Creating a one-input data table

A one-input data table displays the results of one or more formulas for various values of a single input cell. Figure 31.2 shows the general layout for a one-input data table. You need to set up the table manually yourself. This is not something that Excel will do for you.

You can place the data table anywhere in a worksheet. The left column contains various values for the single input cell. The top row contains references to formulas located elsewhere in the worksheet. You can use a single formula reference or any number of formula references. The upper-left cell of the table remains empty. Excel calculates the values that result from each value of the input cell and places them under each formula reference.

This example uses the mortgage loan worksheet from earlier in the chapter (see “Looking at a What-If Example”). The goal of this exercise is to create a data table that shows the values of the four formula cells (loan amount, monthly payment, total payments, and total interest) for various interest rates ranging from 4.5% to 6.5%, in 0.25% increments.

Figure 31.3 shows the setup for the data table area. Row 3 consists of references to the formulas in the worksheet. For example, cell F3 contains the formula =C10, and cell G3 contains the formula =C11. Row 2 and column D contain optional descriptive labels that are not actually part of the data table. Column E contains the values of the single input cell (interest rate) that Excel will use in the table.

To create the table, select the entire data table range (in this case, E3:I12) and then choose Data ⇨ Forecast ⇨ What-If Analysis ⇨ Data Table. The Data Table dialog box, shown in Figure 31.4, appears.

You must specify the worksheet cell that contains the input value. Because variables for the input cell appear in the left column in the data table, you place this cell reference in the Column Input Cell field. Enter C7 or point to the cell in the worksheet. Leave the Row Input Cell field blank. Click OK, and Excel fills in the table with the calculated results (see Figure 31.5).

Using this table, you can now see the calculated loan values for varying interest rates. Notice that the Loan Amt column (column F) doesn't vary. That's because the formula in cell C10 doesn't depend on the interest rate.

If you examine the contents of the cells that Excel entered as a result of this command, you'll see that the data is generated with a multicell array formula:

{=TABLE(,C7)} 

A multicell array formula is a single formula that can produce results in multiple cells (see Chapter 18, “Understanding and Using Array Formulas”). Because the table uses formulas, Excel updates the table that you produce if you change the cell references in the first row or plug in different interest rates in the first column.

Creating a two-input data table

As the name implies, a two-input data table lets you vary two input cells. You can see the setup for this type of table in Figure 31.6. Although it looks similar to a one-input table, the two-input table has one critical difference: it can show the results of only one formula at a time. With a one-input table, you can place any number of formulas, or references to formulas, across the top row of the table. In a two-input table, this top row holds the values for the second input cell. The upper-left cell of the table contains a reference to the single result formula.

Using the mortgage loan worksheet, you could create a two-input data table that shows the results of a formula (say, monthly payment) for various combinations of two input cells (such as interest rate and down-payment percent). To see the effects on other formulas, you simply create multiple data tables—one for each formula cell that you want to summarize.

The example in this section uses the worksheet shown in Figure 31.7 to demonstrate a two-input data table. In this example, a company wants to conduct a direct-mail promotion to sell its product. The worksheet calculates the net profit from the promotion.

This model uses two input cells: the number of promotional pieces mailed and the anticipated response rate. The following items appear in the Parameters area:

• Printing costs per unit    The cost to print a single mailer. The unit cost varies with the quantity: $0.20 each for quantities less than 200,000; $0.15 each for quantities of 200,001 through 300,000; and $0.10 each for quantities of more than 300,000. The following formula is used:

  =IF(B4<200000,0.2,IF(B4<300000,0.15,0.1)) 

• Mailing costs per unit    A fixed cost, $0.28 per unit mailed.
• Responses    The number of responses, calculated from the response rate and the number mailed. The formula in this cell is as follows:

  =B4*B5 

• Profit per response    A fixed value. The company knows that it will realize an average profit of $18.50 per order.
• Gross profit    This is a simple formula that multiplies the profit-per-response by the number of responses:

  =B10*B11 

• Print + mailing costs    This formula calculates the total cost of the promotion:

  =B4*(B8+B9) 

• Net Profit    This formula calculates the bottom line—the gross profit minus the printing and mailing costs.

If you enter values for the two input cells, you see that the net profit varies quite a bit, often going negative to produce a net loss.

Figure 31.8 shows the setup of a two-input data table that summarizes the net profit at various combinations of quantity and response rate; the table appears in the range E4:M14. Cell E4 contains a formula that references the Net Profit cell:

=B14 

To create the data table, follow these steps:

1. Enter the response rate values in F4:M4.
2. Enter the number mailed values in E5:E14.
3. Select the range E4:M14, and choose Data ⇨ Forecast ⇨ What-If Analysis ⇨ Data Table. The Data Table dialog box appears.
4. Specify B5 as the Row input cell (the response rate) and B4 as the Column input (the number mailed).
5. Click OK. Excel fills in the data table.

Figure 31.9 shows the result. As you can see, quite a few of the combinations of response rate and quantity mailed result in a loss rather than a profit.

As with the one-input data table, this data table is dynamic. You can change the formula in cell E4 to refer to another cell (such as gross profit), or you can enter some different values for Response Rate and Number Mailed.

Defining scenarios

To introduce you to Scenario Manager, this section starts with an example that uses a simplified production model, as shown in Figure 31.10.

This worksheet contains two input cells: the hourly labor cost (cell B2) and the unit cost for materials (cell B3). The company produces three products, and each product requires a different number of hours and a different amount of materials to produce.

Formulas calculate the total profit per product (row 13) and the total combined profit (cell B15). Management—trying to predict the total profit but uncertain what the hourly labor cost and material costs will be—has identified three scenarios, which are listed in Table 31.1.

The Best Case scenario has the lowest hourly cost and the lowest materials cost. The Worst Case scenario has high values for both the hourly cost and the materials cost. The third scenario, Most Likely, has intermediate values for both of these input cells. The managers need to be prepared for the worst case, however, and they're interested in what would happen under the Best Case scenario.

Choose Data ⇨ Forecast ⇨ What-If Analysis ⇨ Scenario Manager to display the Scenario Manager dialog box. When you first open this dialog box, it tells you that no scenarios are defined, which is not too surprising because you're just starting. As you add named scenarios, they appear in the Scenarios list in this dialog box.

To add a scenario, click the Add button in the Scenario Manager dialog box. Excel displays its Add Scenario dialog box, shown in Figure 31.11.

This dialog box consists of four parts:

• Scenario Name    You can give the scenario any name you like.
• Changing Cells    These are the input cells for the scenario. You can enter the cell addresses directly or point to them. If you've created a name for the cells, type the name. Nonadjacent cells are allowed; if pointing to multiple cells, press Ctrl while you click the cells. Each named scenario can use the same set of changing cells or different changing cells. The number of changing cells for a scenario is limited to 32.
• Comment    By default, Excel displays the name of the person who created the scenario and the date it was created. You can change this text, add new text to it, or delete it. If you name the scenario well, you may not need much of a comment. However, some scenarios are so complex that more information will be useful both to you and to others who use your workbook.
• Protection    The two Protection options (preventing changes and hiding a scenario) are in effect only when you protect the worksheet and choose the Scenario option in the Protect Sheet dialog box. Protecting a scenario prevents anyone from modifying it; a hidden scenario doesn't appear in the Scenario Manager dialog box.

In this example, define the three scenarios that are listed in Table 31.1. The changing cells are Hourly cost (B2) and Materials cost (B3).

After you enter the information in the Add Scenario dialog box, click OK. Excel then displays the Scenario Values dialog box, shown in Figure 31.12. This dialog box displays one field for each changing cell that you specified in the previous dialog box. Enter the values for each cell in the scenario. If you click OK, you return to the Scenario Manager dialog box, which then displays your named scenario in its list. If you have more scenarios to create, click the Add button to return to the Add Scenario dialog box.

Displaying scenarios

After you define all the scenarios and return to the Scenario Manager dialog box, the dialog box displays the names of your defined scenarios. Select one of the scenarios and then click the Show button (or double-click the Scenario name). Excel inserts the corresponding values into the changing cells and calculates the worksheet to show the results for that scenario. Figure 31.13 shows an example of selecting a scenario.

Modifying scenarios

After you've created scenarios, you may need to change them. To do so, follow these steps:

1. Click the Edit button in the Scenario Manager dialog box to change one or more of the values for the changing cells of a scenario.
2. From the Scenarios list, select the scenario that you want to change and then click the Edit button. The Edit Scenario dialog box appears.
3. Click OK. The Scenario Values dialog box appears.
4. Make your changes and then click OK to return to the Scenario Manager dialog box. Notice that Excel automatically updates the Comments box with new text that indicates when the scenario was modified.

Merging scenarios

In workgroup situations, you may have several people working on a spreadsheet model, and several people may have defined various scenarios. The marketing department, for example, may have its opinion of what the input cells should be, the finance department may have another opinion, and your CEO may have yet another opinion.

Excel makes it easy to merge these various scenarios into a single workbook. Before you merge scenarios, make sure that the workbook from which you're merging is open:

1. Click the Merge button in the Scenario Manager dialog box.
2. From the Merge Scenarios dialog box that appears, choose the workbook that contains the scenarios you're merging in the Book drop-down list.
3. Choose the sheet that contains the scenarios you want to merge from the Sheet list box and click Add. Notice that the dialog box displays the number of scenarios in each sheet as you scroll through the Sheet list box.
4. Click OK. You return to the previous dialog box, which now displays the scenario names that you merged from the other workbook.

Generating a scenario report

If you've created multiple scenarios, you may want to document your work by creating a scenario summary report. When you click the Summary button in the Scenario Manager dialog box, Excel displays the Scenario Summary dialog box.

You have a choice of report types:

• Scenario Summary    The summary report appears in the form of a worksheet outline.
• Scenario PivotTable    The summary report appears in the form of a PivotTable.

For simple cases of scenario management, a standard Scenario Summary report is usually sufficient. If you have many scenarios defined with multiple result cells, however, you may find that a Scenario PivotTable provides more flexibility.

The Scenario Summary dialog box also asks you to specify the result cells (the cells that contain the formulas in which you're interested). For this example, select B13:D13 and B15 (a multiple selection) to make the report show the profit for each product plus the total profit.

Excel creates a new worksheet to store the summary table. Figure 31.14 shows the Scenario Summary form of the report. If you gave names to the changing cells and result cells, the table uses these names; otherwise, it lists the cell references.