MIS 775 Harvard University Business Analytics Essay

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MIS775 Decision Modelling for Business
Analytics
DEPARTMENT OF INFORMATION SYSTEMS AND BUSINESS ANALYTICS
DEAKIN BUSINESS SCHOOL
FACULTY OF BUSINESS AND LAW, DEAKIN UNIVERSITY
Assignment Two – A spreadsheet-based decision model
Background
This assignment is to be completed in groups of 2-3 members. The modelling work should be submitted
online in the Assignment Folder as a single MS Excel file with the required information in clearly labelled
separate worksheets. In addition, you are also required to submit a MS PowerPoint file that summarises your
model and results. In summary, two files should be submitted – an Excel spreadsheet and a PowerPoint file.
The assignment has six sections:
1. Model description, conceptual model, and assumptions
2. Spreadsheet-based decision model
3. Scenario analysis report
4. Stochastic modelling including justification for the choice of distributions
5. Simulated distribution for each output and risk analysis report
6. Overall presentation.
The requirements of each section are detailed below. The breakdown of marks (total is 30) is given in the
Assignment 2 Rubric at the end of this document.
Percentage of final grade
Due date
30%
Sunday 22 May 2022 at 8pm AEST
The assignment must be submitted by the due date electronically in CloudDeakin. When submitting
electronically, check that you have submitted the work correctly by following the instructions. Please note
that we will NOT accept any assignment or part of the assignment submitted after the deadline or via
email.
Assurance of Learning
This assignment assesses following Graduate Learning Outcomes and related Unit Learning Outcomes:
Graduate Learning Outcome (GLO)
Unit Learning Outcome (ULO)
GLO1: Discipline-specific knowledge and
ULO1: Conceptualise, formulate, and represent a
capabilities: appropriate to the level of study
business problem as a decision model.
related to a discipline or profession.
ULO2: Develop and solve business problems using
advanced decision modelling techniques such as
GLO5: Problem solving: creating solutions to
authentic (real world and ill-defined) problems optimisation, stochastic modelling, and risk analysis in
GLO4: Critical thinking: evaluating information spreadsheets.
ULO3: Interpret and analyse the results; investigate the
using critical and analytical thinking and
judgment
sensitivity of the solutions to the assumptions of the
decision model.
Feedback
Prior to submission
Students are able to seek assistance from the teaching staff to ascertain whether the assignment conforms
to submission guidelines. Please post your questions on CloudDeakin’s discussion forum for Assignment 2.
After submission
Your assignment feedback will be returned in the rubric via CloudDeakin with an overall mark and comments.
MIS775 – Decision Modelling for Business Analytics
Assignment 2 – Trimester 1, 2022
Page 1
Assignment Details:
Three years ago, Emma Thompson purchased a cafe in the Melbourne Botanical Gardens, and now wants
you to develop a spreadsheet-based decision model that can be used to investigate and explore decisions
and risks relating to taking a small business loan (e.g., for investment). The model needs to be generic
enough to enable Emma to explore the size of the loan that is viable/manageable within different
scenarios of income, cost, expenses, loan amount, deposit made on the loan, repayment amount, other
financial commitments, the amount of interest paid etc. and understand the risks associated with meeting
the loan commitments.
The decision model must be realistic and easy to use. The level of complexity modelled, for example the
choice of deterministic vs. stochastic inputs, input distributions, etc., is left to your discretion. However,
the model must enable the user to input the following business cost/expenses and loan details/options.
Deterministic/Fixed inputs:
• Utilities (Electricity& Gas &Water)
• Telephone/mobile and Internet
• Insurance
• Maintenance
• Paid salaries
• Own wage
• Leasing
No data is provided. You are required to create a fictitious business and demonstrate the utility of the
decision model using real data where available (e.g., interest rates) and create data where it is not.
Your model needs to take into account the costs of running the business (e.g., coffee supplies) and the sales
revenue in order to determine the profit generated in each four-week period. You will then use the model to
explore the risks associated with Emma taking the loan under various scenarios of your choosing.
Note that Net Profit = Sales revenue – Total variable costs – Fixed costs – Overheads.
You can also assume the following:
•
weekly coffee supplies has a Normal distribution with mean $864 and standard deviation $29
Sales revenue for any week = $3,624.3+8.76*Coffee supplies for that same week + Error term, where
the Error term is Normally distributed with mean zero and standard deviation $253.5
For each of the remaining stochastic inputs of your choice, you will need to determine appropriate
distributions with parameter values and support your answers with goodness-of-fit tests for all stochastic
inputs.
•
The minimum requirements of the decision model are:
1. Ability to enter loan details, income, costs, and expenses to explore decision options relating to the
business loan such as amount and repayments to calculate outputs for example total interest paid.
2. Ability to explore decision options relating to the size of the loan, the interest rate, the loan term, and
the percentage of profit to be set aside each week for repaying the loan. Base the interest rate on the
published RBA rates. The rates can be found at https://www.rba.gov.au/statistics/tables/xls/
f05hist.xls
3. Ability to calculate outputs such as whether Emma is in default of the loan agreement (i.e., whether
she has sufficient funds to cover a repayment) and the amount of repayment outstanding (which will
be zero if she can have sufficient funds to cover the repayment).
4. Stochastic treatment of some of the inputs, so that the resulting simulated output can be explored.
5. It must also enable Emma to explore and understand the risks associated with the decision.
MIS775 – Decision Modelling for Business Analytics
Assignment 2 – Trimester 1, 2022
Page 2
Your submission will be assessed across these six sections for a total unit mark of 30%:
Section 1: Model description, conceptual model, and assumptions (File: PowerPoint; 5 marks)
•
Provide a brief overview of the model
•
Include a conceptual model
•
Note any relevant assumptions.
Section 2: Spreadsheet-based decision model (Files: PowerPoint & Excel; 5 marks)
Design a spreadsheet model that you can use to investigate and explore Emma’s financial situation if she
takes out a loan. The model should include the following:
•
Fixed inputs
•
Stochastic inputs
•
Decision variables
•
Calculated variables
•
Output variables
Section 3: Scenario analysis report (Files: PowerPoint & Excel; 5 marks)
This section relates to Topic 7. Use Excel’s scenario analysis and investigate the impact that different
scenarios for each stochastic input on the outputs. The choice of best and worst scenarios is yours.
Section 4: Stochastic modelling including choice of distributions (Files: PowerPoint & Excel; 5 marks)
This section relates to Topic 8. Undertake stochastic modelling where each of the stochastic inputs are
now random. This will require you to choose an appropriate distribution for each of the stochastic inputs
and justify each one.
Section 5: Simulated output distribution and risk analysis report (Files: PowerPoint & Excel; 5 marks)
This section relates to Topic 9. This requires you to examine the simulated distributions for each output,
and undertake a risk analysis based on simulation modelling, in order to quantify the risks associated with
meeting the loan commitments.
Section 6: Overall presentation (File: PowerPoint; 5 marks)
Word limit: No more than 2000
The PowerPoint presentation should form the content of a report that includes:
1. A brief description of the model (maximum 100 words)
2. The conceptual model and assumptions behind your decision model.
3. The decision model copied from the spreadsheet.
4. The best- and worst-case scenarios for the data provided, and a discussion of the consequences.
5. Justification for the choice of distributions.
6. Risk analysis report based on the simulation modelling along with a summary of input parameters
and distributions used.
MIS775 – Decision Modelling for Business Analytics
Assignment 2 – Trimester 1, 2022
Page 3
Faculty of Business and Law Assignment Extension Procedures
Information for students seeking an extension BEFORE the due date
If you wish to seek an extension for this assignment prior to the due date, you need to apply via the online
Assignment Extension Tool in MIS775 unit site. You must provide a reason for the extension as well as your
supporting documentation and a draft of your assignment. This needs to occur as soon as you become
aware that you will have difficulty in meeting the due date. To support you in using the tool, the Learning
Innovation team has prepared the following short video: https://video.deakin.edu.au/media/t/1_g9rtrqow
Students who request an extension due to Covid are required to provide evidence of a positive PCR test or a
reply notification that they have registered a positive RAT test where possible (i.e. for students located in
Australia) or other evidence (for students located offshore).
Please note: Unit Chairs can only grant extensions up to two weeks beyond the original due date. If you
require more than two weeks or have already been provided an extension by the Unit Chair and require
additional time, you must apply for Special Consideration via StudentConnect within 3 business days of the
due date.
Conditions under which an extension will normally be considered include:
• Medical – to cover medical conditions of a serious nature, e.g., hospitalisation, serious injury or chronic
illness.
Note: temporary minor ailments such as headaches, colds and minor gastric upsets are generally
regarded as not serious medical conditions.
• Compassionate – e.g., death of a close family member, significant family, and relationship problems.
• Hardship/Trauma – e.g., sudden loss or gain of employment, severe disruption to domestic
arrangements, victim of crime.
Note: misreading the due date, assignment anxiety or travel will not be accepted as grounds for
consideration.
Information for students seeking an extension AFTER the due date
If the due date has passed or you require more than two weeks extension, or you have already been
provided with an extension and require additional time, you must apply for Special Consideration via
StudentConnect. Please be aware that applications are governed by university procedures and must be
submitted within three business days of the due date or extension due date.
Please be aware that in most instances the maximum amount of time that can be granted for an assignment
extension via the Special Consideration process is three weeks after the due date, as Unit Chairs are required
to have all assignments submitted before results/feedback can be released back to students.
Penalties for late submission
The following marking penalties will apply if you submit an assessment task after the due date without an
approved extension: 5% will be deducted from available marks for each day up to five days, and work that is
submitted more than five days after the due date will not be marked and will receive 0% for the task.
‘Day’ means calendar day. The Unit Chair may refuse to accept a late submission where it is unreasonable or
impracticable to assess the task after the due date.
Calculation of the late penalty is as follows: this is based on the assignment being due on a Sunday at 8:00pm
• 1 day late: submitted after Sunday 11:59pm and before Monday 11:59pm– 5% penalty.
• 2 days late: submitted after Monday 11:59pm and before Tuesday 11:59pm – 10% penalty.
• 3 days late: submitted after Tuesday 11:59pm and before Wednesday 11:59pm – 15% penalty.
• 4 days late: submitted after Wednesday 11:59pm and before Thursday 11:59pm – 20% penalty.
• 5 days late: submitted after Thursday 11:59pm and before Friday 11:59pm – 25% penalty.
Dropbox closes on the Friday after 11:59pm AEST time.
MIS775 – Decision Modelling for Business Analytics
Assignment 2 – Trimester 1, 2022
Page 4
Rubric for Assignment 2
Performance Levels
Criteria
Model description,
conceptual model,
and assumptions
ULO1/GLO1,4
Total: 5 marks
Spreadsheet-based
decision model
ULO1,2,3/GLO1,4, 5
Total: 5 marks
Scenario analysis
report
ULO1,2,3/GLO1,4,5
Total: 5 marks
Stochastic modelling
including choice of
distributions
ULO1,2,3/GLO1,4, 5
Total: 5 marks
Simulated output
distribution and risk
analysis report
ULO1,2,3/GLO1,4, 5
Total: 5 marks
Report
ULO3/GLO4
Total: 5 marks
YET TO ACHIEVE MINIMUM STANDARD
Poor (0-49)
0
1.5
Conceptual model
A vague conceptual
is inappropriate or
model is given, with
not clearly
several modelling errors
outlined
0 – 1.4 Marks
1.5 – 2.4 Marks
0
1.5
Decision model
Decision model is
remains incomplete
complete. All stochastic
with some formulas
inputs can only display
or values missing
averages
MEETS STANDARD
Satisfactory (50-59)
Good (60-69)
2.5
3
An appropriate conceptual
A clear conceptual model is
model is given. Relationships
given. Relationships are mostly
are mostly correctly specified
correctly specified
2.5 – 2.9 Marks
2.5
Decision model is complete.
Some stochastic inputs can
only display averages
3.0 – 3.4 Marks
3
Decision model is complete. All
stochastic inputs display
appropriate random values.
There are errors in the fixed
inputs or calculated values
EXCEEDS STANDARD
Very good (70-79)
Excellent (80-100)
3.5
5
A very clear conceptual model
A very clear conceptual model is given. All
is given. All components are
components are modelled correctly in a
modelled correctly in a clear
clear and innovative fashion
way
3.5 – 3.9 Marks
4 – 5 Marks
3.5
5
Decision model is complete. All
Decision model is complete. All stochastic
stochastic inputs display
inputs display appropriate random values.
appropriate random values.
All formulas in the model are correct
Only errors are in some
formulas for outputs
0 – 1.4 Marks
0
Scenario analysis
report is not
included or is
inappropriate
1.5 – 2.4 Marks
1.5
Some possible scenario
analyses are presented,
but not clearly
2.5 – 2.9 Marks
2.5
Most of the important
scenarios are considered for
the analysis
3.0 – 3.4 Marks
3
Most of the important
scenarios are considered for
the analysis and elaboration on
them is presented clearly
3.5 – 3.9 Marks
3.5
All of the main scenarios are
considered, justified in a clear
way, and presented in a
compelling fashion
4 – 5 Marks
5
All scenarios are considered, fully justified
in a clear way, and presented in a
compelling fashion
0 – 1.4 Marks
0
Stochastic modelling
not included or
inappropriate
1.5 – 2.4 Marks
1.5
Stochastic modelling is
poorly implemented and
analysed
2.5 – 2.9 Marks
2.5
Some effective stochastic
modelling is used with poor
choice of distributions
3.0 – 3.4 Marks
3
Some effective stochastic
modelling is used with some
elaboration on distributions
3.5 – 3.9 Marks
3.5
Stochastic modelling is used
effectively. Choice of
distributions is justified
4 – 5 Marks
5
Stochastic modelling is used effectively.
Choice of distributions is fully justified
0 – 1.4 Marks
0
Simulated output
and risk analysis are
not included or are
inappropriate
1.5 – 2.4 Marks
1.5
Unclear simulation
outputs are presented.
Unclear analysis of the
effect of input risks
1.5 – 2.4 Marks
1.5
Report is not a
standalone document,
requiring review of
spreadsheet to
understand results on
which report is based.
Displays a general lack
of clarity or logic in
interpretation or
analysis of results
1.5 – 2.4 Marks
3.0 – 3.4 Marks
3
Reasonable analysis of
simulation outputs is
presented. It considers some
of the main stochastic inputs,
with some discussion of their
effect on output
3.0 – 3.4 Marks
3
Report is a completely
standalone document.
A clear and logical report is
provided across all areas, where
results of analysis have been
satisfactorily examined and
accurately interpreted.
Some areas of the report display
a lack of depth in understanding
3.5 – 3.9 Marks
3.5
Clear and reasonable analysis
of simulation output. A
comprehensive consideration
of the main stochastic inputs,
with some discussion of their
effect on output
3.5 – 3.9 Marks
3.5
Report is a completely
standalone document.
A clear and logical report is
provided across all areas, where
results of analysis have been
examined, interpreted and
described accurately, precisely
and concisely. Report displays a
understanding across all areas
4 – 5 Marks
5
Clear and comprehensive analysis of
simulation output is provided with
comprehensive consideration of the main
stochastic inputs, and discussion of their
effect on output
0 – 1.4 Marks
0
Report is not
included or is
inappropriate
2.5 – 2.9 Marks
2.5
Some analysis of simulation
output is presented. It
considers some relevant
stochastic inputs, with some
discussion of their effect on
output
2.5 – 2.9 Marks
2.5
Report is largely a standalone
document, though may require
a review of the spreadsheet to
help understand some points.
Some areas lack clarity or logic
in interpretation or analysis of
results, or there are a few
errors or omissions
4 – 5 Marks
5
Report is a completely standalone
document.
A clear and logical report is provided
across all areas, where results of analysis
have been examined, interpreted and
described accurately, precisely and
concisely. Report displays understanding
across all areas.
Report concludes with some key insights
2.5 – 2.9 Marks
3.0 – 3.4 Marks
3.5 – 3.9 Marks
4 – 5 Marks
0 – 1.4 Marks
Format
PowerPoint
report
PowerPoint
report
&
Excel
spreadsheet
PowerPoint
report
&
Excel
spreadsheet
PowerPoint
report
&
Excel
spreadsheet
PowerPoint
report
&
Excel
spreadsheet
PowerPoint
report
Total marks 30 (30%)
MIS775 – Decision Modelling for Business Analytics
Assignment 2 – Trimester 1, 2022
Page 4

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