# Study Guide: Pages 53-73

# CHAPTER 2: SPREADSHEET MODELING continued

## Example 4 XerTech Copy, Inc. . ....................53

Page 53 lists "Monthly Copier Space Rental Rate" as a
decision variable with a value of $150. This is not precisely true. In
fact the decision variable is not a number at all; it's which of three
different space rental plans to use.

A little bit of clear businesslike thought about the three alternatives
implies that if demand for copies is extremely low, none of the
alternatices can save the business; if demand is low, alternative 3 is
best for Xertech; if demand is moderate, alternative 2 is best; and if
demand is high, alternative 1 is best. (Think through why this is so.)

The purpose of breakeven analysis and crossover analysis is to replace
the vague terms "extremely low," "low," "moderate," and "high" with
specific numbers of copies.

The book uses GoalSeek for breakeven analysis and crossover analysis,
my online spreadsheet uses Data Table and graphics. We will go over the
algebraic method (which you will need for the exams) in class.

## The Art of Modeling .................................... .58

Be sure you understand what each item on the two lists
means and why it is important.

Note: the "formulas" view of a spreadsheet is seen by holding down the
Ctrl key end tapping ~ ("tilde")

## Example 5 Production at Oak Products, Inc. .....60

Skim for the "why."

Don't worry about the "how" beyond being able to tell the two apart

## Constraints and Constrained Optimization .......64

Skim

## Summary...........................................65

Be sure you understand what each item on the list means
and why it is important.

## Key Terms, Self-Test Exercises, Problems, cases................65

Red these as a review. "How" is important, but
only after you
have thoroughly mastered "Why."

Pay special attention to probleem 8; be sure to come to class knowinng
what the question is.