John Lorenz R.

Belanio

Government Association of Certified Professional Accountants (GACPA) – Iloilo Chapter

1st Quarterly Meeting with Technical Sessions
23 March 2017, Grand Xing Imperial Hotel, Iloilo City
 ORGANIZATIONAL LEVELS NATURE OF NATURE OF
Organizational Hierarchy

PROBLEMS DECISION MAKING

Highest
Level
Unstructured Non-Programmed
Decisions

Programmed
Lowest Structured Decisions
Level
• Efficient decision-making involves a series of steps that require
the input of information at different stages of the process, as well
as a process for feedback (Baker, 2001).
• Decision making is the study of identifying and choosing
alternatives based on the values and preferences of the decision
maker.
• Making a decision implies that there are alternative choices to
be considered, and in such a case we want not only to identify as
many of these alternatives as possible but to choose the one that
best fits with our goals, objectives, desires, values, and so on
(Harris, 1980).
“It would appear Hopkins, that your gut feel was only indigestion.”
• Made up of a composite of data, information, facts, and
belief
• Data by itself does not constitute useful information unless
it is analyzed and processed
 only as good as the data that informed it.
 only as good as it is an informed one.
 only as good as the system which exists to implement.
 only good if you have the means to implement it.
 only good if other people understand it and what it means.
GIGO
Garbage In = Garbage Out

Used to express the idea that in computing and other spheres,

incorrect or poor quality input will always produce faulty output
the quality of output is determined by the quality of the input.
CHARACTERISTICS OF VALUABLE INFORMATION
(STAIR & REYNOLDS, 2012)
 CHARACTERISTICS OF VALUABLE INFORMATION
(STAIR & REYNOLDS, 2012)

Accessible Accurate Complete Economical Flexible

Reliable Secure Simple Timely Verifiable

Relevant
 Technology can and does play a vitally important role in
both supporting decision making and, in some instances,
actually making decisions or recommendations.
 Most of the decision-analysis tools on the market focus on
one specific analytical technique, like simulation or
decision trees.
 One integrated set of tools that combines the best
analytical methods, can be applied to different problems,
and is already in your computer is an electronic
spreadsheet (e.g. Microsoft Excel).
SPREADSHEET
 IF function
 What-If Analysis
 Goal Seek function
 Scenario Manager function
 Data Table function
 Solver function
 Pivot Table
 Data Validation and Conditional Formatting
 Forecasting Models
IF
 Used to conduct conditional
tests on values and formulas
 Will return one value if a
condition is TRUE and another
value if the condition is FALSE
 Use this function when you
want to compare two items in
your workbook
 Syntax:
=IF(logical_test,value_if_true,
value_if_false )
=IF(LOGICAL_TEST,VALUE_IF_TRUE,VALUE_IF_FALSE )

 LOGICAL_TEST: any value or expression that can be evaluated to TRUE or

FALSE.
 E.g. A10=100 is a logical expression.
 This argument can use any comparison operator.

 VALUE_IF_TRUE: the value that is returned if the LOGICAL_TEST is TRUE.

 E.g. if this argument is the text string “Within budget” and the LOGICAL_TEST argument
evaluates to TRUE, then the IF function displays the text “Within budget.”
 Note:VALUE_IF_TRUE can be another formula.

 VALUE_IF_FALSE: the value that is returned if the LOGICAL_TEST is FALSE.

 E.g. if this argument is the string “Over budget” and the LOGICAL_TEST argument
evaluates to FALSE, then the IF function displays the text “Over budget.”
 Note:VALUE_IF_FALSE can be another formula.
WHAT-IF
 What-if analysis is a suite of commands that changes the values in
cells to see how those changes will affect the outcome of formulas on
the sheet.
 There are three kinds of what-if analysis tools in Excel: Scenarios,
Data Tables, and Goal Seek.
 Scenarios and Data Tables take sets of input values and determine
possible results.
 Goal Seek works differently from Scenarios and Data Tables in that it
takes a result and determines possible input values that produce that
result.
GOAL SEEK
 An analytical function that allows a value in a formula to be adjusted to
reach a desired result to answer
 Can eliminate unnecessary calculations that can be used to determine a
single variable value in a formula
 When the Goal Seek command starts to run, it repeatedly tries new
values in the variable cell to find a solution to a problem. This process is
called iteration, and it continues until Excel has run the problem 100
times or has found an answer within 0.001 of the target values specified.
 It calculates so fast, the Goal Seek command can save significant time
and effort over the brute force method of trying one number after
another in a formula.
 GOAL SEEK

Upon selecting GOAL SEEK, the

Goal Seek dialog box will appear.
GOAL SEEK
 Set cell: This is the
cell that will contain
the desired result.
 To value: This is the
desired result.
 By changing cell:
This is the cell where
Goal Seek will place
its answer.
SCENARIO MANAGER
 A scenario is a set of input values and corresponding results from
calculations that Excel can save and report as needed.
 Several input values in a worksheet might change depending on different
situations or circumstances. Values that produce different results can be
stored as scenarios.
 Excel’s Scenario Manager allows 32 different scenarios or groups of values
to be defined.
 This can be used to selectively display the desired values or scenario in the
worksheet.
 Eliminates the need to have multiple copies of the same worksheet
representing different situations. For each group of input values, a scenario
must be named and stored before it can be used.

Source: https://support.office.com/en-us
SCENARIO MANAGER

Source: https://trumpexcel.com/scenario-manager-in-excel/
DATA
 A data table is a range of cells that shows how changing one or two
variables in your formula will affect the results of those formulas.
 It provides a shortcut for calculating multiple results in one operation
and a way to view and compare the results of all the different
variations together on your sheet.
 Data tables help you explore a set of possible outcomes. Unlike
scenarios, data tables show you all the outcomes in one table on one
sheet.
 Using data tables makes it easy to examine a range of possibilities at
a glance. Because you focus on only one or two variables, results are
easy to read and share in tabular form.
DATA TABLE
SOLVER
 With Solver, you can find an optimal (maximum, minimum or a specific value) value
for a formula in one cell — called the objective cell — subject to constraints, or
limits, on the values of other formula cells on a worksheet.
 Solver works with a group of cells, called decision variables or simply variable
cells, that participate in computing the formulas in the objective and constraint
cells. Solver adjusts the values in the decision variable cells to satisfy the limits on
constraint cells and produce the result you want for the objective cell.
 How to load Solver:
 (Windows) File > Options > Add Ins > select Solver and click OK
 (Mac) Tools > Excel Add Ins > select Solver Add In and click OK
 You can find Solver under Data tab
PIVOT
 A pivot table is a report that lets you, “summarize, analyze, explore,
and present a summary” of your data, and is particularly useful “when
you have a long list of figures to sum, and aggregated data or
subtotals would help you look at the data from different perspectives
and compare figures of similar data.”
 The "pivot" part of a pivot table stems from the fact that you can rotate
(or pivot) the data in the table in order to view it from a different
perspective. To be clear, you're not adding to, subtracting from, or
otherwise changing your data when you make a pivot. Instead, you're
simply reorganizing the data so you can extract useful information
from it.

Source: https://blog.hubspot.com/
PIVOT TABLE:
 Your data should be organized in columns with headings. These headings will be used
when you create the PivotTable, and things will get very confusing without headings.

 Perfect source data. "Perfect" source data will have no blank rows or columns, and no
subtotals. Each column will have a unique name (on one row only), every field will have
a value in every row, and columns will not hold repeated groups of data

 Consistent data in all cells, i.e. if you have a date column, make sure all the values in that
column are dates (or blank). If you have a quantity column, make sure all the values are
numbers (or blank), and not words.

 Plan before you build. Before you start building, jot down what you are trying to
measure or understand, and sketch out a few simple reports on a notepad. Keep things
simple, and focus on the questions you need to answer.

Sources: https://fiveminutelessons.com/learn-microsoft-excel/how-create-pivot-table-excel
 PIVOT TABLE

Source: http://www.dummies.com/software/microsoft-office/excel/how-to-create-a-pivot-table-in-excel-2010/
PIVOT TABLE FIELD LIST To complete the pivot table, assign the fields in
the PivotTable Field List task pane to the
various parts of the table. You do this by dragging
a field name from the Choose Fields to Add to
Report list box and dropping it in one of the four
areas below, called drop zones:
 Report Filter: This area contains the fields that
enable you to page through the data
summaries shown in the actual pivot table by
filtering out sets of data — they act as the filters
for the report. So, for example, if you designate
the Year Field from a table as a Report Filter,
you can display data summaries in the pivot
table for individual years or for all years
represented in the table.
 Column Labels: This area contains the fields
that determine the arrangement of data shown
in the columns of the pivot table.
 Row Labels: This area contains the fields that
determine the arrangement of data shown in
the rows of the pivot table.
 Values: This area contains the fields that
determine which data are presented in the
cells of the pivot table — they are the values
that are summarized in its last column (totaled
by default).
DATA VALIDATION CONDITIONAL
FORMATTING
 Validating data and applying conditional formatting to data
are good basic indicators of data anomalies and trends.
 You validate data when you restrict the type of data or the
values that users enter into a cell, for example, ensuring
that only valid calendar dates are entered in the Date
Posted field.
 You use conditional formatting to change the visual display
of the data for instance, coloring cells red if the number is
below the average.
DATA VALIDATION
CONDITIONAL FORMATTING
FORECASTING
 Managers (and accountants) are always trying to reduce uncertainty
and make better estimates of what will happen in the future
 This is the main purpose of forecasting
 Some firms use subjective methods
 Seat-of-the pants methods, intuition, experience
 There are also several quantitative techniques
 Moving averages, exponential smoothing, trend projections, least
squares regression analysis
 FORECASTING
1. Determine the use of the forecast—what objective are we trying
to obtain?
2. Select the items or quantities that are to be forecasted
3. Determine the time horizon of the forecast
4. Select the forecasting model or models
5. Gather the data needed to make the forecast
6. Validate the forecasting model
7. Make the forecast
8. Implement the results
TIME SERIES
 Time-series models attempt to predict the future
based on the past
 Common time-series models:
 Moving average
 Exponential smoothing
 Trend projections
 Decomposition

 Measure of forecast accuracy: MAD, MSE, MAPE

FORECASTING SPREADSHEET MODELS
 Excel QM/OM
 An easy to use decision support
system for use in quantitative
analysis
 Excel macro; need to enable it
when you open Excel
 Downloadable to accompany
QA/MS books
 On the right is the main menu of
quantitative models
 MODELS: WMA & EXP. SMOOTHING

3-month weighted moving average with weights: 1, 2 and 3

Exponential smoothing, where alpha=0.1

THANK YOU!
My Contact Details:
JOHN LORENZ R. BELANIO
Assistant Professor, Department of Management
College of Management, University of the Philippines Visayas
Iloilo City

Email: [email protected] /[email protected]

FB Messenger: www.facebook.com/jlorenzb (John Lorenz)