Preface

This is a book for business analysts about modeling. A model is a simplified representation of a situation or problem, and modeling is the process of building, refining, and analyzing that representation for greater insight and improved decision making. Some models are so common that they are thought of as routine instruments rather than models. A budget, a cash flow projection, or a business plan may have many uses, but each one is a model. In addition, many sophisticated models are embedded in software. Option pricing models, credit scoring models, or inventory models are key components of important decision-support systems. Beyond these types, we encounter many customized models, built by the millions of people who routinely use spreadsheet software to analyze business situations. This group includes consultants, venture capitalists, marketing analysts, and operations specialists. Almost anyone who uses spreadsheets in business has been involved with models and can benefit from formal training in the use of models.

Models also play a central role in management education. A short list of models that nearly every business student encounters would include cash flow models, stock price models, option pricing models, product life cycle models, market diffusion models, order quantity models, and project scheduling models. For the management student, a basic ability to model in spreadsheets can be a powerful tool for acquiring a deeper understanding of the various functional ...

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