5.1 – Report investigating the features of Spreadsheet Software used in the
Decision-Making Process
Introduction
This report will describe the features of using spreadsheet software needed in a
decision-making process. It covers the software's features by explaining where
to access and how to use them. To better understand it, the report will contain a
given scenario in which you need to create a spreadsheet for a company that
sells trainers. The trainers are imported in USA dollars and sold in UK Pounds.
The trainers are expensive and only sell better when economic growth in the
country is good. Due to this and exchange rates, the spreadsheet needs to predict
the impact of exchange rate fluctuations on the company's profit margin. The
report will cover how to break down the scenario by explaining what
information to look for, putting it into context with the trainer scenario and
placing it into the data model.
Task 1
Stages in the decision-making process:
1. Understanding the scenario.
Before creating a data model, it is important that we understand our given
scenario. Through understanding the scenario, we can ensure that the model and
its information is appropriate. Failure to do so would affect the usefulness of the
data model. To understand the scenario, we need to first understand who the
spreadsheet is for, their uses for it and what they want it to show. The
spreadsheet also needs to aid with their decision making, by providing an
insight into alternative decisions. This will be done through showing the
impacts/consequences of each viable alternative and weighing up its
benefits/limitations. As a result, the client will be able to make the best possible
decision for their needs.
Trainers:
The trainer scenario asks you to create a spreadsheet that can predict the impact
on profit margins from the fluctuations in exchange rates. However, to do this,
we need to read about what the company is and what they provide. Here we are
told that the company sells trainers, which they sell in USD to multiple shops
throughout the UK, that are sold in GBP.
2. Identifying information and sources:
2.1 - Information required
,As it is a data model that we are creating, one key component is the information
that is required. The information must be a suitable source or else the data
model will not be able to work properly. What makes a suitable source of data is
information where you are aware of its origin, making it a credible source.
2.2 - Additional information that is already available
It may be the case that you will be provided with some information already, as
this would have originated from the given scenario. Due to this you must
ensure that you read the scenario thoroughly and identify the information
already given.
Trainers:
With this given scenario, we can attempt to identify information that is already
available. We can see that the given trainer scenario already contains a table of
information that includes the trainer model, its price in United States Dollars,
and the average monthly sales based on an exchange rate of 0.7 from dollars to
pounds. Aside from this, we are informed that the typical profit margin
(difference between the total cost to run your business and the total revenue it
brings in) that is applied to calculate the sales price in the UK is 40%. It
mentions how to calculate the profit, which will come to use when creating the
spreadsheet as there may be a dedicated section displaying the profit margins.
Another thing told is that the company has found that for every 10p rise in sale
prices, the average monthly sales will drop by 20 units. Also, it is mentioned
that due to the fluctuations in exchange rates, if the exchange rate goes below
0.7, the company can either decrease the profit margins or increase prices,
retaining the profit margin. However, this reduces the overall number of sales
made.
2.3 - sources of additional information
While it may be good to include additional information, it should be ensured
that the sources from which the additional information comes from is recorded
for the spreadsheet data model. This additional information can be gathered
from a range of sources, including internet sites or published books at a library.
Trainers:
Sources of the additional information within the trainer scenario would
originate from a range of trusted internet sites for the exchange rates, another
source for this information can also come from the local Bank. Sources of
information on the stock of each trainer would come directly from the import
company. Information on the economic growth of the US and UK would come
from sources such as the country's GDP.
2.4 - requirements for verifying the information sources.
, Despite all the information, it should be known that it needs to come from a
credible and reliable source. What makes a source credible is looking at whom
the information provider is and the date the information was given. The date of
information may vary so depending on the circumstances it is up to you to think
carefully as to whether it is still relevant or not.
Trainers:
One of the considered factors is the exchange rates of a specific day. This
information can be gathered online but must be from a suitable site or done
without the internet and at a bank or central union as an alternative.
3. Factors affecting the quality of information:
3.1 - currency of data,
The currency of data has nothing entirely to do with currency. Instead, how
recent the data is. Its relevancy varies for each factor, as some are updated more
regularly than others. Using older information reduces the overall usefulness of
the data model.
Trainers:
The currency of the exchange rate data would play a significant factor when
taking the circumstances into account as exchange rates fluctuate very often,
and an exchange rate from 15 hours ago would be less current than one from 2
hours ago.
3.2 - accuracy of data
The accuracy of data is defined by the amount of detail it contains and it is
having little to no errors. These are significant determinants of the information's
quality that you use. It is mandatory to avoid having too many errors because
doing so could make your data model produce poorer results than it would if it
were processed into a lot more accurate model.
Trainers:
With the trainer scenario, a lot of different groups of information need to ensure
that its data is accurate. One example of this is the accuracy of the exchange
rate from US dollars to British pound, this is important because the exchange
rate is used to determine how well the sales will be if it is over or below 0.7.
Another example of this is
3.3 - external factors
External factors are those that are outside of the information that is in the data
model, however, they are crucial as they can impact your data model. External
factors can be a range of different things, such as how decent the quality of
your information is. Within a business, external factors are grouped into 5
