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M4L-4-IE350-Courseware-Topic1
M4L-4-IE350-Courseware-Topic1
COURSEWARE
IE350-L01
ANALYTICAL
TOOLS AND TRENDS
TOPIC 1
Prepared by:
COURSE DESCRIPTION
Analytical Tools and Trends is divided into three major areas: analytical tools in
marketing, QM tools, and system dynamics. This introduces approaches in analyzing
marketing data in order to characterize and predict marketing data through
establishing spreadsheet models using Microsoft Excel® PivotTable, Solver & Data
Analysis Add-Ins. This course also explores analytical methodologies in product
research & development. System Dynamics is also integrated to this course in order
to understand the interconnectedness of variables or elements of complex systems
over time.
CLO4 Use systems dynamics approach in describing and solving real-world problems
WEEK 1 TOPIC
MODULE 1: COURSE INTRODUCTION
LEARNING OUTCOME
Recognize and value the importance of descriptive and analytical tools in marketing,
L01 multi-objective decision making, and system dynamics in the field of industrial
engineering
INTRODUCTION TO COURSE
INTRODUCTION TO COURSE
Ethical and values- Act in accordance with moral and ethical principles personally and
driven professionally
Critical thinker and Practice creative and critical thinking skills in solving real-life
problem solver problems
Effective
Communicate effectively in spoken, written, visual, and other forms
communicator
VISION
A reputable school of engineering and architecture regarded by industry & government as a
prime mover for local and international development.
MISSION
To provide quality education in the development of technically competent, innovative and
upright engineers and architects.
GOAL
To produce graduates with a comprehensive knowledge and competence in engineering and
architecture responsive to the dynamic needs of the local and global communities
VISION
A leading center of Industrial Engineering education renowned for its excellence and
innovation in continuously developing Vanguards with professional competence, research
aptitude and personal social responsibility
MISSION
To produce globally competitive Vanguards who lead in conceptualizing and implementing
effective, economical and environmentally sustainable service and manufacturing systems
optimization designs through providing practical and advanced knowledge in sciences,
engineering and management
GENERAL GOAL
To nurture students to lead in the design, improvement and installation of integrated systems
of people, materials, information, equipment and energy. Graduates of the Industrial
Engineering program are expected to be capable in applying appropriate scientific and
mathematical competence in solving diverse contemporary management problems.
When spreadsheets first became widely available in the early 1980s, it spawned a revolution in
teaching. What previously could only be done with arcane software and large-scale computing was
now available to the common man, on a desktop. Also, before spreadsheets, most substantial
analytical work was done outside the classroom where the tools were; spreadsheets and personal
computers moved the work into the classroom. Not only did it change how the data analysis
curriculum was taught, but it also empowered students to venture out on their own to explore new
ways to use the tools. I can’t tell you how many phone calls, office visits, and/or emails I have
received in my teaching career from ecstatic students crowing about what they have just done with a
spreadsheet model. I have been teaching courses related to business and data analytics and
modeling for over 40 years, and I have watched and participated in the spreadsheet revolution.
During that time, I have been a witness to the following important observations:
• Each successive year has led to more and more demand for Excel-based analysis and modeling
skills, both from students, practitioners, and recruiters.
• Excel has evolved as an ever more powerful suite of tools, functions, and capabilities, including the
recent iteration and basis for this book—Excel 2013.
• The ingenuity of Excel users to create applications and tools to deal with complex problems
continues to amaze me.
• Those students who preceded the spreadsheet revolution often find themselves at a loss as to
where to go for an introduction to what is commonly taught to most undergraduates in business
and sciences.
Each one of these observations has motivated me to write this book. The first suggests that there is
no foreseeable end to the demand for the skills that Excel enables; in fact, the need for continuing
productivity in all economies guarantees that an individual with proficiency in spreadsheet analysis
will be highly prized by an organization. At a minimum, these skills permit you freedom from
specialists that can delay or hold you captive while waiting for a solution. This was common in the
early days of information technology (IT); you requested that the IT group provide you with a solution
or tool and you waited, and waited, and waited. Today if you need a solution you can do it yourself.
It may appear to be trivial to ask why we model problems, but it is worth considering. Usually, there
are at least two reasons for modeling problems—(1) if a problem has important financial and
organizational implications, then it deserves serious consideration, and models permit serious
analytical investigation, and (2) on a very practical level, often we are directed by superiors to model
a problem because they believe it is important. For a subordinate analyst, important problems
generally call for more than a gratuitous “I think. . .” or “I feel. . .” to convincingly satisfy a superior’s
probing questions. Increasingly, superiors are asking questions about decisions that require careful
consideration of assumptions, and about the sensitivity of decision outcomes to possible changes in
environmental conditions and the assumptions (sensitivity analysis). To deal with these questions,
formality in decision making is a must; thus, we build models that can accommodate this higher
degree of scrutiny. Ultimately, careful modeling can (and should) lead to better overall decision
making.
So, if the modeling of decision problems is important and necessary in our work, then what modeling
tool(s) do we select? In recent years, there has been little doubt as to the answer of this question for
most decision makers: Microsoft Excel. Excel is the most pervasive, all-purpose and first-stop
modeling tool on the planet, due to its ease of use. It has a wealth of internal capability that
continues to grow as each new version is introduced. Excel also resides in Microsoft Office, a suite
of similarly popular tools that permit interoperability. Finally, there are tremendous advantages to
one-stop shopping in the selection of a modeling tool (that is, a single tool with many capabilities).
There is so much power and capability built into Excel that unless you have received very recent
training in its latest capabilities, you might be unaware of the variety of modeling that is possible with
Excel. Of course, there are occasions where advanced tools are required, but for most
circumstances, Excel is sufficient. Here is the first layer of questions that decision makers should ask
when considering Excel as tool:
2. If my modeling effort requires multiple forms of analysis, can Excel handle the various
techniques required?
3. If I commit to using Excel, will it be capable of handling new forms of analysis and a potential
increase in the scale and complexity of my models?
The general answer to these questions is that just about any analytical technique that you can
conceive that fits in the row-column structure of spreadsheets can be modeled with Excel. Note that
this is a very broad and bold statement. Obviously, if you are modeling phenomena related to high
energy physics or theoretical mathematics, you are very likely to choose other modeling tools. Yet,
for the individual looking to model business problems, Excel is a must.
Spreadsheets permit us to unify these analyses on a single modeling platform. This makes our
modeling effort: (1) durable—a robust structure that can anticipate varied future use, (2) flexible—
capable of adaptation as the problem changes and evolves, and (3) shareable—models that can be
shared by a variety of individuals at many levels of the organization, all of whom are collaborating in
the solution process of the problem. Additionally, the standard programming required for
spreadsheets is easier to learn than other forms of sophisticated programming languages found in
many modeling systems. Even so, Excel has anticipated the occasional need for more formal
programming by providing a resident, powerful programming language, VBA (Visual Basic for
Applications). See sample spreadsheet model below on the use of PivotTable.
Figure 1.0: Data on price of beverages among different regions and in different years
Figure 2.0: Price fluctuations of wheat, maize and rice in the international market (Steve and Sharada 2014)
Indeed, we can understand and design management strategies, but we need some structures or
guiding principles to understand and manage the complexity and changes of complex dynamic
systems based on systems approach which considers the whole systems rather than in isolation.
Systems approach is rather a rational rather intuitive approach. It depends on some formalised
methodology consisting of methods of problem definition, dynamic hypothesis, modelling, policy
analysis, etc., and theoretical techniques which are useful for solving models and sub-models of
the problem. In essence the systems must be modelled and simulated to understand the systems
and design management strategies. Also these must be done before implementation of the
management strategies. Forrester’s system dynamics methodology provides the methodology—the
guiding principles to develop computer models to simulate such complex and dynamic systems to
understand the complex systems and design the management strategies. In essence, systems
thinking is a formalized methodology consisting of methods of problem definition, dynamic
hypothesis, modelling and policy analysis to understand and manage complex and dynamic
systems. As the complexity of our world increases, systems thinking is emerging as a critical factor
for success, and even survival. How then can people become skilled systems thinkers? But in the
world of complex dynamic systems, everyday experience fails because the time horizon and scope
of the systems are so vast—we never experience the majority of the effects of our decisions. When
experiments in the real world are impossible, simulation becomes the main way we can learn
effectively about the dynamics of complex systems. System dynamics is the most appropriate
technique to simulate complex and dynamic systems based on systems thinking to develop policy
scenarios and learn to effectively manage the systems.
IE350 ANALYTICAL TOOLS AND TRENDS
Version: EIOR-01 | KIDC-01
TOPIC 1
COURSE INTRODUCTION
Sources
(1) Guerrero, H. Excel Data Analysis: Modelling and Simulation. Springer Nature
Switzerland AG 2019
(2) Bala, B. et. al. System Dynamics: Modelling and Simulation: Springer Nature
Switzerland AG 2019
(3) Michaloudis, J. The Ultimate Excel Resource Guide 2018 SLU.