References "VisiCalc '79: Dan Bricklin and Bob Frankston", Creative Computing, November 1984, vol. 10, p. 122, 124. "VisiCalc Production Ends", PC Magazine, August 6, 1985, vol. 4, p. 33. Bajarin, T. "VisiCorp was PC software industry's training ground." PC Week, August 13, 1990, v7 n32, p.117. Browne, Christopher. "Historical Background on Spreadsheets", at URL http://www.ntlug.org/~cbbrowne/spreadsheets.html, visited March 24, 1998; also checked http://www.hex.net/~cbbrowne/spreadsheets.html 04/12/1999. Claymon, D. "Profile: Mitch Kapor, The Lotus cofounder goes to bat for startups", Red Herring Magazine, February 1999, URL www.herring.com/mag/issue63/news-profile.html. Frankston, R. Email message, 04/15/1999a. Frankston, R. Email message, 04/15/1999b. Henderson, T.B., D.F. Cobb, G.B. Cobb. Spreadheet Software from VisiCalc to 1-2-3. Indianapolis: Que Corp., 1983. Kapor, M. Email message, 04/15/1999. Mattessich, Richard. "Spreadsheet: Its First Computerization (1961-1964)", at URL http://www.j-walk.com/ss/history/spreadsh.htm. Pardo, R. Email message, 08/20/2004. According to Bill Jelen “mr. Excel” www.mrexcel.com Did you 50% of Excel know? users leave 80% of Excel untouched... Saturday, October 19, 2013 7 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Definition of Spreadsheet Modeling… Spreadsheet modeling is a creative process, and thus cannot be reduced to a simple recipe, every spreadsheet passes through a predictable series of four stages: 1. Designing 2. Building 3. Testing 4. Analysis Modeling for insight requires skills in establishing a base case, performing sensitivity analysis, using back- solving, and (when necessary) carrying out optimization and simulation. Basic Spreadsheet Modeling Concepts… Most mathematical models, including spreadsheet models, involve: 1. Inputs – given values that are fixed for the model 2. Decision variables – under the control of the decision maker 3. Outputs – determined by input and decisions variables There isn’t one best spreadsheet practice but there are good habits to learn: Model must be readable, clear and logic Separation of parts in spreadsheet Clear headings for input decision and output variables Use of rangenames Use of various formatting (font, size, color) Cell comments and text boxes for lists and explanations Saturday, October 19, 2013 8 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Turning Numbers into Knowledge The Art of Estimation: Ping Pong Ball exercise How many ping-pong balls could you fit into the room? 1. Take just 60 sec to answer the question 2. Solving the same problem in 5 min (with a partner) Take 10 min to make a list of the points that you think these two exercises illustrate. Ping Pong Ball Exercise What type of model did you use? You modeled in terms of categories such as few, some, lots or tens, hundreds, thousands. You drew a mental picture of a ping-pong ball and looking around the room You then estimated that the answer belonged in one category rather than another Saturday, October 19, 2013 9 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Turning Numbers into Knowledge: Ping Pong Ball Exercise Volumetric calculation… You might have estimated the volume of: a ping-pong ball volume of a room divided one into another Did you model the ping-pong ball as a cube rather than a sphere? Did you model the room as a large, empty box? Did you ignore the furniture? Did you assume that you were not allowed to squash or deform the balls? Turning Numbers into Knowledge: Ping Pong Ball Exercise Solving the same problem in 5 min (with a partner) Keep a note of how you go about solving it. How did you go about solving the problem this time? Did you use the same procedure but refine your measurements? Did you use the extra time to take a new approach? Did you change your model? Did you modify your assumptions? Did you, for example make a correction for the furniture or the shape of the room? What were the differences between working alone and working in a team? Did you share tasks? Did you start with similar ideas or did you spend time arguing about the proper approach? Given more resources (time and people), chances are you may have built a more sophisticated model. Saturday, October 19, 2013 10 Intro To Spreadsheet Modeling Professor Mouwafac Sidaoui Turning Numbers into Knowledge: Ping Pong Ball Exercise What have you learned about modeling? Online calculator www.online-calculators.co.uk/volumetric/roomvolume.php H L W Saturday, October 19, 2013 11.