Modeling and Multivariate Methods - SAS

Chapter 24 Visualizing, Optimizing, and Simulating Response Surfaces 623
Profiling Models Stored in Excel
Figure 24.77 Demand Model in Excel
The formula is in cell B8, and is a calculation of the Overall Cost associated with having different amounts
of product in stock. The formula can be seen in the Formula Bar, and is a function of four cells:
• Amount Stocked is the amount of product in stock.
• Demand is the customer demand for the product.
• Air Freight is the cost per unit to ship additional product by air when the demand exceeds the amount in
stock.
• Expiration Cost is the cost per unit of disposing of unused product when the demand is less than the
amount in stock.
The calculations of the formula are as follows:
• If Amount Stocked is less than Demand, then the company has to ship additional units, at a cost of
(Demand-Amount Stocked) x Air Freight. For example, if the demand is 8, but the company has only 6
in stock, then it has to ship 8-6=2 units at a cost of 2x150=300.
• If Amount Stocked is greater than Demand, then the company has to dispose of unused product, at a
cost of (Amount Stocked-Demand) x Expiration Cost. For example, if the demand is 5, but the
company has 8 in stock, then it has to dispose of 8-5=3 units at a cost of 3x50=150.
• If Amount Stocked is equal to Demand, then there is no shipping cost or disposal cost.
• There is never both a shipping cost and a disposal cost at the same time.
Using the model in Excel, you can get the cost for only a given set of inputs at once. It is difficult to visualize
how changing the value of one input affects the output. You can choose a different combination of the
inputs to see how the cost is affected, but doing so for many combinations can take a long time.
Use the JMP Profiler to simultaneously see the effect of all inputs on the output. Also, you can quickly
simulate a range of input combinations to see the resulting range of output values.