9781118041581

We have already encountered several quantitative approaches to optimizing

a given objective: enumeration, graphic solutions, and (in the preceding

appendix) calculus. To these we can add a fourth approach: spreadsheet-

based optimization. Over the past 25 years, spreadsheets have become pow-

erful management tools. Modeling a quantitative decision on a spreadsheet

harnesses the power of computer calculation instead of laborious pencil-and-

paper figuring. Besides helping to define and manage decision problems,

spreadsheets also compute optimal solutions with no more than a click of a

mouse. There are many leading spreadsheet programs—Excel, Calc, Google

Docs, Lotus 123, Quattro Pro, to name a few—and all work nearly the same

way. To review the fundamentals of spreadsheet use, let’s revisit the microchip

example.

Table 2A.1 shows this example depicted in an Excel spreadsheet. The

spreadsheet consists of a table of cells. Besides the title in row 2, we have typed

labels (Quantity, Price, MR) in rows 5 and 10. We have also entered the num-

ber 2.0 in cell B7 (highlighted in colored type). This cell houses our basic deci-

sion variable, output. For the moment, we have set microchip output at 2.0

lots. Cells C7 to F7 show the price, revenue, cost, and profit results of produc-

ing 2.0 lots. These cells are linked via formulas to our output cell. For instance,

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SPECIAL APPENDIX

TO CHAPTER 2

Optimization Using

Spreadsheets

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