Working with Scenarios - Simon Fraser University · Using Microsoft® Excel 97, Bestseller Edition Chapter 18. Building Scenarios and Outlines with Excel > Working with Scenarios

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Using Microsoft® Excel 97, Bestseller Edition

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Working with Scenarios

You could develop different scenarios by using different worksheets in a

workbook, with each sheet containing the different assumptions. However,

this approach can waste a lot of time. For example, imagine that you have

10 different scenarios, each one in a different sheet, and you need to

change your model by adding a new condition to each scenario. You would

then have to make the identical change to each of the 10 worksheets. Aside

from the waste of time involved in approaching the problem this way, you

also improve the chance of making a mistake.

Instead, it is far easier to use Excel 97's built-in Scenario Manager to track,

display, and manage your different scenarios. In the following sections you

learn how to take advantage of this important planning tool.

Creating Scenarios

Consider the worksheet shown in Figure 18.1. In it, you see a five-year

proforma (projected) income statement for UXLS Corporation. The income

statement is divided into three main categories: revenues; cost of goods

sold; and selling, general, and administrative costs. For the projected five

years, many things can change in the business, different goals may be

realized, and different directions pursued. In order to analyze the impact

from all of these possibilities, you use the Scenario Manager to examine the

different cases.

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Contents

Table of Contents

Index

Copyright

About the Authors

We'd Like to Hear from You!

Introduction

Pt. I. Using Excel Worksheets

Pt. II. Advanced Excel

Worksheet Features

Pt. III. Creating Charts and

Graphics

Pt. IV. Creating and Using

Excel Databases

Pt. V. Analyzing Your Data

Ch. 18. Building Scenarios

and Outlines with Excel

How Scenario Manager

Works

Working with

Scenarios

Outlining Worksheets

Common Problems and

Solutions

From Here…

Ch. 19. Auditing and

Validating Worksheets

Ch. 20. Analyzing Data:

PivotTables!

Ch. 21. Mastering Excel's

Solver and Goal Seek

Ch. 22. Mastering the

Analysis ToolPak

Pt. VI. Networking and

Integration with Excel

Pt. VII. Programming Excel

Pt. VIII. Appendixes

Index

Figure 18.1. A proforma income statement is where different

scenarios will be explored.

Before creating different scenarios, it's wise to establish your starting

scenario (often called the base case) as a defined scenario in Scenario

Manager. That way, you can return to the base case and view it again at

any time. Otherwise, you run the risk of losing the base case because it is

not automatically stored for you once you start using Scenario Manager.

You define the starting base case scenario in the same way that you add

other scenarios. After you do that, you can then start adding and evaluating

different scenarios.

Tip

Before using Scenario Manager with a workbook model, it's a good

idea to save the completed model to a different file name so that, if

something goes wrong, you can return to the base case. Then,

create and analyze scenarios using a copy of the workbook with a

different file name.

For each scenario you create, you name the scenario, and then designate

the changing cells for the scenario. The changing cells are those cells that

will be different in that scenario. You can have up to 30 changing cells per

scenario.

You should consider designing the workbook model so that the changing

cells are either adjacent to one another or in close proximity. This will make

your workbook more efficient, and it enables others to more easily view the

inputs you are using as changing cells. Excel doesn't require that you use a

particular layout when creating scenarios, however.

To add a scenario to Scenario Manager, follow these steps:

First, completely develop your worksheet model.1.



Choose Toools, Scenarios. You initially see the Scenario Manager

dialog box shown in Figure 18.2.

Figure 18.2. Before You Add scenarios, the Scenario Manager dialog box is empty.

2.

Click the Add button. The Add Scenario dialog box displays.3.

For the base case scenario, type the name in the Scenario Name

field (see Figure 18.3).

Figure 18.3. The Add Scenario dialog box lets you define the name for new scenarios.

4.

Using the Changing Cells field, select each of the cells that will be

different for the scenario you're defining. For the first base case

scenario you define, select one of the cells that doesn't contain a

formula. To select the cells, click the Collapse button to the right of

the Changing Cells field, and then either click and drag to select a

contiguous range or use Ctrl+Click to select nonadjacent cells.

Then click the Expand button to return to the dialog box.

5.

Click OK to continue creating the scenario. If you selected any

changing cells that contain formulas, you see the warning dialog

box shown in Figure 18.4. This warning lets you know that one or

6.



more of the changing cells you selected contains a formula and that

formulas will be changed to constant values when you view the

scenario. You don't need to fix anything, but you might want to

make a note of this so that you can restore formulas later. Click OK

to continue.

You now see the Scenario Values dialog box shown in Figure 18.5.

Each of the changing cells you selected is shown in the dialog box,

along with its pre-scenario value. For each of the changing cells,

enter a new value to reflect in the scenario.

7.

Click OK to save the scenario and return to the Scenario Manager

dialog box, or click the Add button to save the scenario and

immediately create another scenario (you are taken to the Add

Scenario dialog box instead).

8.

Figure 18.4. Changing cells in scenarios are converted from

formulas to values for each scenario.

Figure 18.5. Use the Scenario Values dialog box to control the

values in each of the changing cells.

After you have defined additional scenarios, you can quickly switch between

them. Choose Tools, Scenarios to display the Scenario Manager dialog box,

select a scenario in the Scenarios list, and then click the Show button. The



selected scenario is instantly activated. You can close the Scenario Manager

dialog box to view it in more detail.

Tips for Creating Scenarios

As you are viewing different scenarios, it can become difficult to determine

which scenario case you are viewing. You can easily rectify this problem.

When you build your base worksheet model, include a cell that will contain

the name of the scenario. Then, select that cell as one of the changing cells,

and type in the name of the scenario in the Scenario Values dialog box for

that cell. When you select scenarios to show, you can then see on the

worksheet which scenario you are working with.

Sometimes you want to use formulas when deciding what values to enter

into the Scenario Values dialog box. While Scenario Manager won't store

formulas for you, you can enter them into the Scenario Values dialog box.

For example, suppose you want to enter the value for cell H7 as being 12

percent higher than the value in cell F7. You can enter the formula

=F7*1.12 into the changing cell information for cell H7, as shown in

Figure 18.6. When you click OK to store the changing cell values, the

results of any formulas you entered are calculated and stored along with the

scenario. Using this trick can save time when entering values for different

scenarios.

Figure 18.6. You can perform onetime calculations when using

the Scenario Values dialog box.

Naming worksheet cells, particularly those you use as changing cells, makes

it less likely that you will enter incorrect information for scenarios. The

quickest way to name cells is to select the cell or range you want to name,

click in the Name Box (to the left of the formula bar), type the name, and

press Enter. The Scenario Values dialog box automatically displays any

assigned cell names in place of the cell references (see Figure 18.7).

� See Naming Ranges



Merging Scenarios

More than one person on a team may develop different scenarios. For

example, it may be one person's job to research and develop a scenario

that projects cost savings based on what is likely and possible. Another

person may research the most likely possibilities for increasing sales. Yet

another may be able to use his knowledge of manufacturing to develop

scenarios for reducing the cost of goods sold.

After these scenarios are developed by these different people, each using

their own copy of the base scenario model, you typically need to consolidate

their scenarios into one "master scenario" where you can examine all

possibilities.

Figure 18.7. There are many benefits for naming cells in Excel,

one of which is the Scenario Values dialog box, which displays

any cell names automatically instead of cryptic cell references.

In order to consolidate scenarios, each of the subsidiary scenario workbooks

must be built in the same way, with each cell in the workbook indicating the

same information (except for the changing cells, of course). To merge

scenarios from multiple sources, follow these steps:

Open all of the scenario workbooks. Then display the workbook in

which you plan to consolidate the information from the subsidiary

scenario workbooks.

1.

Choose Tools, Scenarios to access the Scenario Manager dialog

box.

2.

Click the Merge button.3.

Use the Merge Scenarios dialog box to choose the open workbook

and sheet that contain the scenarios of interest (see Figure 18.8).

4.



Click OK to merge the scenarios from the selected workbook to the

active workbook. You return to the Scenario Manager dialog box

with the new scenarios added to the list.

5.

Protecting and Hiding Scenarios

When you define a scenario, there are two check boxes on the Add Scenario

dialog box that let you protect or hide the scenarios (refer to Figure 18.3).

These two options become active when you protect the worksheet and are

otherwise not available.

Prevent Changes. This option inhibits the ability to change a scenario

in any fashion once the worksheet in which the scenarios exist is

protected. A user of the workbook can still view the different scenarios

when they're protected, but he cannot change them.

•

Hide. This option causes a protected scenario to be invisible to anyone

who cannot unprotect the worksheet (assuming you protect it with a

password). With the Hide option selected and activated, others cannot

view the hidden scenario's values.

•

Figure 18.8. Use the Merge Scenarios dialog box to choose an

open worksheet that contains scenarios that you want to merge

to your active worksheet.

In both cases, when you protect the worksheet, you must make sure that

the Scenarios check box is selected in the Protect Sheet dialog box in order

for these settings to operate. You choose Tools, Protection, Protect Sheet to

display the Protect Sheet dialog box.

Summarizing Scenarios

As a way to document your scenarios and assumptions, Scenario Manager

can prepare a summarization of the different defined scenarios. This

scenario summary report lists all the inputs and results for all defined

scenarios in a workbook. The following procedure summarizes three defined

scenarios: Base Case, Best Case, and Worst Case. In addition, the current

values of the changing cells are included in the report.

To prepare a summary report, follow these steps:

Make the scenario worksheet active.1.

Choose Tools, Scenarios to display the Scenario Manager dialog

box.

2.

Click the Summary button. You see the Scenario Summary dialog

box shown in Figure 18.9.

3.

Choose Scenario Summary as the Report Type, and choose the

result cells in the field provided. To select the cells, click the

Collapse button to the right of the Result Cells field, and then either

click and drag to select a contiguous range or use Ctrl+Click to

4.



select nonadjacent cells. Then click the Expand button to return to

the dialog box.

Note

Result cells are the cells you want to recalculate when you

view a new scenario, such as the cells containing net profit

and loss calculations. The result cells must include formulas

that are related to the changing cells.

Click OK to create the scenario summary.5.

A new worksheet is created in your current workbook called Scenario

Summary. In it, you see the changing cells for each scenario in the

workbook, and the results for each scenario. Figure 18.10 shows you a

sample scenario summary report.

Figure 18.9. The Scenario Summary dialog box lets you choose

how the summary is created.



Figure 18.10. The Scenario Summary report helps you

summarize the results of your scenarios and to document your

changing assumptions.

If your model contains multiple sets of changing cells provided by multiple

users, you can create a PivotTable for the scenarios in step 4 of the

preceding set of steps. The PivotTable provides a different way to analyze

the results of complex scenario sets. For more information on PivotTables,

see Chapter 20, "Analyzing Data: PivotTables!"

Printing Individual Scenarios

You can print scenarios just like any other worksheet. Select the scenario to

show, close the Scenario Manager dialog box, and then print the worksheet.

However, there is a way to combine the Report Manager (an Excel add-in)

with your scenarios to print more than one scenario at a time. You do this

by choosing the different scenarios in the Report Manager. Once they're

defined, you can print multiple scenarios simultaneously.

Note

You can tell if the Report Manager add-in is loaded by looking for the

Report Manager command on the View menu. If the command is not

present, choose Tools, Add-Ins to activate the Report Manager.

To print one or more scenarios, follow these steps:

Access the Report Manager dialog box by choosing View, Report

Manager. You see the Report Manager dialog box.

1.

Click the Add button. You see the Add Report dialog box.2.

In the Add Report dialog box, type a name for the report, and then

use the Section to Add portion of the dialog box to define each part

of the report. Use the Scenario drop-down list box to choose each

of the scenarios you want to print in the report. Click Add after

3.



Related Content

Using Scenario Manager

From: Excel® 2007 Bible

Exploring Different Scenarios

From: Excel 2007 All‐‐‐‐in‐‐‐‐One Desk

Reference For Dummies®

Working with Scenarios

From: Formulas and Functions

with Microsoft® Excel 2003

defining each report section. Figure 18.11 shows a report defined

that will print three different scenarios.

Click OK to close the Report Manager dialog box.4.

Figure 18.11. The Add Report dialog box lets you choose

scenarios for each section of a report.

Finally, to print a Report Manager report, access the Report Manager dialog

box, select the report you want, and click the Print button. You must

indicate how many copies you want to print in the subsequent Print dialog

box. Click OK to print.

� See Report Manager

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Working with Scenarios - Simon Fraser University · Using Microsoft® Excel 97, Bestseller Edition Chapter 18. Building Scenarios and Outlines with Excel > Working with Scenarios