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Using Goal Seek

The document describes how to use the Excel Goal Seek tool to determine unknown values in formulas. It provides examples of using Goal Seek to: 1) Determine what value in cell B2 would make the sum in cell B3 equal to 200 when cell B1 is 25; and 2) Determine what unit price in cell E3 would result in a monthly profit of $900 when 35 necklaces are sold per month. Goal Seek is useful for solving more complex mathematical scenarios where it can determine the unknown value needed to satisfy a desired formula output.

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Zahra Zahid
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58 views

Using Goal Seek

The document describes how to use the Excel Goal Seek tool to determine unknown values in formulas. It provides examples of using Goal Seek to: 1) Determine what value in cell B2 would make the sum in cell B3 equal to 200 when cell B1 is 25; and 2) Determine what unit price in cell E3 would result in a monthly profit of $900 when 35 necklaces are sold per month. Goal Seek is useful for solving more complex mathematical scenarios where it can determine the unknown value needed to satisfy a desired formula output.

Uploaded by

Zahra Zahid
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Using Goal Seek

To get a better understanding of what the goal seek command actually does, create a spreadsheet that looks similar to this:
Step 1 Set up a scenario

In cell A1, we have the text Already Know, used as a label for the value within our formula that were certain of. In this
example, that value is 25, as seen in cell B1.
In cell A2, we have the text Uncertain Value, used as a label for the input value we want to determine. In the current equation,
we have a value of 75, as seen in cell B2.
In cell A3, we have the text Desired Result, used as a label for the expected outcome of our equation.
Step 2 Insert a formula

Next, select cell B3 and enter =SUM(B1+B2) into the formula bar, and press Enter. A value of 100 should appear in cell B3, the
sum of cells B1 and B2. In other words, 25+75=100.
Step 3 Select the Goal Seek command

Next, navigate up to the Data tab in the ribbon menu. At the far right, there should be a group called Data Tools. Under the Data
Validation and Consolidate options, youll find a drop-down menu for What-If Analysis. Select that, and from the menu, select
Goal Seek.
Step 4 Input the desired values

The goal seek function requires input for three options.


Set cell: Here, you need to input the name of the cell where the formula is located. For our example, thats cell B3, which holds
our formula =SUM(B1+B2).

To value: Here, you need to input the real desired value of our new equation, which the goal seek function will create. Well set it
to 200. This means we want the sum of cells B1 and B2 to equal 200. However, we can only do that
By changing cell: This one is very straightforward. The sum of cells B1 and B2 can only equal 200 by changing the value of one
of our cells. In our example, we want to change cell B2, so we enter in B2. Then, click OK!
Step 5 Success!

Once we hit OK, the computer finds that the only way to make the sum of cell B1 and cell B2 equal 200, when B1 remains 25 and
B2 is an unknown value, is to change B2 to 175.
Its basic math. Its something you could solve in your head in a second. However, it can be applied to much more complicated
mathematical scenarios and make for a more beneficial outcome. This example merely demonstrated its basic function.

Potential Sales Example


For a more applicable example, lets say you run an online store where you sell hand-crafted necklaces at $18 each. You sell 35 of
these a month for a monthly profit of $630. However, materials are getting more expensive, and after doing some calculations,
you decide itd be most convenient if you were to make $900 a month. But how much do you need to raise the price of your
product to meet that goal?
Lets create a basic spreadsheet:

In our first table, we list our Current Sales information. In cell B2 we have 35, for number of necklaces sold per month, and in cell
B3 we have $18.00, for the unit price per necklace. In cell B4, we enter the formula =E2*E3 to multiply the number of necklaces
sold by the unit price, hit Enter, and come out with a profit of $630.00.
In our second table, we have the same information, but because this is our Desired Sales table, well be changing some things up
with the goal seek function.

Set cell: We set E4, because thats the cell where we want our newly calculated profit to go.
To value: We want the value of our new profit to be $900.00, so input 900 for this one.
By changing cell: We want to change the price of our product, not the amount of products sold, so input E3.
Goal seek will then change the value in cell E3 where the price of our product is into one that would, when multiplied by 35,
equal 900.

The goal seek function calculates that we will need to sell each necklace at $25.71 to make $900 a month. If we do the actual
calculation here, we see that 25.71 x 35 = 899.85, while 26 x 35 = 910, meaning goal seek will round as close to the number as
possible.
If we owned a store, wed probably decide to round the number down ourselves, to 25 or 26, depending on circumstances.
Nevertheless, goal seek has done its job.
What if the prices of materials havent changed, and we merely want to produce more items each month to turn out a bigger
profit? We could use goal seek to figure this out just by inputting E2, instead of E3, into the by changing cell box.
At the end of the calculation, the what-if analysis tool will determine we need to sell 50 necklaces per month in order to make
$900, exactly.

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