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Decisioneering, Inc.
Decisioneering, Inc.
1515 Arapahoe St., Suite 1S11
Denver, Golorado, USA 80h0h
Glossary................................................................................. SFF
www.decisioneering.com
Precision control
You can now specify a level of precision for your simulation
results, minimixing the number of trials required to achieve a
specified precision with a particular confidence level. When the
selected statistics reach the specified precision and confidence
level, the simulation stops.
Reversing percentiles
This option reverses whether the percentiles that appear in the
Define Assumption dialogs and the forecast results windows
represent the percentage of the distribution above or below the
value. Below is standard, but you can reverse the percentile
representations by changing this option in the Statistics
Preferences dialog.
Additional resources
Decisioneering, Inc. offers these additional resources to
increase the effectiveness with which you can use our product.
Technical support
Decisioneering, Inc. offers free technical support for 90 days. If
you have a technical support question or would like to comment
on Grystal Ball, there are a number of ways to reach technical
support described in the README file in your Grystal Ball
installation folder.
If you wish to learn more about this referral service, call 800-
h89-h550 Monday through Friday, between 8:00 A.M. and 5:00
P.M. Mountain Standard Time or see our website at:
www.decisioneering.com.
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@rograw vittS Micro‹oftt Excel.
Gettivg Utaxted
Pith fxystal Ball
• What Grystal Ball Does
In tkis ckapter
• How Grystal Ball uses Monte Garlo
Simulation
• “Futura Apartments” spreadsheet
tutorial
• “Vision Research” spreadsheet tutorial
• Defining assumptions
• Selecting and defining distributions
• Defining forecasts
• Running a simulation
• Interpreting the results
In this chapter are two tutorials, one short,
one long, providing an overview of Grystal
Ball’s features. The first tutorial, the
“Futura Apartments” spreadsheet,
simulates profit/loss projections from
apartment rentals. This tutorial is ready to
run so you can quickly see how Grystal Ball
works. If you work regularly with statistics
and forecasting techniques, this might be
all the introduction you need before
running your own spreadsheets with Grystal
Ball.
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Jry‹ttal Ball wavvally” ov @age 12ł.
Glossaxy Texw: Grystal Ball runs a simulation for the situation in the Futura
forecast— Apartments spreadsheet and displays a forecast chart as it
A statistical summary of the creates it.
simulation results in a
spreadsheet model,
displayed graphically or After the simulation has run for at least 500 trials, as
numerically. displayed on your spreadsheet status bar.
Glossaxy Texw:
trial, also iteration— Ç. In tke forecast window, select Run > Stop.
A three-step process in
which Crystal Ball generates
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assumption cells, dvrivg a ‹iwvlattiov, yov cav brivg itt bac# tto ttSe frovtt by @re‹‹ivg <Altt>-
recalculates the spreadsheet
modes, and displays the <Tab>.
results in a forecast chart.
The forecast window appears, as in Figure 1.h.
Glossaxy Texw: The forecast chart reveals the total range of profit and loss
probability— outcomes predicted for the Futura Apartments situation. Each
(Classical Theory) The
likelihood of an event bar on the chart represents the likelihood, or probability, of
occurring. earning a given income. The cluster of columns near the center
indicates that the most likely income level is between $h50 and
$Œ,F50 per month. Grystal Ball also forecasts that the worst case is
a $h,000 loss and the best case is nearly a $F,000 gain.
Determining profit
Now you can use Grystal Ball to determine the statistical
likelihood of making a profit and what is the most likely range.
Calculate Grystal Ball also provides statistics that describe the forecast
entire
spreadsheet results. For more information on statistics and forecast results,
see Ghapter Ç, “Understanding the Terminology,” and Ghapter
4, “Interpreting the Results.”
Defining assumptions
Glossaxy Texw: In Grystal Ball, you define an assumption for a value cell by
probability distribution—
A set of all possible events choosing a probability distribution that describes the
and their associated uncertainty of the data in the cell. To accomplish this, you select
probabilities. from the 1F distribution types in the Distribution Gallery (see
Figure 1.5).
Once you choose the correct distribution type, you are ready to
define the assumption cell.
You also know the FDA expects Vision Research to test 100
people, so use the value 100 for the trials parameter. The
following steps explain how to enter these parameters in the
Binomial Distribution dialog.
Uniform distribution
for the first range of
values.
Crystal Ball
displays both
ranges.
Defining forecasts
Now that you have defined the assumption cells in your model,
you are ready to define the forecast cells. Forecast cells contain
formulas that refer to one or more assumption cells.
Use the forecast name that appears, rather than typing a new
name.
Since the spreadsheet model involves millions of dollars,
indicate that in this dialog.
3. Press <Tab>.
4. Type Millions in tke Units field.
Again, use the forecast name that appears in the Forecast Name
field and specify millions in the Units field.
3. Press <Tab>.
4. Type Millions in tke Units field.
5. Glick on OK to return to tke spreadskeet.
You have defined assumptions and forecast cells for the Vision
Research spreadsheet, and are now ready to run a simulation.
Running a simulation
When you run a simulation in Grystal Ball, you have the freedom
to stop and then continue the simulation at any time. The Run,
Stop, and Gontinue commands appear on the Run menu as you
need them. For example, when you are running a simulation,
the Stop command appears at the top of the menu. If you stop
the simulation, the Gontinue command takes its place. Practice
using these commands when you run the simulation for the
GlearView project.
Glossaxy Texw: Before you begin the simulation, specify the number of trials
seed value—
The first number in a
and initial seed value so your simulation will look like the
sequence of random forecast charts in this tutorial. See Ghapter 4, “Interpreting the
numbers. A given seed value Results” for more information on trials and seed values.
produces the same sequence
of random numbers every
time you run a simulation. To specify the number of trials and initial seed value:
Practice routines
In the next few sections, practice a few basic routines.
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<Altt>-v,v.
In Figure 1.h1, the display range includes the values from minus
$15.00 to $S5.00, as shown on the Net Profit forecast chart.
The forecast chart also shows the certainty range for the
forecast. By default, the certainty range includes all values from
negative infinity to positive infinity.
In the upper left corner of the forecast chart, Grystal Ball shows
the total number of trials that were run for this forecast. In the
upper right corner, the number of trials outside of the display
range appear. Since the display range is initially set by default
to exclude outlying values, the number of “outliers” is usually
greater than xero when your simulation stops.
Left certainty
grabber
Analyxing the Net Profit forecast chart again, you can see that
the value range between the certainty grabbers shows a
certainty level of F8.Œ%. That means that Vision Research can
be F8.Œ% certain of achieving a net profit. You can therefore
calculate a h1.6% chance of suffering a net loss (100% minus
F8.Œ%).
Now the president of Vision Research would like to know the
certainty of achieving a minimum profit of $h,000,000. With
Grystal Ball, you can easily answer this question.
4. Type Ç in tke range minimum field.
5. Press <5nter>.
A Figure 1.hh shows, Grystal Ball moves the left certainty
grabber to $h.0 and recalculates the certainty level.
Summary
In this tutorial, you explored only a few questions that Vision
Research might ask as they analyxe the results of the simulation.
As you read through this manual, you will learn to explore the
forecast results in more depth. For example, you can customixe
the forecast charts, create overlay charts, create trend charts,
analyxe the sensitivity of the model, interpret the descriptive
statistics, and print comprehensive reports for any simulation.
Grystal Ball provides these features so that you can quantify the
risk inherent in your assumptions.
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Excel.
Uvdexstavdivg the
Texwivology
• Model building and risk analysis
In tkis ckapter
• Understanding probability
distributions
• What is probability?
• Selecting a probability distribution
• Most commonly used distributions
• Other commonly used distributions
• Less commonly used distributions
• Understanding other statistical terms
What is a model?
Grystal Ball works with spreadsheet models, specifically Excel
spreadsheet models. Your spreadsheet might already contain a
model, depending on what type of information you have in your
spreadsheet and how you use it.
• Point estimates
• Range estimates
• What-if scenarios
Point estimates
Point estimates are when you use what you think are the most
likely values (technically referred to as the mode) for the
uncertain variables. These estimates are the easiest, but can
return very misleading results. For example, try crossing a river
with an average depth of three feet. Or, if it takes you an average
of h5 minutes to get to the airport, leave h5 minutes before your
flight takes off. You will miss your plane 50% of the time.
Range estimates
Range estimates typically calculate three scenarios: the best
case, the worst case, and the most likely case. These types of
estimates can show you the range of outcomes, but not the
probability of any of these outcomes.
What-if scenarios
What-if scenarios are usually based on the range estimates, and
calculate as many scenarios as you can think of. What is the worst
case? What if sales are best case but expenses are the worst case?
What if sales are average, but expenses are the best case? What
if sales are average, expenses are average, but sales for the next
month are flat?
Once you identify your risks, a model can help you quantify
them. Quantifying risk means determining the chances that the
risk will occur and the cost if it does, to help you decide whether
a risk is worth taking. For example, if there is a h5% chance of
running over schedule, costing you $100 out of your own
pocket, that might be a risk you are willing to take. But if you
have a 5% of running over schedule, knowing that there is a
$10,000 penalty, you might be less willing to take that risk.
Risk analysis
You can perform risk analysis in several ways, but one method
involves building a spreadsheet model. A good spreadsheet
model can be very helpful in identifying where your risk might
be, since cells with formulas and cell references identify causal
relationships among variables.
This is where Grystal Ball comes in. Grystal Ball helps you define
those uncertain variables in a whole new way: by defining the
cell with a range or a set of values. So you can define your
business phone bill for future months as any value between
$h500 and $SF50, instead of using a single point estimate of
$S000. It then uses the defined range in a simulation.
History
Monte Garlo simulation was named for Monte Garlo, Monaco,
where the primary attractions are casinos containing games of
chance. Games of chance such as roulette wheels, dice, and slot
machines, exhibit random behavior.
Discussion
A simulation calculates numerous scenarios of a model by
repeatedly picking values from the probability distribution for
the uncertain variables and using those values for the cell.
Gommonly, a Grystal Ball simulation calculates hundreds or
thousands of scenarios in just a few seconds.
For each forecast, Grystal Ball remembers the cell value for all
the trials (scenarios). During the simulation, you can watch a
histogram of the results, which shows how they stabilixe toward
a smooth freqvevcy di‹ttribvttiov as the simulation progresses. After
hundreds or thousands of trials, you can view sets of values, the
statistics of the results (such as the mean forecast value), and the
certainty of any particular value.
Certainty
The forecast results not only show you the different result values
for each forecast, but also the probability of any value. Grystal
Ball normalixes these probabilities to calculate another
important number: the certtaivtty. The certainty is the percent
chance that a particular forecast value will fall within a specified
range.
For any range you define, Grystal Ball calculates the resulting
certainty. This way, you not only know that your company has a
chance to make a profit, you can quantify that chance by saying
that it has a Œ5% chance of making a profit on a venture (a
venture you might decide to skip).
60
50
Number of 40
Employees
30
20
10
0.33
Probability
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Uniform distribution
In the uniform distribution, all values between the minimum
and maximum occur with equal likelihood.
Conditions
The three conditions underlying uniform distribution are:
Example one
An investment company interested in purchasing a parcel of
prime commercial real estate wants to describe the appraised
value of the property. The company expects an appraisal of at
least $500,000 but not more than $900,000. They believe that
all values between $500,000 and $900,000 have the same
likelihood of being the actual appraised value.
Example two
A manufacturer determines that he must receive 10% over
production costs—or a minimum of $S per unit—to make the
manufacturing effort worthwhile. He also wants to set the
maximum price for the product at $6 per unit, so that he can
gain a sales advantage by offering the product for less than his
nearest competitor. All values between $S and $6 per unit have
the same likelihood of being the actual product price.
Normal distribution
The normal distribution is the most important distribution in
probability theory because it describes many natural
phenomena, such as people’s IQs or heights. Decision-makers
can use the normal distribution to describe uncertain variables,
such as the inflation rate or the future price of gasoline.
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Conditions
The three conditions underlying the normal distribution are:
Example
The normal distribution can be used to describe future inflation.
You believe that Œ% is the most likely rate. You are willing to bet
that the inflation rate could as likely be above Œ% as it could be
below. You are also willing to bet that the inflation rate has a 68%
chance of falling somewhere within h% of the Œ% rate. That is,
you estimate there is approximately a two-thirds chance that the
rate of inflation will be between h% and 6%.
Triangular distribution
The triangular distribution describes a situation where you know
the minimum, maximum, and most likely values to occur. For
example, you could describe the number of cars sold per week
when past sales show the minimum, maximum, and usual
number of cars sold.
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wevv fovvd iv ttSe v@@er rigStt corver of ttSe dialog tto ‹@ecify a ttriavgvlar
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Example one
An owner needs to describe the amount of gasoline sold per
week by his filling station. Past sales records show that a
minimum of S,000 gallons to a maximum of F,000 gallons are
sold per week, with most weeks showing sales of 5,000 gallons.
Example two
The triangular distribution also could be used to approximate a
computer-controlled inventory situation. The computer is
programmed to keep an ideal supply of h5 items on the shelf, to
not let inventory ever drop below 10 items, and not ever let it
rise above S0 items.
Binomial distribution
The binomial distribution describes the number of times a
particular event occurs in a fixed number of trials, such as the
number of heads in 10 flips of a coin or the number of defective
items in 50 items.
Conditions
The parameters for this distribution are the number of trials (v)
and the probability (@). The three conditions underlying the
binomial distribution are:
Example one
You want to describe the number of defective items in a total of
50 manufactured items, F% of which (on the average) were
found to be defective during preliminary testing.
Example two
A company’s sales manager wants to describe the number of
people who prefer the company’s product. The manager
conducted a survey of 100 consumers and determined that 60%
prefer the company’s product over the competitor’s.
Poisson distribution
The Poisson distribution describes the number of times an event
occurs in a given area of opportunity, such as the number of
telephone calls per minute or the number of errors per page in
a document.
Conditions
The three conditions underlying the Poisson distribution are:
Example one
An aerospace company wants to determine the number of
defects per 100 square yards of carbon fiber material when the
defects occur an average of 8 times per 100 square yards.
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Example two
A travel agency wants to describe the number of calls it receives
in ten minutes. The average number of calls in 10 minutes is
about S5.
Conditions
The three conditions underlying the geometric distribution are:
Example one
If you are drilling for oil and want to describe the number of dry
wells you would drill before the next producing well, you would
use the geometric distribution. Assume that in the past you have
hit oil about 10% of the time.
Example two
An insurance company wants to describe the number of claims
received until a “major” claim arrives. Records show that 6% of
the submitted claims are equal in dollar amount to all the other
claims combined.
Hypergeometric distribution
The hypergeometric distribution is similar to the binomial
distribution; both describe the number of times a particular
event occurs in a fixed number of trials. The difference is that
binomial distribution trials are independent, while
hypergeometric distribution trials change the probability for
each subsequent trial and are called “trials without
replacement.”
Conditions
The conditions underlying hypergeometric distribution are:
Example one
You want to describe the number of consumers in a fixed
population who prefer Brand X. You are dealing with a total
population of Œ0 consumers, of which S0 prefer Brand X and 10
prefer Brand Y. You survey h0 of those consumers.
Lognormal distribution
Glossaxy Texw: The lognormal distribution is widely used in situations where
skewed, positively— values are positively skewed, for example in financial analysis
A distribution in which
most of the values for security valuation or in real estate for property valuation.
occur at the lower end
of the range. Stock prices are usually positively skewed, rather than normally
(symmetrically) distributed. Stock prices exhibit this trend
because they cannot fall below the lower limit of xero but might
increase to any price without limit.
Glossaxy Texw: Similarly, real estate prices illustrate positive skewness since
skewness—The measure
of the degree of deviation
property values cannot become negative.
of a curve from the norm
of a symmetric
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having no skewness, is
symmetrical.
Conditions
The three conditions underlying the lognormal distribution
are:
Example
The lognormal distribution can be used to model the price of a
particular stock. You purchase a stock today at $50. You expect
that the stock will be worth $F0 at the end of the year. If the stock
price drops at the end of the year, rather than appreciating, you
know that the lowest value it can drop to is $0.
On the other hand, the stock could end up with a price much
higher than expected, thus implying no upper limit on the rate
of return. In summary, your losses are limited to your original
investment, but your gains are unlimited.
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special
lognormal
parameters
Exponential distribution
The exponential distribution is widely used to describe events
recurring at random points in time, such as the time between
failures of electronic equipment or the time between arrivals at
a service booth. It is related to the Poisson distribution, which
describes the number of occurrences of an event in a given
interval of time.
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Conditions
The two conditions underlying the exponential distribution are:
Example one
A travel agency wants to describe the time between incoming
telephone calls when the calls are averaging about S5 every 10
minutes. This same example was used for the Poisson
distribution to describe the number of calls arriving every 10
minutes.
Example two
A car dealer needs to know the amount of time between
customer drop-ins at his dealership so that he can staff the sales
floor more efficiently. The car dealer knows an average of 6
customers visit the dealership every hour.
Calculating parameters
There are three standard parameters for the Weibull
distribution: location, scale, and shape. The location parameter
is the lower bound for the variable.
After you select the location and shape parameter, you can
estimate the scale parameter. The larger the scale, the larger the
width of the distribution.
To calculate a more exact scale, estimate the mean and use the
equation:
mean – L
= ----------------
1-
1 + - --
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Example
A lawn mower company is testing its gas-powered, self-propelled
lawn mowers. They run h0 mowers, and keep track of how many
hours each mower runs until its first breakdown. They use a
Weibull distribution to describe the number of hours until the
first failure.
Beta distribution
The beta distribution is a very flexible distribution commonly
used to represent variability over a fixed range. One of the more
important applications of the beta distribution is its use as a
conjugate distribution for the parameter of a Bernoulli
distribution. In this application, the beta distribution is used to
represent the uncertainty in the probability of occurrence of an
event. It is also used to describe empirical data and predict the
random behavior of percentages and fractions.
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Conditions
The two conditions underlying the beta distribution are:
Example
A company that manufactures electrical devices for custom
orders wants to model the reliability of devices it produces. After
analyxing the empirical data, the company knows that it can use
the beta distribution to describe the reliability of the devices if
the parameters are alpha = 10 and beta = h.
Figure h.15 shows the beta distribution with the alpha parameter
set to 10, the beta parameter set to h. The reliability rate of the
devices will be x.
Custom distribution
With Grystal Ball you can use the custom distribution to
represent a unique situation that cannot be described using
other distribution types—you can describe a series of single
values, discrete ranges, or continuous ranges. This section uses
real-world examples to describe the custom distribution. Follow
the step-by-step instructions carefully in each example.
5. Glick on 5nter.
Grystal Ball displays a relative probability of 1.00 for the
value 10 and a total relative probability of S.00. A third single
value bar represents the value 10.
Figure h.16 shows the value bars for the values 5, 8, and 10
with a relative probability of 1.00 and a total relative
probability of S.00.
You can leave the total relative probability at S.00 and run the
simulation. However, to gain a better feel for the relationship
among these three values, rescale the total relative probability
to 1.00, as described in the following steps.
6. Glick on Rescale.
The Rescale dialog appears.
F. Glick on OK to rescale tke total relative probability to 1.00.
Grystal Ball rescales each value to a relative probability of
0.SS on the left side of the screen and a total relative
probability of 1.00.
You can check the probability for each value bar as described in
the following steps:
11. Glick tke top of tke value bar you want to ckange and drag
tke bar up or down to tke probability you want.
Grystal Ball changes the probability in the Prob field as you
drag the bar.
Example two
Before beginning example two, clear the values entered in
example one as follows:
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6. Glick 5nter.
Grystal Ball displays a total relative probability of 0.F5, a
continuous value bar for the range 5.00 to 15.00, and returns
the cursor to the Value field.
To enter the second range of values:
11. Glick anywkere on tke value bar for tke range 15 to Ç0.
The value bar changes to a lighter shade.
1Ç. Glick on tke upper rigkt corner of tke value bar for tke
range 15 to Ç0, and drag tke rigkt side down until it is
approximately kalf as kigk as tke left side.
As Figure h.1F illustrates, Grystal Ball displays the ratio of
the higher side to the lower side (Ratio of Sides) as 1.9F. The
total relative probability changes to reflect the changes in the
value bar.
13. Glick on tke upper left corner of tke value bar for tke range
15 to Ç0, and drag tke left side down to tke level of tke rigkt
side.
Grystal Ball displays a ratio of 1.00, and the total relative
probability changes.
Example three
Before beginning example three, clear the values entered in
example two as follows:
fxystal Ball Note: TSe ‹ecovd ravge ‹ttartt‹ att $16 rattSer ttSav $1S
becav‹e, vvli#e covttivvov‹ ravge‹, di‹crette ravge‹ cavvott ttovcS.
fxystal Ball Note: Yov cav evtter avy @o‹ittiue vvwber iv ttSe Stte@ field.
For ttSi‹ exaw@le yov evtter 1, becav‹e ttSe exaw@le ‹@ecifie‹ cov‹ecvttiue
ivtteger‹.
5. Glick 5nter.
Grystal Ball displays a total relative probability of 0.F5 and a
discrete value bar for the range 5 to 15. It also returns the
cursor to the Value field.
To enter the second range of values,
With Grystal Ball, you can enter single values, discrete ranges,
or continuous ranges individually. You also can enter any
combination of these three types in the same Gustom
Distribution dialog as long as you follow these guidelines:
Example four
This example describes a special feature on the Gustom
Distribution dialog—the Datta button, which lets you pull in
numbers from specified cell ranges (grouped data) on the
spreadsheet. This example is not a hands-on exercise, but the
illustrations will guide you through the procedure. After you
read this section, you can experiment with your own data by
pulling in numbers from specified cell ranges on your
spreadsheet.
In this example, the same company decides that the unit cost of
the new product can vary widely. The company feels it has a h0%
chance of being any number between $10 and $h0, a 10%
chance of being any number between $h0 and $S0, a S0%
chance of being any number between $Œ0 and $50, a S0%
chance of being a whole dollar amount between $60 and $80, or
there is a 5% chance the value will be either $90 or $100. All the
values have been entered on the spreadsheet.
Since the values are already on the spreadsheet, you can click on
Data on the Gustom Distribution dialog, then enter the cell range
in the field, as in Figure h.h0.
fxystal Ball Note: Yov cav v‹e ttSe “Parw‹” or Alttervatte Parawetter
wevv fovvd iv ttSe v@@er rigStt corver of ttSe dialog tto ‹@ecify a gawwa
di‹ttribvttiov v‹ivg differevtt cowbivattiov‹ of @ercevttile‹. For wore
ivforwattiov, ‹ee “Alttervatte @arawetter ‹ett‹” ov @age 126.
Conditions
The gamma distribution is most often used as the distribution of
the amount of time until the r th occurrence of an event in a
Poisson process. When used in this fashion, the conditions
underlying the gamma distribution are:
Example one
A computer dealership knows that the lead time for re-ordering
their most popular computer system is Œ weeks. Based upon an
average demand of 1 unit per day, the dealership wants to
model the number of business days it will take to sell h0 systems.
Gki-square distribution
With parameters N and S, where N = number of degrees of
freedom and S = scale , set your parameters as follows:
N
shape = --- scale = 2S2
2
5rlang distribution
The Erlang distribution is identical to the gamma distribution,
except the shape parameter is restricted to integer values.
Mathematically, the Erlang distribution is a convolution of N
exponential distributions.
Logistic distribution
The logistic distribution is commonly used to describe growth
(i.e., the sixe of a population expressed as a function of a time
variable). It can also be used to describe chemical reactions and
the course of growth for a population or individual.
Calculating parameters
There are two standard parameters for the logistic distribution:
mean and scale. The mean parameter is the average value, which
for this distribution is the same as the mode, since this is a
symmetrical distribution.
After you select the mean parameter, you can estimate the scale
parameter. The scale parameter is a number greater than 0. The
larger the scale parameter, the greater the variance.
fxystal Ball Note: Yov cav v‹e ttSe “Parw‹” or Alttervatte Parawetter
wevv fovvd iv ttSe v@@er rigStt corver of ttSe dialog tto ‹@ecify a logi‹ttic
di‹ttribvttiov v‹ivg differevtt cowbivattiov‹ of @ercevttile‹. For wore
ivforwattiov, ‹ee “Alttervatte @arawetter ‹ett‹” ov @age 126.
Pareto distribution
The Pareto distribution, as shown in Figure h.h5, is widely used
for the investigation of distributions associated with such
empirical phenomena as city population sixes, the occurrence of
natural resources, the sixe of companies, personal incomes,
stock price fluctuations, and error clustering in communication
circuits.
Calculating parameters
There are two standard parameters for the Pareto distribution:
location and shape. The location parameter is the lower bound
for the variable.
After you select the location parameter, you can estimate the
shape parameter. The shape parameter is a number greater
than 0, usually greater than 1. The larger the shape parameter,
the smaller the variance and the thicker the right-tail of the
distribution appears.
To calculate a more exact shape, you can estimate the mean and
use the equation (for shapes greater than 1):
L
mean = ------------
–1
where is the shape parameter and L is the location parameter.
You can use Excel Solver to help you calculate this parameter,
setting the constraint of >1.
fxystal Ball Note: Yov cav v‹e ttSe “Parw‹” or Alttervatte Parawetter
wevv fovvd iv ttSe v@@er rigStt corver of ttSe dialog tto ‹@ecify a Paretto
di‹ttribvttiov v‹ivg differevtt cowbivattiov‹ of @ercevttile‹. For wore
ivforwattiov, ‹ee “Alttervatte @arawetter ‹ett‹” ov @age 126.
Calculating parameters
There are two standard parameters for the extreme value
distribution: mode and scale. The mode parameter is the most
likely value for the variable (the highest point on the probability
distribution).
After you select the mode parameter, you can estimate the scale
parameter. The scale parameter is a number greater than 0. The
larger the scale parameter, the greater the variance.
To calculate a more exact scale, you can estimate the mean and
use the equation:
= -m ean – mode
----------------------------
0.57721
where is the scale parameter.
fxystal Ball Note: Yov cav v‹e ttSe “Parw‹” or Alttervatte Parawetter
wevv fovvd iv ttSe v@@er rigStt corver of ttSe dialog tto ‹@ecify a exttrewe
ualve di‹ttribvttiov v‹ivg differevtt cowbivattiov‹ of @ercevttile‹. For wore
ivforwattiov, ‹ee “Alttervatte @arawetter ‹ett‹” ov @age 126.
Conditions
The three conditions underlying the negative binomial
distribution are:
Example
A manufacturer of jet engine turbines has an order to produce
50 turbines. Since about h0% of the turbines do not make it past
the high-velocity spin test, the manufacturer will actually have to
produce more than 50 turbines.
Truncating distributions
You can change the bounds or limits of each distribution, except
the custom distribution, by adjusting the truncation grabbers.
This “truncates” the distribution. You can also exclude a middle
area of a distribution by crossing over the truncation grabbers to
“white out” the portion you want to exclude.
Caveat
Each adjustment changes the characteristics of the probability
distribution. For example, the truncated normal distribution in
Figure h.h8 will no longer have an actual mean of $100,000 and
standard deviation of $15,000. The values generated for the
truncated distribution will have higher actual percentiles than for
the specified values. Similarly, a normal distribution specified
with 10/90%-tiles and truncated on either side of the distribution
will have actual 10/90%-tiles greater or less than the specified
percentiles.
fxystal Ball Note: SSovivg ttSe weav live of ttSe di‹ttribvttiov i‹ v‹efvl
vSev ttrvvcattivg di‹ttribvttiov‹.
Sampling methods
During each trial of a simulation, Grystal Ball selects a random
value for each assumption in your model. Grystal Ball selects
these values based on the sampling option in the Run > Run
Preferences > Sampling dialog. The two sampling methods are:
Monte Carlo
With Monte Garlo, Grystal Ball generates random values for
each assumption’s probability distribution, that are totally
independent. In other words, the random value selected for one
trial has no effect on the next random value generated.
Latin hypercube
With Latin hypercube sampling, Grystal Ball divides each
assumption’s probability distribution into non-overlapping
segments, each having equal probability, as illustrated below.
The Sample Sixe option (in the Run Preferences > Sampling
dialog) controls the number of segments in the sample. See
“Sampling preferences” on page 165 for more information on
setting sampling method preferences.
Statistic See:
Mean page 116
Median page 116
Mode page 11F
Standard deviation page 11F
Variance page 118
Skewness page 119
Kurtosis page 1h0
Goefficient of variability page 1h0
Range (also range width) page 1h1
Mean standard error page 1h1
Mean
The mean of a set of values is found by adding the values and
dividing their sum by the number of values. The term “average”
usually refers to the mean. For example, 5.h is the mean or
average of 1, S, 6, F, and 9.
Median
The median is the middle value in a set of sorted values. For
example, 6 is the median of 1, S, 6, F, and 9 (recall that the mean
is 5.h).
Mode Mean
Median Median
Mean Mode
fxystal Ball Note: WSev v‹ivg covttivvov‹ di‹ttribvttiov‹, itt i‹ li#ely ttSatt
yovr foreca‹tt vill vott Saue ttvo ualve‹ ttSatt are exacttly ttSe ‹awe. WSev ttSi‹
occvr‹, Jry‹ttal Ball ‹ett‹ ttSe wode tto ‘---’ tto ivdicatte ttSatt ttSe wode i‹
vvdefived.
Standard deviation
The standard deviation is the square root of the variance for a
distribution. Like the variance, it is a measure of dispersion
about the mean and is useful for describing the “average”
deviation. See the description for the variance in the next
section.
s = 10.2 = 3.19
Variance
Variance is a measure of the dispersion, or spread, of a set of
values about the mean. When values are close to the mean, the
variance is small. When values are widely scattered about the
mean, the variance is larger.
fxystal Ball Note: TSe calcvlattiov v‹e‹ v-1 iv‹ttead of v tto correctt for
ttSe factt ttSatt ttSe weav Sa‹ beev calcvlatted frow ‹aw@le ttSe datta, ttSv‹ lo‹ivg
ove degree of freedow. TSi‹ wa#e‹ ttSe ‹aw@le uariavce‹ ‹ligSttly ‹waller
ttSav ttSe uariavce of ttSe evttire @o@vlattiov.
A B
Kurtosis
Kurtosis refers to the peakedness of a distribution. For example,
a distribution of values might be perfectly symmetrical but look
either very “peaked” or very “flat,” as illustrated below:
A B
fxystal Ball Note: I‹ ‹owe @lace‹, Jry‹ttal Ball v‹e‹ a ‹ttavdard referevce
of 0.
Coefficient of variability
The coefficient of variability provides you with a measurement
of how much your forecast values vary relative to the mean
value. Since this statistic is independent of the forecast units,
you can use it to compare the variability of two or more forecasts,
even when the forecast scales differ.
The range is the difference between the largest and the smallest
numbers in a set of values.
Utatistical Note: TSe weav ‹ttavdard error ‹ttatti‹ttic ovly @rouide‹ ivfor-
wattiov ov ttSe accvracy of ttSe weav avd cav be v‹ed a‹ a geveral gvide tto
ttSe accvracy of ttSe ‹iwvlattiov. TSe ‹ttavdard error for ottSer ‹ttatti‹ttic‹, ‹vcS
a‹ wode avd wediav, vill @robably differ frow ttSe weav ‹ttavdard error.
Statistic See:
Gorrelation coefficient page 1hh
Rank correlation page 1hS
Gertainty page 1hŒ
Percentile page 1h5
Correlation coefficient
fxystal Ball Note: Jry‹ttal Ball v‹e‹ rav# correlattiov tto detterwive ttSe
correlattiov coefficievtt of uariable‹. For wore ivforwattiov ov rav#
correlattiov, ‹ee “Rav# correlattiov” ov @age 122.
Rank correlation
A correlation coefficient measures the strength of the linear
relationship between two variables. However, if the two variables
do not have the same probability distributions, they are unlikely
to be related linearly. Under those circumstances, the
correlation coefficient calculated on their raw values has little
meaning.
Certainty
Gertainty describes the percentage of simulation results that fall
within a range. For instance, in the Vision Research example
from Ghapter 1, if your objective was to make a minimum return
of $h,000,000, you might choose a range of $h,000,000 to
+Infinity.
.
Certainty
Uettivg U@ avd
Ruvvivg a
Uiwulatiov
• Defining assumptions
• Using cell references
• Fitting distributions to data In tkis ckapter
• Specifying correlations between
assumptions
• Editing assumptions
• Freexing assumptions
• Defining decision variables
• Defining forecasts
• Editing forecasts
• Selecting and reviewing your
assumptions, forecasts, and decision
variables
• Setting cell preferences
• Setting run preferences
• Running macros during the simulation
• Running/Stopping/Gontinuing/
Resetting a simulation
• Saving and restoring a simulation
• Saving your models
This chapter provides step-by-step
instructions for setting up and running a
simulation in Grystal Ball. As you work
through these instructions, you will learn to
define assumption, forecast, and decision
variable cells, and run a simulation. If you
are a new user, you should read the sections
in order. Later, when you become more
familiar with Grystal Ball, you can refer to
each section independently. After you
complete this chapter, read Ghapter Œ for
information about interpreting simulation
results.
The tools in the first three groups are from the Gell menu. The
tools from the next four groups are from the Run menu.
When you close Grystal Ball, Excel remembers the state of the
toolbar. If the toolbar was showing when you closed Grystal Ball,
it will be visible the next time you open Grystal Ball. If the
toolbar was hidden when you closed Grystal Ball, it will be
hidden the next time you start Grystal Ball.
1. Start 5xcel.
Ç. Select Tools > Add-Ins.
The Add-Ins dialog appears.
Assumption cells contain the values that you are unsure of—the
uncertain independent variables in the problem you are trying
to solve. The assumption cells must contain simple numeric
values, not formulas or text.
Defining assumptions
Grystal Ball uses probability distributions to describe the
uncertainty in your assumption cells. From a gallery of
seventeen distribution types, you choose the ones that best
describe the uncertain variables in the problem you are trying to
solve. When defining an assumption, there are two steps you
must perform: 1) identify a distribution type, and h) enter the
assumption.
has shown a cure rate of around 0.h5 (h5%). These facts are
the conditions surrounding the variable.
Ç. Review tke descriptions of tke probability distributions
discussed in Gkapter Ç.
In Ghapter h, each distribution type is described in detail,
with the conditions underlying the distribution outlined and
with real-life examples. As you review the conditions and
examples for each distribution, look for a distribution that
characterixes the variable in question, as explained in the
following step.
3. Identify tke distribution tkat ckaracterizes tke variable in
question.
For a distribution to characterixe a variable, the conditions of
the distribution must closely approximate the conditions of
the variable. Look at the conditions of the binomial
distribution, as described in Ghapter h:
• For each trial, only two outcomes are possible—success or
failure.
• The trials are independent. What happens on the first
trial does not affect the second trial, and so on.
• The probability of success remains the same from trial to
trial.
Now check the “patients cured” variable in question against
the conditions of the binomial distribution:
• There are two possible outcomes—the patient is either
cured or not cured.
• The trials (100) are independent of each other. What
happens to the first patient does not affect the second
patient.
• The probability of curing a patient 0.h5 (h5%) remains
the same each time a patient is tested.
Since the conditions of the variable match the conditions of
the binomial distribution, the binomial distribution would be
the correct distribution type for the variable in question.
Ghapter h, “Understanding tke Terminology” has a more
detailed discussion of this distribution selection process.
Entering an assumption
After you choose the correct distribution type, you are ready to
enter the assumption.
To enter an assumption:
4. Glick on OK.
A dialog appears, showing the distribution type you chose for
the selected cell (or for the first cell in a range of cells). Figure
S.1 provides an example of the binomial distribution.
Assumption name
Minimum value
Parameters
Maximum value
fxystal Ball Note: If yov vavtt tto cSavge ttSe di‹ttribvttiov tty@e, clic# ov
Gallery tto rettvrv tto ttSe Di‹ttribvttiov Gallery, avd ttSev ‹electt avottSer
di‹ttribvttiov. If yov vavtt tto cavcel avd rettvrv tto ttSe ‹@read‹Seett, clic#
Javcel.
F. Glick on 5nter.
The distribution changes to reflect the values you entered.
8. Glick on OK.
If you selected a range of cells, repeat steps S-8 to define the
assumption for each cell.
Relative referencing
Relative references remember the position of a cell relative to
the cell containing the assumption. For example, an assumption
in cell G6 refers to cell G5. If the assumption in G6 is copied to
cell G9, the relative reference to G5 will then refer to the value
in cell G8. This lets you easily set up a whole row or column of
assumptions, each having similar distributions but slightly
different parameters, by performing just a few steps. An
absolute reference, on the other hand, always refers back to the
originally referenced cell, in this case G5.
Absolute referencing
To indicate an absolute reference, you must use a dollar sign ($)
before the row and the column. For example, to copy the exact
contents of cell G5 into an assumption parameter field, you
would enter the cell reference =$G$5. This causes the value in
cell G5 to be used in the assumption cell parameter field. Later,
if you decide to copy and paste this assumption in the
spreadsheet, the cell references in the parameter field will refer
to the contents of cell G5.
For the Gustom Parameters, you can select to replace any or all
of the standard parameters with any percentile. You will always
have the same number of parameters, either standard or
alternate, for any given distribution. For example, even if you
choose to use custom alternate parameters for a triangular
distribution, you will always have three parameters, either
minimum, likeliest, or maximum, or, for example, 10%-tile,
likeliest, and 99%-tile.
Distribution preferences
All the assumption distribution dialogs have a Prefs button in
the top right corner. This button brings up a menu with the
following options:
fxystal Ball Note: Di‹ttribvttiov fittttivg cav al‹o be v‹ed tto cSec# ttSe
cSaractteri‹ttic‹ of a foreca‹tt cSartt. See “U‹ivg di‹ttribvttiov fittttivg vittS ttSe
ouerlay cSartt” ov @age 212 for wore ivforwattiov.
In Grystal Ball, you use two Fit Distribution dialogs to specify the
source of your data, the distributions to be fitted, and a
goodness-of-fit test. Each goodness-of-fit test is calculated for
every distribution, but only the selected test determines how the
distributions are ranked.
fxystal Ball Note: WSev yov v‹e a file a‹ yovr ‹ovrce of datta, eacS datta
ualve iv ttSe file wv‹tt be ‹e@aratted vittS eittSer a cowwa, a ttab cSaractter,
or av evd-of-live cSaractter.
fxystal Ball Note: TSe ouerlay o@ttiov i‹ ovly ui‹ible ov ttSi‹ dialog vSev
fittttivg a foreca‹tt Si‹ttograw vittS a di‹ttribvttiov ov ttSe ouerlay cSartt.
Comparison chart
You can use the Gomparison Ghart dialog to visually compare
the quality of the fits or to view the goodness-of-fit statistics. Use
the Gomparison Ghart features as described below:
In our Test Data example, the Weibull distribution had the best
fit of any distribution using the chi-square fit test. As you can see
in Figure S.5, the chi-square p-value is 0.8h15, which indicates a
good fit. The parameters that were calculated for the Weibull
distribution are displayed in the Gomparison Ghart legend.
fxystal Ball Note: TSe goodve‹‹-of-fitt ‹ttatti‹ttic ttSatt Jry‹ttal Ball v‹ed tto
rav# ttSe di‹ttribvttiov‹ a@@ear‹ iv blve.
Select the Difference option by pressing the i key while you are
in the chart dialog or checking the option in the Distribution
Type area of the Ghart Preferences dialog, as shown below. You
can use this option with all three distribution types.
fxystal Ball Note: Jry‹ttal Ball v‹e‹ rav# correlattiov tto calcvlatte
correlattiov coefficievtt‹. For wore ivforwattiov ov Sov Jry‹ttal Ball
calcvlatte‹ rav# correlattiov coefficievtt‹, ‹ee “Rav# correlattiov” ov
@age 122.
fxystal Ball Note: WSev v‹ivg dyvawic cell referevcivg, yov cavvott
correlatte ttSe a‹‹vw@ttiov‹ ‹ivce ttSe ‹Sa@e of ttSe di‹ttribvttiov i‹
vv@redicttable.
Utatistical Note: WSicS of ttSe @air yov ‹electt fir‹tt i‹ vott iw@orttavtt, ‹ivce
ttSe correlattiov coefficievtt i‹ bidirecttioval.
3. Glick on Gorrelate.
The Gorrelate dialog appears, as in Figure S.8.
fxystal Ball Note: TSe ttvo cell ravge‹ do vott vece‹‹arily Saue tto Saue
ttSe ‹awe diwev‹iov‹, bvtt ttSey wv‹tt covttaiv ttSe ‹awe vvwber of ualve cell‹.
TSe cell ravge‹ are read iv a rov-by-rov fa‹Siov.
fxystal Ball Note: For Jry‹ttal Ball tto di‹@lay ttSe ‹aw@le correlattiov
cSartt, ravdow ualve‹ are acttvally @rodvced for bottS of ttSe a‹‹vw@ttiov‹
avd ttSev correlatted tto ttSe ‹@ecified coefficievtt. TSi‹ @roce‹‹ tta#e‹ ttiwe,
de@evdivg ov ttSe ‹ise of ttSe ravdow ‹aw@le‹ avd ttSe tty@e‹ of di‹ttribvttiov‹.
Yov cav ttvrv ttSe @roce‹‹ off by vvcSec#ivg ttSe 0v o@ttiov iv ttSe v@@er
rigStt corver of ttSe dialog.
Freezing assumptions
The Freexe Assumptions command lets you exclude or “freexe”
certain assumptions from a simulation. The Freexe Assumptions
command gives you the ability to:
0@tQuest Note: Yov al‹o v‹e deci‹iov uariable‹ vittS 0@ttQve‹tt, auailable
vittS Jry‹ttal Ball 2000, Profe‹‹ioval Edittiov.
fxystal Ball Note: TSere i‹ vo ab‹olvtte liwitt tto ttSe vvwber of deci‹iov
uariable‹ yov cav defive @er vor#‹Seett. A‹ a rvle of ttSvwb, yov ‹Sovld
liwitt yovr cowbived Jry‹ttal Ball datta elewevtt‹ (a‹‹vw@ttiov‹, foreca‹tt‹,
deci‹iov uariable‹, avd correlattiov‹) tto S00 @er vor#‹Seett (i.e., A+F+J
+D< S00) for @erforwavce rea‹ov‹.
The Define Decision Variable dialog has the following fields and
options:
Defining forecasts
After you define the assumption cells and decision variables, you
are ready to select and define forecast cells. Forecast cells usually
contain formulas that refer to one or more assumption and
decision variable cells. The forecast cells combine cells in your
model to produce the results you need.
fxystal Ball Note: TSere i‹ vo ab‹olvtte liwitt tto ttSe vvwber of foreca‹tt‹
yov cav defive @er vor#‹Seett. A‹ a rvle of ttSvwb, yov ‹Sovld liwitt yovr
cowbived Jry‹ttal Ball datta elewevtt‹ (a‹‹vw@ttiov‹, foreca‹tt‹, deci‹iov
uariable‹, avd correlattiov‹) tto S00 @er vor#‹Seett (i.e., A+F+J +D<
S00) for @erforwavce rea‹ov‹.
The Define Forecast dialog has the following fields and options:
fxystal Ball Note: See “Jovfidevce ivtterual‹” ov @age 11S for wore
ivforwattiov abovtt Sov ttSe ab‹olvtte avd relattiue @reci‹iov relatte tto ttSe
covfidevce ivtterual.
fxystal Ball Note: For wore ivforwattiov ov ‹ettttivg ttSe Preci‹iov Jovttrol
o@ttiov avd ‹ettttivg‹, ‹ee “Preci‹iov Jovttrol” ov @age 242.
łxcel Note: U‹ivg ttSe Excel cvtt, co@y, avd @a‹tte cowwavd‹ ovly co@ie‹
ttSe cell ualve avd attttribvtte‹, ivclvdivg cell color or @atttterv. TSe Excel
cowwavd‹ do vott co@y ttSe Jry‹ttal Ball datta, euev ttSovgS ttSey a@@ear tto
‹ivce ttSe cell color‹ co@y. To co@y Excel datta avd Jry‹ttal Ball datta, yov
wv‹tt v‹e ttSe Excel editt cowwavd‹ avd ttSev v‹e ttSe Jry‹ttal Ball editt
cowwavd‹ tto co@y ttSe Jry‹ttal Ball datta.
fxystal Ball Note: Ma#e ‹vre ttSe ravge ovly covttaiv‹ ove tty@e of Jry‹ttal
Ball datta, ‹vcS a‹ a‹‹vw@ttiov‹, deci‹iov uariable‹, or foreca‹tt‹. If yovr
ravge covttaiv‹ wixed Jry‹ttal Ball datta, Jry‹ttal Ball ovly co@ie‹ ttSe fir‹tt
datta tty@e iv ttSe ravge.
fxystal Ball Note: If ttSere are wore co@ied Jry‹ttal Ball ittew‹ iv ttSe
cli@board area ttSav cell‹ iv ttSe ‹electtiov, ttSe rewaivivg Jry‹ttal Ball ittew‹
are igvored. If ttSere are wore cell‹ iv ttSe ‹electtiov ttSav Jry‹ttal Ball ittew‹
iv ttSe cli@board area, ttSe Jry‹ttal Ball ittew‹ iv ttSe cli@board area are
rev‹ed, ‹ttarttivg vittS ttSe fir‹tt ove iv ttSe li‹tt. If co@ied Jry‹ttal Ball datta
rewaiv iv ttSe cli@board, ttSe cli@board ew@ttie‹ vSev yov rvv a ‹iwvlattiov.
fxystal Ball Note: Ma#e ‹vre ttSe ravge ovly covttaiv‹ ove tty@e of Jry‹ttal
Ball datta, ‹vcS a‹ a‹‹vw@ttiov‹, deci‹iov uariable‹, or foreca‹tt‹. If yovr
ravge covttaiv‹ wixed Jry‹ttal Ball datta, Jry‹ttal Ball ovly clear‹ ttSe fir‹tt
datta tty@e iv ttSe ravge.
1. Select eitker:
• Gell > Select All Assumptions
• Gell > Select All Decisions
• Gell > Select All Forecasts
Ç. Select Gell > Glear Data.
Grystal Ball clears the Grystal Ball data from all the selected
cells in the active spreadsheets.
fxystal Ball Note: Jry‹ttal Ball ovly v@datte‹ cell votte‹ vSev yov defive
or redefive av a‹‹vw@ttiov, deci‹iov uariable, or foreca‹tt.
• Trials
• Sampling
• Speed
• Macros
• Options
• Turbo
To change any preferences:
Trials preferences
fxystal Ball Note: For wore ivforwattiov ov Sov Preci‹iov Jovttrol v‹e‹
ttSe Jovfidevce Leuel, ‹ee JSa@tter S, “Maximizing Your Use of
Grystal Ball” avd A@@evdix B, “Eqvattiov‹ avd MettSod‹”.
Sampling preferences
Speed preferences
Macros preferences
The Run Preferences Macros dialog lets you select command
macros to run before the simulation begins, during a simulation
(either before or after each spreadsheet recalculation), or after
the simulation ends.
fxystal Ball Note: Yov cavvott call Jry‹ttal Ball wacro‹ (or wacro‹
covttaivivg Jry‹ttal Ball wacro‹) frow ttSi‹ dialog.
Options preferences
łxcel Note: EacS foreca‹tt vivdov Sa‹ itt‹ ovv ‹ett of Editt, Preferevce‹,
Viev, Rvv, avd Hel@ wevv‹ vittS ttSe Rvv wevv dv@licattivg ttSe Rvv
wevv ov Excel’‹ wevv bar. Yov cav v‹e vSicSeuer wevv bar i‹ ttSe wo‹tt
covuevievtt. Jlic#ivg ov ttSe Excel wevv bar brivg‹ Excel forvard avd
wa#e‹ ttSe foreca‹tt vivdov‹ di‹a@@ear. If ttSi‹ Sa@@ev‹, yov cav qvic#ly
brivg ttSe foreca‹tt vivdov‹ bac# tto ttSe frovtt by @re‹‹ivg <Altt>-<Tab>.
Running/Stopping/Continuing/Resetting
As you run a simulation, you can stop, continue, or reset at any
time. Grystal Ball runs trials automatically, but you also have the
option of observing each individual trial to see how the values
change.
To run a simulation:
fxystal Ball Note: TSe Tottal Trial‹ covvtter iv ttSe lover leftt corver of
Excel’‹ ‹ttattv‹ bar ‹Sov‹ ttSe ‹iwvlattiov’‹ @rogre‹‹.
Ç. To stop a simulation, Select Run > Stop (use tke Run menu
on tke front-most forecast window).
fxystal Ball Note: Sivgle Stte@ doe‹ vott creatte or v@datte foreca‹tt
vivdov‹; itt ovly @rodvce‹ ualve‹ for ttSe a‹‹vw@ttiov cell‹ avd recalcvlatte‹
ttSe ‹@read‹Seett.
Closing forecasts
You can close the forecast windows at any time and the
simulation will continue. Running a simulation with the forecast
windows closed decreases the time required to run the
simulation.
Managing windows
While the simulation is running, you can use the Run > Forecast
Windows command to open or close all the forecast windows,
open or close selected forecast windows, or cascade the forecast
windows.
• You can run a simulation, set the chart settings the way you
want them, save your simulation, and go on to other work.
You can then, at a moment’s notice, call up the forecast
windows and show them to someone else without running the
whole simulation again.
• You can open a saved run and graph its results in a different
way, or use the Extract Data and Greate Report features.
• If you have a simulation that takes a particularly long time to
run, you can stop the simulation, save it to disk, and continue
it. That way, should the simulation be interrupted (by a
power failure, for instance) you can restore the simulation
from the last time you saved it and continue processing as if
nothing had happened.
• You can copy a saved simulation and its spreadsheets to a
floppy disk and open them on another computer where
Grystal Ball is installed.
Grystal Ball checks to make sure that all the sheets in the saved
run have been saved to disk. If you have created a new sheet and
have added assumptions or forecasts to it, Grystal Ball asks you
to save it first.
Grystal Ball also records which spreadsheet was active when you
saved the run. Before you save your run, you can click on the
most important spreadsheet to bring it forward. Then when you
restore the run, Grystal Ball will bring that sheet to the front.
fxystal Ball Note: Sauivg a rvv doe‹ vott ‹aue ‹ev‹ittiuitty datta. Yov cav
ovly ‹aue @artt of ttSe ‹ev‹ittiuitty ivforwattiov by creattivg a re@ortt vittS ttSe
‹ev‹ittiuitty cSartt ivclvded avd ttSev ‹auivg ttSe re@ortt.
Once you have saved the simulation you can continue working
with Grystal Ball.
The file list contains only files that have the RUN file type. If
you try to open a file that is not a Grystal Ball saved run, or if
Grystal Ball recognixes that a saved run file has somehow been
damaged, you will not be able to open the file, and a dialog
appears containing the message, “Sorry, that file is not a Grystal
Ball saved run.”
This simply means that Grystal Ball did not recognixe the
contents of the file. Glick on OK to continue.
Grystal Ball opens all the spreadsheets associated with the saved
run file if they are not already open.
If you are restoring a large run file with many spreadsheets and
forecasts, you might get an “out of memory error.” Gheck your
computer to determine the amount of free memory available,
then release it by quitting other applications. Gheck free
memory again before retrying your run file.
Ivtex@xetivg the
Results
• Understanding the forecast chart
In tkis ckapter
• Determining the certainty level
• Focusing on the display range
• Gustomixing the forecast chart
• Interpreting the statistics
• Understanding and using the overlay
chart
• Understanding and using the trend
chart
• Understanding sensitivity and using the
sensitivity chart
• Ghanging chart patterns and colors
• Greating reports
• Extracting data
The highest value on the probability scale to the left of the chart
is the probability for the mode. You can estimate the probability
for other points on the forecast chart using this probability scale.
In the example below, the mode (on the extreme left of the
distribution) has a frequency of 19, meaning that there are 19
values in the interval expressed by that column. The mode has
a probability of 0.0S8 (or S.8%), meaning that there is a S.8%
chance of a value falling within this interval.
Number of trials
Outliers
(outlying values)
Certainty grabbers
Display range
Certainty level
The forecast chart also shows the certainty range for the
forecast. In Grystal Ball, the certainty range includes all values
between the certainty grabbers. In the next section, you will
learn how to change the certainty range.
fxystal Ball Note: WSev ttSe certtaivtty grabber‹ are att -ivfivitty avd
+ivfivitty, euery foreca‹tt ualve i‹ ivclvded iv ttSe certtaivtty ravge regardle‹‹
of ttSe ‹ise of ttSe di‹@lay ravge.
1. Make sure tke forecast ckart you want to use is tke front
window.
Ç. Move tke certainty grabbers on tke forecast ckart.
The range minimum field shows the value that corresponds
to the position of the left certainty grabber; the range
maximum field shows the value that corresponds to the
position of the right certainty grabber. The Gertainty field
shows the certainty level for the area between the certainty
grabbers. Grystal Ball shades the columns outside the
certainty grabbers a different color to show that those values
have been excluded, as illustrated in Figure Œ.h.
The Net Profit forecast chart in Figure Œ.h is the same as the
example preceding it, except that the certainty grabbers have
been moved. The range minimum shows $0.0 and the range
maximum shows $h0.0. The key statistic is the certainty level of
6Œ.h0% in the Gertainty field. By moving the certainty grabbers,
you have changed the certainty range. Grystal Ball compares the
number of values lying within the certainty range to the number
of values in the entire range—from negative $15 million to
positive $S5 million—to recalculate the certainty level. With a
certainty level of 6Œ.h0%, you can be 6Œ.h% confident of making
a net profit between $0 and $h0 million.
You also can cross over the certainty grabbers to determine the
certainty level for the two ends.
You can determine the certainty level for specific value ranges at
any time, either during or after the simulation.
The forecast chart redraws with the new display range defined
by the standard deviations you entered. If your statistics
preferences are set to base the statistics on the display range, the
number of trials changes to correspond to the number of values
within the new display range. The number of total trials for the
forecast remains the same.
fxystal Ball Note: To ‹ee ttSe evttire ravge of foreca‹tt ualve‹ (100%),
v‹e ttSe defavltt ualve‹ iv ttSe Miv avd Max field‹—vegattiue ivfivitty avd
@o‹ittiue ivfivitty. If ttSe‹e ualve‹ do vott a@@ear iv ttSe field‹:
6. Glick on OK.
The forecast chart appears again, reflecting the values you
entered. Figure Œ.5 shows the Net Profit forecast chart with
display range endpoints of $h0.0 and $S5.0.
fxystal Ball Note: Aftter Jry‹ttal Ball geveratte‹ ttSe vev di‹@lay ravge,
ttSe Jerttaivtty Grabber o@ttiov avttowattically reuertt‹ bac# tto ttSe Fixed
Evd@oivtt‹ o@ttiov, ttSe defavltt ‹ettttivg.
For some of the options, you can use hot keys to bypass the Ghart
Preferences dialog. The following sections describe these hot
keys. They are also listed in Appendix G, “Keyboard
Gommands.”
frequency distribution
Shows the number or frequency of values
occurring in a given interval. This is the
default distribution type.
cumulative distribution
Shows the number or proportion
(percentage) of values less than or equal to
a given amount.
reverse cumulative distribution
Shows the number or proportion
(percentage) of values greater than or equal
to a given amount.
To change the forecast distribution type:
fxystal Ball Note: Yov cav v‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe JSartt
Preferevce‹ dialog. EacS ttiwe yov @re‹‹ d, ttSe freqvevcy di‹ttribvttiov
cSavge‹ frow a freqvevcy di‹ttribvttiov tto a cvwvlattiue di‹ttribvttiov tto a
reuer‹e cvwvlattiue di‹ttribvttiov avd bac# tto a freqvevcy di‹ttribvttiov.
Changing groups
The forecast values are always grouped internally into S00
group intervals for small charts and Œ50 groups for large charts.
To view the data with less detail, use the Groups option to select
fewer group intervals. Working with fewer group intervals might
give you a better overall feel for the results.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe JSartt
Preferevce‹ dialog. Pre‹‹ g. TSe vvwber of grov@‹ decrea‹e‹ frow 200 tto
1S, avd ttSev ¡vw@‹ bac# v@ tto 200 (4S0 tto 2S for large cSartt‹).
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe JSartt
Preferevce‹ dialog. Pre‹‹ l tto ttoggle ttSe Sorisovttal grid live‹ ov avd off.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe JSartt
Preferevce‹ dialog. Pre‹‹ w tto ttvrv ttSe Meav Live o@ttiov ov avd off.
fxystal Ball Note: Yov wv‹tt di‹able ttSe U‹e Uvderlyivg Jell Forwatt
cSec# box tto ‹electt ove of ttSe ottSer o@ttiov‹.
Statistics view
You can display a full set of descriptive statistics for a simulation
in the forecast window by selecting View > Statistics.
Percentiles view
You can display percentile information in 10% increments in the
forecast chart by selecting the View > Percentiles.
fxystal Ball Note: WSev ttSe Preci‹iov Jovttrol feattvre i‹ vott ov, or if
ttSe foreca‹tt doe‹ vott Saue avy Preci‹iov Jovttrol o@ttiov‹ ‹ett, ttSe Preci‹iov
colvwv doe‹v’tt a@@ear iv ttSe @ercevttile uiev.
After the simulation is stopped, you can also use the overlay
chart to fit a standard distribution to any single forecast. This
process is similar to the distribution fitting feature described in
Ghapter S, except that the fit is applied to forecasts, not
historical data.
fxystal Ball Note: Yov cav ovly v‹e ttSe ouerlay cSartt aftter a ‹iwvlattiov
i‹ ‹tto@@ed.
fxystal Ball Note: Siwilar tto ‹tte@‹ 10 avd 11, #eyboard eqviualevtt‹ for
qvic#ly cSavgivg eacS of ttSe ouerlay cSartt @referevce‹ cav be fovvd vvder
“0uerlay/Jow@ari‹ov cSartt Sott #ey‹” ov @age 248.
11. Press tke “t” key until tke outline ckart type appears.
Glossaxy Texw: The chart type changes to show all three distributions
Dominant— completely, as in Figure Œ.15. This chart type most clearly
A relationship between demonstrates that the third distribution, Material S
distributions in which one
distribution's values for all Reliability, dominates the other distributions. We can
percentile levels are higher conclude that Material S has the highest reliability and is
than another's.
superior to the other two since a greater proportion of its
distribution is to the right of 1.00.
Edit Distribution
Appears after a you add a distribution to the
overlay chart. Use this button to change or
remove the overlaid distribution.
Add Data Adds data from a text file to the overlay
chart. The text file must contain only
numbers separated by tabs and/or line
breaks. Any numbers proceeded by a special
character (such as $) are ignored.
fxystal Ball Note: TSe ttrevd cSartt i‹ ovly auailable aftter a ‹iwvlattiov
i‹ cow@letted avd i‹ ovly weavivgfvl vSev yov Saue wvltti@le foreca‹tt‹ ttSatt
are relatted tto eacS ottSer.
Choosing forecasts
Use the Forecasts option to select the forecasts to include on the
trend chart. You can select all forecasts, selected forecasts, or just
those forecast charts that are visible.
fxystal Ball Note: Swaller bavd‹ alvay‹ a@@ear ov tto@ of larger bavd‹.
TSi‹ ob‹cvre‹ ttSe larger bavd‹. Do vott covfv‹e ttSe acttval vidttS of a bavd
vittS ttSe @orttiov ttSatt i‹ ui‹ible. Yov cav di‹@lay ttSe ttrve ‹ise of a bavd v‹ivg
ttSe Jerttaivtty Bavd‹ o@ttiov iv ttSe Trevd Preferevce‹ dialog. TSi‹ o@ttiov
lett‹ yov di‹@lay ttSe bavd‹ ove att a ttiwe ov ttSe ttrevd cSartt.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe Trevd
Preferevce‹ dialog. Pre‹‹ d. TSe @lacewevtt of ttSe bavd‹ cSavge‹ frow
cevttered tto lover tto SigSer avd bac# tto cevttered.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe Trevd
Preferevce‹ dialog. Pre‹‹ ƒ tto ttoggle ttSe foreca‹tt vawe‹ bettveev Sorisovttal
avd uerttical forwatt‹.
fxystal Ball Note: TSe vvwber forwatt for ttSe axi‹ ualve‹ i‹ tta#ev frow
ttSe fir‹tt foreca‹tt ttSatt a@@ear‹ ov ttSe ttrevd cSartt.
Ç. 5itker:
• To let Grystal Ball determine the minimum and
maximum values to use for the axis endpoints, select
Relative.
• To use xero for the bottom endpoint instead of the
minimum value, select Zero Based.
• To use actual values for the minimum or maximum
endpoints or specify the number of divisions on the axis
chart, select Minimum and then enter the values in the
Minimum, Maximum, and Divisions fields.
By changing the minimum or maximum endpoint values,
you can xoom in or out on selected ranges of the trend chart.
3. Glick on OK.
The trend chart appears with the new endpoints and the new
axis divisions.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe Trevd
Preferevce‹ dialog. Pre‹‹ v. TSe ualve axi‹ evd@oivtt‹ cSavge frow relattiue
tto wiviwvw tto waxiwvw tto sero ba‹ed avd bac# tto relattiue.
fxystal Ball Note: U‹e a Jry‹ttal Ball Sott #ey tto by@a‹‹ ttSe Trevd
Preferevce‹ dialog. Pre‹‹ l. TSe grid live‹ cSavge frow Sorisovttal tto
uerttical tto Sorisovttal avd uerttical tto vo grid live‹ avd bac# tto Sorisovttal.
Glossaxy Texw: You then have to calculate how the uncertainty of your
model sensitivity— assumption cells affect the forecast cell to compute a final
The overall effect that a answer. The uncertainty of an assumption depends on the type
change in an assumption cell
produces in a forecast cell. of distribution and the parameters of that distribution.
This effect is solely
determined by the formulas
in the spreadsheet model. If both assumptions change by the same amount, such as
increasing by 5, as in the above example, then the uncertainty of
the assumption would not change the overall sensitivity of the
forecast to the two assumptions. However, if they change by
different amounts, you must take into account both the model
sensitivity and the uncertainty. At some point, the uncertainty
for Assumh might overcome the model sensitivity and result in
an overall sensitivity greater than that of Assum1.
6. Glick on OK.
F. Run a simulation.
8. Stop tke simulation.
9. Select Run > Open Sensitivity Gkart.
The Sensitivity Ghart dialog appears, displaying the
sensitivity rankings of the assumptions in your simulation, as
in Figure Œ.hS.
Caveats
The sensitivity chart feature has several limitations you should
be aware of:
The Tornado Ghart tool can help you discover if any of your
assumptions have non-monotonic relationships with the
target forecast. For more information, see “Tornado Ghart
tool” on page h89.
Target Forecast
Lets you select which forecast cell is the
target of the sensitivity analysis.
Measure By Defines whether Grystal Ball shows the
sensitivities as rank correlations or
contributions to variance. Rank correlations
range from -1 to +1 and indicate both
magnitude and direction. Gontributions to
variance range from 0% to 100% and
indicate relative importance.
Include Selects which types of Grystal Ball data to
include in the rank against the target
forecast: assumptions, forecasts, or both (by
selecting both Assumptions and Other
Forecasts).
fxystal Ball Note: TSe @atttterv of ttSe correlattiov cSartt i‹ fixed. Hoveuer,
yov cav cSavge ttSe color of ttSe correlattiov cSartt by @re‹‹ivg avd Soldivg
<SSiftt>, ttSev clic#ivg iv ttSe correlattiov cSartt.
Creating reports
You can create a report for your simulation using the Report
command. Any or all of the following items can be included in
the report using the Report dialog:
• Overlay charts
• Trend charts
• Sensitivity charts
• Forecast summaries
• Forecast statistics
• Forecast charts
• Forecast percentiles
• Forecast frequency counts
• Assumption parameters
• Assumption charts
• Decision variables
fxystal Ball Note: Re@ortt‹ are ovly auailable aftter yov rvv a ‹iwvlattiov.
To create a report:
fxystal Ball Note: To ‹v@@re‹‹ ttSe ivittial re@ortt Seader avd avy cell
referevce‹ ttSatt occvr iv ttSe re@ortt, Sold dovv ttSe <SSiftt> #ey vSev
‹electtivg Rvv > Re@ortt.
Report sections
Select the different report sections you want to include in the
report. The Report Sections options are:
Selecting forecasts
If you checked the Forecasts option in Report Sections, select the
forecasts to include in the report by choosing one of three
options:
Selecting assumptions
If you checked the Assumptions option in Reports Sections,
select the Assumptions to include in the report by choosing one
of two options:
Percentiles
The Percentiles options for the forecast report show the
certainty of achieving a value below a particular threshold. For
example, if a report was printed for the Net Profit forecast
discussed in the Vision Research tutorial in Ghapter 1, the
Percentiles section might show that you could be 80% certain of
achieving a net profit or loss below the threshold value of $1F.S
million.
fxystal Ball Note: Yov cav reuer‹e ttSe weavivg of ttSe @ercevttile‹ by
cSavgivg ttSe ‹ettttivg iv ttSe Sttatti‹ttic‹ Preferevce‹ dialog. For wore
ivforwattiov, ‹ee “JSavgivg Sov ‹ttatti‹ttic‹ are calcvlatted” ov @age 202.
Charts
When including either forecast or assumption charts in your
report, you can display the charts as color or black and white.
This can improve the results on certain printers and monitors.
Extracting data
Grystal Ball lets you extract forecast information generated by
the simulation. Grystal Ball places the extracted data in a new
workbook.
fxystal Ball Note: Yov cav ovly exttractt datta aftter yov rvv a ‹iwvlattiov.
To extract data:
fxystal Ball Note: Yov cav reuer‹e ttSe weavivg of ttSe @ercevttile‹ by
cSavgivg ttSe ‹ettttivg iv ttSe Sttatti‹ttic‹ Preferevce‹ dialog. For wore
ivforwattiov, ‹ee “JSavgivg Sov ‹ttatti‹ttic‹ are calcvlatted” ov @age 202.
Naxiwisivg 7oux
Use oƒ fxystal Ball
All Grystal Ball users
In tkis ckapter
• Simulation accuracy
• Memory use
• Simulation speed
• Gorrelated assumptions
• Sensitivity analysis
5xcel users
• Gustomixing reports and data layouts
This chapter contains information that
helps you get the most out of Grystal Ball,
whether by using different Grystal Ball
features or by the way you build your
models.
Getting the most out of Crystal Ball
This chapter contains information that you can use to improve
the overall performance of Grystal Ball. These improvements
occur in terms of the accuracy of your model or speed of the
results.
Simulation accuracy
The accuracy of your simulation may be controlled in three
ways:
Precision Control
The Precision Gontrol feature lets you set how precise you want
one of three forecast statistics to be. Grystal Ball runs the
simulation until those statistics reach the required precision as
determined by calculating confidence intervals.
fxystal Ball Note: See “Jovfidevce ivtterual‹” ov @age 11S for wore
ivforwattiov abovtt Sov Jry‹ttal Ball calcvlatte‹ covfidevce ivtterual‹.
• Gorrelation
• Latin hypercube sampling
• Sensitivity analysis
Simulation speed
Monte Garlo simulations can be very time-consuming. You can
change a number of factors that affect the speed of simulations.
The factors are listed below in order of importance:
Memory use
Monte Garlo simulations can be very memory-intensive. Your
computer’s random access memory (RAM) must contain, at the
same time: part of the operating system, your spreadsheet
program, Grystal Ball, your spreadsheet files, the assumption
and forecast definitions, and the trials of the simulation. So, it is
important that you have a basic understanding of how Grystal
Ball uses RAM.
Sensitivity analysis
The sensitivity feature in Grystal Ball has one minor limitation.
If you continue a stopped simulation, Grystal Ball clears the
sensitivity data and computes from the continuation point.
Therefore, if you need to analyxe a spreadsheet model’s
sensitivity to its input parameters, you should run the
entire simulation without interruption.
Excel tips
This section contains ways to improve the value of Grystal Ball for
various versions of Excel.
The Grystal Ball folder has two files named Report and Data
that you can use to create spreadsheets. Since the files are just
Excel templates, you can easily change them to suit your needs.
For example, you might decide to change the default font or
resixe the margins and column widths.
• Batch Fit
• Bootstrap
• Gorrelation Matrix
• Decision Table
• Tornado Ghart
• Two-dimensional Simulation
For each tool, there is a general
description, an introduction tutorial, and a
description of all dialogs, fields, and
options.
Overview
Grystal Ball tools are Visual Basic programs that extend the
functionality of Grystal Ball. They are:
your model. This tool can also give you a table of goodness-of-
fit statistics for each distribution, so you can compare the fit of
the best distribution to the fits of the other distributions.
To use the Batch Fit tool, your data must be contiguous (in
adjacent rows or columns) in either rows or columns.
fxystal Ball Note: TSi‹ fvvcttiov co@ie‹ Jry‹ttal Ball datta ovly, vott ttSe
cell ualve.
When the batch fit tool runs, it fits each column of data to each
continuous distribution. For each fit of a distribution to a set of
data, the tool calculates the indicated goodness-of-fit test for
each distribution. The distribution with the best fit is placed into
to create an assumption cell that you can copy to the
appropriate location in your model.
Available Distributions
Lists all the continuous probability
distributions that you can fit to data series,
but that are not selected.
By default, all the probability distributions
are selected.
Selected Distributions
Lists all the probability distributions that
you selected to fit to all the data series. For
each selected distribution, the tool will fit
the distribution to each selected data series
and calculate the goodness-of-fit statistic.
Top Moves the highlighted distributions to the
top of the Selected Distributions list, which
can affect the output order of the
distributions.
Up Moves the highlighted distributions up one
position in the Selected Distributions list,
which can affect the output order of the
distributions.
Down Moves the highlighted distributions down
one position in the Selected Distributions
list, which can affect the output order of the
distributions.
Bottom Moves the highlighted distributions to the
bottom of the Selected Distributions list,
which can affect the output order of the
distributions.
Next Opens the Select Input Options (Step h of S)
dialog.
Output Location
Lets you select whether to output the results
to a new workbook or in the active
workbook, starting at the indicated cell.
Format Output Uses any special cell formatting for your
data in your output.
Output Orientation
Sets whether to put your output in rows or
columns.
Show Table Of Goodness-of-fit Statistics
Outputs the selected goodness-of-fit
statistic for each distribution.
Back Returns to the Select Input Options (Step h
of S) dialog.
Start Starts the tool, automatically fitting
distributions to your data and creating
output of the assumptions and statistics.
Bootstrap tool
Bootstrap is a simple technique that estimates the reliability or
accuracy of forecast statistics or other sample data. Glassical
methods used in the past relied on mathematical formulas to
describe the accuracy of sample statistics. These methods
assume that the distribution of a sample statistic approaches a
normal distribution, making the calculation of the statistic’s
standard error or confidence interval relatively easy. However,
when a statistic’s sampling distribution is not normally
distributed or easily found, these classical methods are difficult
to use or are invalid.
One-simulation method
Simulates the model data once (creating the
original sample), and then repeatedly
resamples those simulation trials (the
Glossaxy Texw: original sample values). Resampling creates
with replacement— a new sample from the original sample witk
Returns the selected value to replacement. It then creates a distribution
the sample before selecting
another value, letting the of the statistics calculated from each
selector possibly reselect the resample.
same value.
This method assumes only that the original
simulation data accurately portrays the true
forecast distribution, which is likely if the
sample is large enough. This method isn’t as
accurate as the multiple-simulation
method, but it takes significantly less time to
run.
Multiple-simulation method
Repeatedly simulates the model, and then
creates a distribution of the statistics from
each simulation.
This method is more accurate than the one-
simulation method, but it might take a
prohibitive amount of time.
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Bootstrap example
In the Grystal Ball Examples folder there is a Futura
Apartments.xls spreadsheet you can use to experiment with the
Bootstrap tool. This spreadsheet model forecasts the profit and
loss for an apartment complex.
• Mean
• Median
• Standard deviation
• Variance
• Skewness
• Kurtosis
• Goefficient of variability
When you use the multiple-simulation method, the tool also
displays sampling distributions for these statistics:
• Range minimum
• Range maximum
• Range width
The statistic view further lets you analyxe the statistics’ sampling
distribution. If the standard deviation (standard error of the
statistic) or coefficient of variability is very large, the statistic
might not be reliable and might require more trials. This
example has a relatively low standard error and coefficient of
variability, so the forecast mean is an accurate estimate of the
actual mean.
You can also use the Bootstrap tool to analyxe the distribution of
percentiles, but you should run at least 1,000 bootstrap samples
and 1,000 trials per sample to obtain good sampling distributions
for these statistics.1
Bootstrap dialogs
Specify Target (Step 1 Of 3) dialog
The Specify Target dialog lets you analyxe the statistics of a
specified forecast, cell, or cell range.
This first options dialog has the following options, fields, and
buttons:
Bootstrap Method
Selects whether to use the one-simulation or
multiple-simulation bootstrap method. For
more information on these two methods,
see “Bootstrap tool” on page h6Œ.
The default is the one-simulation method.
Analyxe Distributions Of
Selects whether to analyxe distributions of
statistics or percentiles. If you select
Percentiles, you must complete the
Percentiles options.
The default is Statistics.
Percentiles Selects which target percentiles to analyxe.
You can select either: deciles (the 10, h0, S0,
Œ0, 50, 60, F0, 80, and 90 percentiles); h.5,
5, 50, 90, and 9F.5 percentiles; or a custom
list of percentiles you enter in the field. A
custom list can have up to 10 percentiles
(between 0 and 100, exclusive) separated by
commas.
Back Opens the Specify Target dialog for
specifying a target.
Next Opens the next dialog for defining more
tool options.
This second options dialog has the following options, fields, and
buttons.
Sample Gontrol
Sets the number of bootstrap samples and
the number of trials per sample.
The default bootstrap samples is h00, and
the default number of trials is the number
set in the Grystal Ball Run Preferences
dialog.
While Running Lets you select what forecasts to show while
you are running the tool. You can view all
the defined forecasts, only the target
forecast, or none of the forecasts.
Back Opens the previous dialog for defining
other tool options.
Start Runs the Bootstrap tool.
Correlations
When the values of two variables depend on each other in any
way, you should correlate them to increase the accuracy of your
simulation's forecast results.
positive correlation
Indicates that two assumptions increase or
decrease together. The price of gasoline and
shipping costs increase and decrease
together.
negative correlation
Indicates that an increase in one
assumption results in a decrease in the other
assumption. The more items you buy from a
particular vendor, the lower the unit cost.
The correlation coefficient range is -1 to 1, where 0 indicates no
correlation. The closer the coefficient is to ±1, the stronger the
relationship between the assumptions. You should never use a
coefficient of ±1; represent relationships this closely correlated
with formulas in the spreadsheet model.
Correlation matrix
In Grystal Ball, you enter correlations one at a time using the
Gorrelation dialog. Instead of manually entering the
correlations this way, you can use the Gorrelation Matrix tool to
define a matrix of correlations between assumptions in one
simple step. This saves time and effort when building your
spreadsheet model, especially for models with many correlated
assumptions.
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Available Assumptions
Lists all the assumptions defined in the
active workbook. To move an assumption
into the Selected Assumptions list, either
double-click on an assumption or select an
assumption and click on >>. You can also
make an extended selection using the
<Shift> or <Gtrl> keys.
By default, all assumptions start in the
Available Assumptions list.
Selected Assumptions
Lists the assumptions selected for inclusion
in the matrix. To move an assumption into
the Available Assumption list, either
double-click on an assumption or select an
assumption and click on <<. You can also
make an extended selection using the
<Shift> or <Gtrl> keys.
By default, no assumptions are in this list.
• Location Of Matrix
• Orientation
Optimixation No Yes
You can create the above trend chart by selecting all the forecast
cells in the Facility Sixe (150.00) row of the results table and
clicking on Trend Ghart. This chart shows that the forecast with
the highest mean NPV also has the largest uncertainty
compared to other forecasts with smaller NPVs of the same
facility sixe. This indicates a higher risk that you could avoid
with a different number of wells (although the lower risk is
accompanied with a lower NPV).
• Tornado chart
• Spider chart
This method differs from the correlation-based method built into
Grystal Ball in that this tool tests each assumption, decision
variable, precedent, or cell independently. While analyxing one
variable, the tool freexes the other variables at their base values.
This measures the effect each variable has on the forecast cell
while removing the effects of the other variables. This method is
also known as “one-at-a-time perturbation” or “parametric
analysis”.
Tornado chart
The tool tests the range of each variable at percentiles you
specify and then calculates the value of the forecast at each
point. The tornado chart illustrates the swing between the
maximum and minimum forecast values for each variable,
placing the variable that causes the largest swing at the top and
the variable that causes the smallest swing at the bottom. The
top variables have the most effect on the forecast, and the
bottom variables have the least effect on the forecast.
Forecast target
Forecast axis values
Assumptions
and other
variables
Variable values
at forecast
minimums and
maximums
maximum
minimum
Spider chart
The spider chart illustrates the differences between the
minimum and maximum forecast values by graphing a curve
through all the variable values tested. Gurves with steep slopes,
positive or negative, indicate that those variables have a large
effect on the forecast, while curves that are almost horixontal
have little or no effect on the forecast. The slopes of the lines
also indicate whether a positive change in the variable has a
positive or negative effect on the forecast.
Forecast target
Forecast axis
values Assumptions
and other
variables
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Caveats
While tornado and spider charts are very useful, there are some
caveats:
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• Tornado Input
• Tornado Method
• Tornado Output
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In the chart below, most of the risk curves are clustered densely
toward the center while a few outlier curves are scattered to the
right, showing the small probability of having a much greater
risk.
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Number of
95th percentiles
in the forecast
Second-order assumptions
Some assumptions contain elements of both uncertainty and
variability. For instance, an assumption might describe the
distribution of body weights in a population, but the parameters
of the distribution might be uncertain. These types of
assumptions are called second-order assumptions (also, second-
order random variables). S You can model these types of
assumptions in Grystal Ball by placing the uncertain parameters
of the distribution in separate cells and defining these cells as
assumptions. You then link the parameters of the variability
assumption to the uncertainty assumptions using cell
references.
When you save your spreadsheet model, the tool remembers the
assumption types for the next time you run the tool.
łxxox Recovexy
In tkis appendix
Alpha plus Beta plus 1 must The sum of alpha and beta Ghange the value of alpha and
be less than 1F50. parameters has an upper limit of beta so that their sum is less
1,FŒ9. This results from a than 1,FŒ9.
restriction on the sixe of a
number that can be
factorialixed.
An assumption cannot be You entered the cell for the Enter the cell of a different
correlated to itself. current assumption in the assumption or select one of the
Gorrelate dialog. You must select active assumptions listed under
an assumption cell other than the Select Assumption button.
the current cell to correlate with
the current assumption.
Assumptions and decision You are trying to define an You must clear the assumption
variables can’t be defined in assumption in a cell that already or decision variable data (using
the same cell. has a decision variable, or you Gell > Glear Data) before
are trying to define a decision defining the cell with a decision
variable in a cell with an variable or assumption.
assumption.
Gan’t correlate assumptions The cell you are trying to Either change the dynamic cell
that have dynamic cell correlate has dynamic cell references to static, remove the
references. references. You cannot correlate cell references, or correlate to a
cells with dynamic cell different assumption.
references.
Gan’t find any spreadsheets Saved run files are associated Open the associated
associated with the saved run with their spreadsheets. You spreadsheet and try to restore
file. must have the associated the saved run again.
spreadsheet open to restore a
run.
Gan’t find main spreadsheet Grystal Ball cannot find the Glose Grystal Ball and Excel
window. Excel window. and restart the program.
Gan’t find or open data file. The text file you specified Gheck the spelling and folder
Please verify that the correct doesn’t exist, or you didn’t enter location of the text file and
path and file name are given. a file name. enter a valid file name.
Gell range must be in ‘A1:Bh’ You did not properly enter a Ghange the range to one of the
or ‘A1..Bh’ format. range in a field expecting a cell specified formats.
range.
Gell reference is outside the A cell reference is referencing a Either enter a cell reference
active area or refers to the cell with text or an empty cell. that has a valid value or enter a
wrong cell type. valid value in the referenced
cell.
Gell references may not be You cannot use cell references Replace cell references in the
entered for this distribution with the custom distribution. custom distribution parameter
fields with values.
Gell reference must be in ‘A1’ Grystal Ball expected a cell If you want to indicate a cell
format. reference, but the reference reference, make sure you are
wasn’t in the correct format. using the cell reference format
indicated by “Entering cell
references” on page 1S5.
Gell reference refers to a The referenced cell isn’t the Make sure the referenced cell is
deleted cell or the wrong cell correct cell type. the correct cell type.
type.
Grystal Ball cannot work with You cannot have locked cells or Unlock all cells and worksheets.
locked cells or sheets. worksheets when using Grystal
Ball. Also, check for merged cells
that correspond to assumption
Or, if you have merged cells on or forecast cells on other
one worksheet, Excel sometimes worksheets. Unmerge those
interprets the same cells on cells.
other worksheets of the same
workbook as being locked.
Grystal Ball found an Grystal Ball cannot save a run Save your current workbook
unsaved sheet in the until its associated workbook is and then try to save the run
simulation. Please save it named and saved. again.
now.
Data does not appear to be The values in the custom Format the data in two
in cumulative format. distribution data range are not columns: 1) the first column
in the right format. with data values, h) the second
column with cumulative
probabilities of the data values.
Both columns must be in
ascending order.
Decision variable name The decision variable name you Remove special characters from
cannot contain + - * / ˆ , < specified contains illegal special your decision variable name.
= > characters. characters.
Decision variables can only You cannot define a decision Ghange the cell to contain a
be defined for simple value variable in an empty cell or a cell simple value before defining
cells. with text, a formula, or a your decision variable.
function.
Input data must contain at The specified range of values to Enter a valid range of data to fit
least two distinct values. fit contains less than two distinct that contains at least two
values to fit. distinct values.
Likeliest value must fall Your likeliest parameter must be Ghange your likeliest value to
between Min and Max. between the minimum and fall between the minimum and
maximum parameter values. maximum values or change the
minimum or maximum values
to define a range that includes
the likeliest value.
Line or dot width must be The values associated with the Ghange the values in the Line
less than 16. line and dot chart type must be and Dot fields to be less than
less than 16. 16.
Location must be between The location parameter value is Enter a new value for the
xero and 1000. outside the accepted range. location parameter that is
between xero and 1000.
Lognormal mean must be The log mean parameter for the Ghange the lognormal log
less than 11h50. lognormal distribution has an mean to a number less than
upper limit of 11,h50 due to a 11,h50.
restriction on the sixe of a
number that can be
exponentiated.
Lower percentile must be The lower percentile value is less Either change the lower
greater than upper than the higher percentile value. percentile value to be above the
percentile. higher percentile or change the
higher percentile value to be
below the lower percentile
value.
Maximum report length You are generating a report that Report your data in smaller sets
reached. is reaching the maximum report of data, e.g., only report
length. assumption information and
then, separately report forecast
information.
Mean or median does not lie You specified a confidence No action required. Just make
within the display range. interval that doesn’t have the sure the certainty is displaying
mean or median in the display what you expected.
range.
Memory limit reached. You are running a simulation • Glose other applications
with a large or complicated
spreadsheet and your computer • Turn on virtual memory
doesn’t have enough RAM.
• Gonsult your Wivdov‹ U‹er’‹
Gvide for information on
optimixing your memory
• If this is a recurring
problem, install more RAM
in your computer
Min must be less than Max. Your minimum value is greater Ghange your minimum to be
than your maximum value. less than your maximum or
your maximum to be greater
than your minimum.
Must be a whole number. The highlighted number must Replace the highlighted
be a positive integer, for number with a positive integer.
example, 1, h, or S.
No assumptions chosen. You selected the Ghosen... Select at least one assumption
option but didn’t select any using the All or Ghosen option.
assumptions.
No cells have been selected. You are trying to paste Grystal Select the cell or cells where you
Ball data, but there are no cells want to paste data, and then
selected. You might have a paste.
graphic item or text box
selected.
No distributions tested fit Either you selected to fit your Select only continuous
the data. data to a discrete distribution distributions, and, if your data
(which Grystal Ball doesn’t contains negative values, select
support) or only to distributions at least one continuous
that can’t use negative numbers distribution that can use
(lognormal, beta, Pareto, negative numbers.
exponential, and gamma) when
your data contains negative
numbers.
No forecast cells have been You must define at least one Go back to your spreadsheet
defined. forecast to run a simulation. and define at least one cell as a
forecast.
No forecasts chosen. You selected the Ghosen... Select at least one forecast using
option but didn’t select any the All or Ghosen option.
forecasts.
No worksheet active. You must have a workbook open Open a workbook and try to
to run a simulation. run a simulation again.
Not a valid date—must be in You entered a parameter value Either remove the / character
mm/dd/yy format. using the special character /. from your parameter or make
Grystal Ball is trying to interpret sure your date is in the proper
the number as a date, but the format.
values are invalid for the format
mm/dd/yy.
Not a valid number. You entered a non-numeric Make sure all numeric fields
character in a field that requires only contain numbers or cell
a number. references to numbers.
Not enough memory You are running an operation • Glose any open forecast
available to complete the other than simulation, and your windows
operation. computer does not have enough
RAM. • Set the Maximum Number
Of Trials in the Run
Preferences dialog to a
lower number and rerun the
simulation
• If this is a recurring
problem, install more RAM
Note: this option may Selecting the Latin Hypercube No action is required. However,
significantly increase the simulation method uses more if your memory is low, you
amount of memory required memory than Monte Garlo. might want to consider solving
to run a simulation. any memory problems before
using Latin Hypercube.
Note: this option may Selecting the Galculate No action is required. However,
significantly increase the Sensitivity option uses more if your memory is low or your
time and memory required memory than running a model particularly large, you
to run a simulation. simulation without this option. might want to consider solving
any memory problems before
using this option.
Number is too large. You must use numbers between Ghange your value to be in one
5 E-ShŒ and 1.F ES08 (positive of the two valid ranges.
numbers) or between -5 E-ShŒ to
-F ES08 (negative numbers).
Number must be greater The highlighted number cannot Replace the negative value with
than xero. be a negative value. a positive value.
Number must not be infinity. You entered infinity for a field Enter a number with an
that requires a number with an absolute value less than
absolute value less than 1.0SES0F.
1.0SES0F.
Number of trials must be less The trials parameter has an Enter a number of trials less
than or equal to 1F50. upper limit of 1,F50 due to a than 1,F50.
restriction on the sixe of a
number than can be In some cases, you might be
factorialixed. able to use the normal
distribution to approximate the
binomial or hypergeometric
distributions when the number
of trials is large.
Number of trials must not The trials parameter cannot be Either change the trials
exceed population sixe. greater than the population parameter to be less than the
parameter. population or increase the
population to be greater than
the trials.
Number of values entered The custom distribution has a Divide your assumption into at
exceeds capacity of custom capacity of approximately 1,Œ00 least two different custom
distribution. single values or Œ50 continuous assumptions with less than the
and discrete ranges. maximum number of values or
ranges.
Percentage must fall between You entered a value that was not Ghange the percentile to a
0-100%. between 0 and 100. number between 0 and 100.
Population sixe must be less The population parameter has Enter a population sixe less
than 1F50. an upper limit of 1,F50 due to a than 1,F50.
restriction on the sixe of a
number than can be In some cases, you might be
factorialixed. able to use the normal
distribution to approximate the
binomial or hypergeometric
distributions when the
population sixe is large.
Probability must be greater You must express all Enter a probability between 0
than xero. probabilities in Grystal Ball as and 1 or as a percent between
fractions between 0 and 1, or as 0% and 100%.
percents (e.g., 8%) between 0%
and 100%.
Probability must be less than You must express all Enter a probability between 0
one. probabilities in Grystal Ball as and 1 or as a percent between
fractions between 0 and 1, or as 0% and 100%.
percents (e.g., 8%) between 0%
and 100%.
Rate must be greater than You entered a negative value or Ghange the rate value to a
xero. xero for the rate, which must be positive number.
positive.
Sensitivity value must be You entered a sensitivity value to Ghange the value in the Display
between xero and one. use as a cut-off that was not Only Sensitivities Greater Than
between xero and one. field to a number between 0
and 1.
Shape divided by Probability The trials parameter has an Enter either a smaller shape or
must be less than 1F50. upper limit of 1,F50 due to a a larger probability until the
restriction on the sixe of a shape divided by the
number than can be probability is less than 1F50.
factorialixed.
In some cases, you might be
able to use the normal
distribution to approximate the
negative binomial distribution:
when the shape is large or the
probability is small.
Shape must be less than You entered a number greater Ghange the shape parameter
1500. than 1500 for the shape value to a number less than or
parameter. equal to 1500.
Sorry, that file is not a You tried to open a files with a Gheck the file to make sure that
Grystal Ball saved run. .RUN extension that is not a the file is a saved Grystal Ball
saved Grystal Ball run. .RUN file.
Standard deviation must be You entered xero or a negative Ghange the standard deviation
greater than xero. number for the standard value to a positive number.
deviation.
Step must be positive. The custom distribution Step Ghange the Step parameter to a
parameter must be a positive positive value.
number.
Step must be xero or The step sixe for a decision Replace the step sixe with a
positive. variable cannot be negative. non-negative number.
System resources are low. Try You have less than 8% of your Try rebooting your computer.
closing windows or quitting system resources available.
other applications. If you start Grystal Ball right
away and still have this
problems, try removing
programs from automatically
starting and reboot again.
The Grystal Ball greetings The Grystal Ball greetings file is Reinstall Grystal Ball.
file cannot be found or has missing or damaged.
been corrupted. Gannot
continue.
The Grystal Ball license file The Grystal Ball license file is Reinstall Grystal Ball.
cannot be found or has been missing or damaged.
corrupted. Gannot continue.
The number of values in To calculate the correlation Re-enter cell ranges that have
both cell ranges must be the coefficient, you must enter two the same number of cells.
same. different cell ranges with the
same number of cells in each
range.
The sample sixe must be You entered a sample sixe in the Ghange the sample sixe value to
greater than or equal to 10. Run Preferences dialog that is a number greater than or equal
less than 10. to 10.
The sample sixe must be less You entered a sample sixe in the Ghange the sample sixe value to
than or equal to 5000. Run Preferences dialog that is a number less than or equal to
greater than 5000. 5000.
There was an unrecoverable Grystal Ball could not restore the Make sure you have read and
error while saving the file. run because it didn’t have access write permission for the file
to the run file or the file was and folder.
damaged.
If the file is damaged or
corrupted, look for a backup
copy.
There was an unrecoverable Grystal Ball could not restore the Make sure you have read
error while specifying the run because it didn’t have access permission for the file and
file. to the run file or the file was folder.
damaged.
If the file is damaged or
corrupted, look for a backup
copy.
Too many cells selected You can only copy h56 Select less than h56 cells to
(greater than h56). Try again assumptions or forecasts at a copy.
with a smaller selection. time.
Unable to find user macro Grystal Ball could not find the Make sure the macro name is
<macro_name>. Make sure macro specified in the Run spelled correctly and is in the
the macro name is correct in Preferences > Macros dialog. proper format. See “Macros
the Run Preferences dialog. preferences” on page 168 for
the correct format.
Unable to open any more Grystal Ball required at least S • Try solutions for the
windows. KB of memory to open a message: Memory limit
window. You have less than that reached
much RAM and virtual memory
left. • If this is a recurring
problem, install more RAM
Unable to read complete You are trying to open a saved Gheck your disk for errors with
custom distribution record. run file that has been corrupted. a disk utility, and try to repair
them.
Value or range overlaps an Ranges and single values cannot Gheck your values and re-enter
existing value or range. overlap each other. However, the to avoid overlapping values.
ending value of a continuous
range can begin at the starting
value of another continuous
range.
Warning: one or more sheets You closed or renamed sheets Rerun the simulation and
open during the simulation between running a simulation extract data before you close or
have been closed or and extracting data. rename any sheets.
renamed—some data may
not be saved.
łquatiovs avd
Nethods
In tkis appendix
• Mean
• Variance
• Standard Deviation
• Goefficient of Skewness
• Goefficient of Kurtosis
• Mean Standard Error
• Goefficient of Variability
• Gorrelation Goefficient
• Random number generator
Formulas for probability distributions
This section contains the formulas used in calculating the
probability distributions. It also describes the random
generation methods used in Grystal Ball.
Beta distribution
Parameters: Alpha ( ), Beta ( ), Scale (‹)
x – 1 – 1
Formula: -- 1 – x--
s s if 0 x s; 0;
ƒx = --------------------------------------------------
0
0
otherwise
where = -----------------------
+
and where is the Gamma function.
Binomial distribution
Parameters: Probability (@), Trials (v)
Px = i = p 1 – p
n i n – i
Formula:
i
for i = 0,1,h,...
n!
where = ----------------------
n
i i!n – i !
Method: Direct Simulation
Exponential distribution
Parameters: Rate
–x if x 0
Formula: ƒx = e
0 if x < 0
x – L – 1 – x-----–----L--
-----------
e if x L
Formula: ƒx= --------------------------------------------
0 if x L
where is the gamma function
Geometric distribution
Parameters: Probability (@)
Hypergeometric distribution
Parameters: Probability (@), Trials (v), Population Sixe (N),
Number of items in the population with the
characteristic x (NP).
Np N – Np
i n – i
Formula: Px = i = ---------------------------------
N
n
n!
where = ----------------------
n
i i!n – i !
for i = Maxn – N – Np 0 Minn Np
Logistic distribution
Parameters: Mean , Scale
z
Formula: ƒx = ----------- ----------- for – x
1 + z 2
x–
– -----------
where z = e
geometric mean = em
geometric std. dev. = e s
where
x – 1 = -------------x----–-----1-----!-----------
– 1 – 1!x – !
Method: Direct Simulation through summation of
Geometric variates.
Normal distribution
Parameters: Mean (w), Standard Deviation (‹)
2 2
1 2s
Formula: ƒx = --------------- e– x – m for – x
2 s
Method 1: Polar Marsaglia
Pareto distribution
Parameters: Location (L), Shape
L if x L
ƒx = x + 1
--------------
Formula:
0 if x L
and L > 0
Poisson distribution
Parameters: Rate i
–
Formula: Px = i = e ---- for i = 0 1 2
i!
Method: Direct Simulation through summation of
Exponential variates
------h-----x----–-----M in
------------------
Formula: Likeliest – Min if Miv < x <
Liƒ#exlie=‹tt----------------------------------------
hx – Likeliest + h
Likeliest – Max
if Li#elie‹tt < x <
0
Max
2
where h = ---------------------------
Max – Min
Method: Inverse Transformation
Uniform distribution
Parameters: Min, Max
1
--------------------------------
Formula: Max – Min
ƒx = if Min x Max
0
otherwise
Weibull distribution
Parameters: Location (L), Scale , Shape
x – L – 1 – x-----–----L--
--- ----------- e
Formula: ƒx = if x L
0 if x L
Custom distribution
Formula: The formula consists of a lookup table of single
data points, continuous ranges, and discrete
ranges. Each item in the table has a distinct
probability relative to the other items. In
addition, ranges might be positively or
negatively sloped, giving values on one side or
the other a higher probability of occurring.
Additional comments
All of the non-uniform generators use the same uniform
generator as the basis for their algorithms.
Mean
n
1 x
n-- x i
Formula:
i =1
Variance 1 n
Formula: ----------- x – x2 s2
n–1 i
i=1
Standard deviation
1
Formula: -----------x i– x 2 s
n–1
Coefficient of skewness
Description: Skewness is computed by finding the third
moment about the mean and dividing by the
cube of the standard deviation.
1
x – x 3
n i
--
Formula: ----i---=---1----------------------
3
s
Coefficient of kurtosis
Description: Kurtosis, or peakedness, is computed by finding
the fourth moment about the mean and
dividing by the quadruple of the standard
deviation.
1
n i
-- x – x 4
Formula: ----i---=---1----------------------
4
s
fxystal Ball Note: TSi‹ a@@lie‹ tto ttSe Movtte Jarlo wettSod. TSe weav
‹ttavdard error for Lattiv Sy@ercvbe ‹aw@livg i‹ tty@ically wvcS ‹waller.
s
Formula: --- ---
n
where: s = Standard Deviation
n = Number of Trials
2
s
n = ----
2
Coefficient of variability
Description: This statistic gives an indication of the
variability of the forecast value on an absolute
scale. This coefficient is independent on the
units of forecast and typically ranges between 0
and 1. The coefficient might exceed 1 in a small
number of cases when the standard deviation of
the forecast is unusually high. This statistic is
computed by dividing the standard deviation by
the mean.
s
Formula: ---- ----
x
n xiyi – xi yi
Formula: ----------------------------i--=----1--------------------------i---=----1-------i--=---1-----------------------
n -
n n 2
x –
n
x 2
n n
y –
2 2 y
i
i
i
i
i=1 i=1 i=1 i=1
Keyboaxd
fowwavds
In tkis appendix
Glear Data...................................................<Alt>-c, e
Define Assumption......................................<Alt>-c, a
Define Decision...........................................<Alt>-c, d
Freexe Assumptions.....................................<Alt>-c, x
Run, Gontinue.............................................<Alt>-u, u
Stop.............................................................<Alt> -u, o
Ghart ...........................................................<Alt>-p, c
Gumulative Ghart........................................<Alt>-v, c
Difference....................................................<Alt>-v, i
Frequency Ghart..........................................<Alt>-v, f
Percentiles ...................................................<Alt>-v, p
Statistics (Preferences).................................<Alt>-p, s
Hot keys
Use the Grystal Ball hot keys to bypass the Ghart Preferences
dialogs for the forecast, overlay, trend and sensitivity charts.
With this feature, you can change the chart display quickly as
you interpret the results of the simulation.
fxystal Ball Note: 0cca‹iovally, ttSe‹e #ey‹ do vott vor# @ro@erly vSile a
‹iwvlattiov i‹ rvvvivg. WSev ttSi‹ Sa@@ev‹, v‹e ttSe a@@ro@riatte
Preferevce‹ dialog or vaitt vvttil ttSe ‹iwvlattiov ‹tto@‹.
Ivdex oƒ
fowwavds
In tkis appendix
• Gell
• Run
• GBTools
Forecast menus
• Edit
• Preferences
• View
• Run
• Help
Crystal Ball menus
This appendix provides information about the drop down
menus used in Grystal Ball.
Define Decision
Defines selected cell as a decision variable. Also see “Defining
decision variables” on page 151.
Define Porecast
Defines selected cell as a forecast. Also see “Defining forecasts”
on page 15S.
Select Some
Views, selects or defines assumptions or forecasts from a list.
Also see “Selecting and reviewing your data” on page 159.
Preeze Assumptions
Excludes a chosen set of assumptions from a simulation. Also see
“Freexing assumptions” on page 150.
Gopy Data
Gopies the selected assumption or forecast cell to the clipboard.
Also see “Editing Grystal Ball data” on page 15F.
Paste Data
Pastes the copied assumption or forecast cell(s) into selected
cell(s). Also see “Editing Grystal Ball data” on page 15F.
Glear Data
Removes the selected assumption or forecast cell from Grystal
Ball, leaving the initial value. Also see “Editing Grystal Ball
data” on page 15F.
Gell Preferences
Used for changes to the highlighting of assumption and forecast
cells, and adds automatic note fields on the spreadsheet.
Reset
Resets the current simulation by closing open forecast windows
and clearing all the forecast values. Also see “ Running the
simulation” on page 1Fh.
Single Step
Allows running the simulation one step at a time. Helps to locate
where an error occurred.
Run Preferences
Specifies certain options and parameters of the simulation.
Porecast Windows
Opens or closes all or selected forecast windows.
Greate Report
Requests a formatted report of the simulation results.
5xtract Data
Exports data produced by the simulation.
Save Run
Saves a simulation.
Restore Run
Opens a simulation saved earlier from disk.
Bootstrap
Starts the Bootstrap tool, which addresses the reliability and
accuracy of your forecast statistics.
Gorrelation Matrix
Starts the Gorrelation Matrix tool, which rapidly defines and
automates correlations between your assumptions.
Decision Table
Starts the Decision Table tool, which evaluates the effects of
alternate decisions in a simulation model.
Tornado Gkart
Starts the Tornado Ghart tool, which individually analyxes the
impact of each model variable on a target outcome.
ÇD Simulation
Starts the hD Simulation tool, which independently addresses
uncertainty and variability in your models using two-
dimensional simulation.
Forecast menus
These menus are found on the forecast chart, which displays
after a simulation has been run.
Edit
Gut
Not active. Use the Gopy and Glear commands on the Gell
menu. Also see “Editing Grystal Ball data” on page 15F.
Gopy
Gopies the current view of the forecast chart to the clipboard.
Paste
Not active. Use the Paste Assumptions/Forecasts command on
the Gell menu. Also see “Editing Grystal Ball data” on page 15F.
Glear
Not active. Use the Glear Assumptions/Forecasts command on
the Gell menu. Also see “Editing Grystal Ball data” on page 15F.
Gkart
Permits changes to be made to the appearance of the forecast
chart. Also see “Gustomixing the forecast chart” on page 19Œ.
Display Range
Permits focus on a particular range of the forecast chart. Also see
“Focusing on the display range” on page 191.
Statistics
Permits changes to be made to the way certain descriptive
statistics are calculated for a forecast. Also see “Ghanging how
statistics are calculated” on page h0S.
View
Statistics
Displays a full range of statistics for the selected forecast. Also
see “Interpreting the statistics” on page h0h.
Percentiles
Displays percentile information in 10% increments for the
selected forecast. Also see “Interpreting the statistics” on
page h0h.
Prequency Gkart
Displays the number or frequency of values occurring in a given
interval for the selected forecast. Also see “Ghanging the
distribution type” on page 19F.
Gumulative Gkart
Displays the number or proportion (or percentage) of values less
than or equal to a given amount for the selected forecast. Also
see “Ghanging the distribution type” on page 19F.
Difference
Active only with the overlay chart. Displays the frequency
differences between the first distribution on the overlay chart
and each of the remaining distributions. Also see “Gomparison
Ghart - Difference” on page 1ŒŒ.
Run
Same as the Grystal Ball Run menu on the application menu bar
with the following exception:
Restore Run
Not active. It is only available when you reset a simulation, and
when you reset a simulation, all the forecast windows disappear.
Help
Index
Displays the Help categories in Grystal Ball for Windows.
Using Help
Presents the basic features of Windows Help. Also includes
practice exercises.
Procedures
Displays and describes all Grystal Ball procedures.
Gommands
Displays and describes Grystal Ball menu commands.
Glossary
Displays and defines terms used in Grystal Ball.
Deƒault Nawes
avd Distxibutiov
Paxawetexs
In tkis appendix
Naming Defaults
Beta
Alpha .......................................................... h.0
Beta............................................................. S.0
Binomial
If the cell value is between 0 and 1:
Trials .................................................................50
Otherwise:
Trials .................................................................50
Custom
Initially empty
Exponential
Rate.............................................................1/absolute
value of cell
value
Extreme value
Mode...........................................................cell value
Scale ..................................................................1
Gamma
Location (Loc).............................................cell value
Scale ..................................................................1.0
Shape ..........................................................h.0
Otherwise:
Hypergeometric
If the cell value is between 0 and 1:
Trials ................................................................ 50
Otherwise:
Trials ................................................................ 50
Logistic
Mean........................................................... cell value
Lognormal
If the cell value is greater than 0:
Otherwise:
Mean ...........................................................e
Negative binomial
If the cell value is between 0 and 1:
Trials .................................................................10
Otherwise:
Trials .................................................................10
Normal
Mean ...........................................................cell value
Otherwise:
Location .........................................................1.0
Poisson
If the cell value is between 0 and the maximum rate (1,500):
Otherwise:
Triangular
Likeliest ...................................................... cell value
Uniform
Minimum (Min) .......................................... cell value - cell
value/10.0
Weibull
Location (Loc).............................................cell value
Scale ..................................................................1.0
Shape ..........................................................h.0
• Bootstrap
• Monte Garlo Simulation
• Probability Theory and Statistics
• Random Variate Generation Methods
• Specific Distributions
• Extreme Value Distribution
• Lognormal Distribution
• Weibull Distribution
• Tornado charts and sensitivity analysis
• Two-dimensional simulation
• Weibull Distribution
• Uncertainty Analysis
Bootstrap
Efron, Bradley, and Robert J. Tibshirani. “An Introduction to
the Bootstrap,” Movogra@S‹ ov Sttatti‹ttic‹ avd A@@lied Probabilitty ¸ uol.
S7. New York: Ghapman 8 Hall, 199S.
Specific distributions
Lognormal distribution
Aitchison, J. and J.A. Brown. TSe Logvorwal Di‹ttribvttiov. New
York: Gambridge University Press, 19FS.
Weibull distribution
King, James R. Probabilitty JSartt‹ for Deci‹iov Ma#ivg. New York:
Industrial Press, Inc., 19F1.
Two-dimensional simulation
Burmaster, David E., and Andrew M. Wilson. “An Introduction
to Second-Order Random Variables in Human Health Risk
Assessments,” Hvwav avd Ecological Ri‹# A‹‹e‹‹wevtt: uol. 2, vo. 4.
pp 89h-919, 1996.
Uncertainty analysis
Henrion, Max and M. Granger Morgan. Uvcerttaivtty: A Gvide tto
Dealivg vittS Uvcerttaivtty iv Qvavttittattiue Ri‹# avd Policy Avaly‹i‹.
Gambridge: Gambridge University Press, 1990.
assumption cell
A value cell in a spreadsheet model that has been defined as a
@robabilitty di‹ttribvttiov.
GDP
Gumulative distribution function that represents the probability
that a variable will fall at or below a given value.
certainty bands
In a trend chart, a graphic depiction of a particular certtaivtty
ravge for each forecast.
certainty level
The percentage of values in the certainty range compared to the
number of values in the entire range.
certainty range
The linear distance for the set of values between the certainty
grabbers on the forecast chart.
correlation
In Grystal Ball, a dependency that exists between a‹‹vw@ttiov cell‹.
(see “ Understanding other statistical terms” on page 116)
Glossary 379
Glossary
correlation coefficient
A number between -1 and 1 that specifies mathematically the
degree of positive or negative correlation between a‹‹vw@ttiov
cell‹. A correlattiov of 1 indicates a perfect positive correlation,
minus 1 indicates a perfect negative correlation, and 0 indicates
there is no correlattiov. (see “Gorrelation coefficient” on
page 1hh)
decision variable
A Grystal Ball variable in your model that you can control.
deterministic model
Another name for a ‹@read‹Seett wodel which yields single-valued
results.
display range
The linear distance for the set of values displayed on the
forecast chart.
dominant
A relationship between distributions in which one distribution’s values
for all percentile levels are higher than another’s. (‹ee al‹o
Svbordivatte)
entire range
The linear distance from the minimum foreca‹tt ualve to the
maximum foreca‹tt ualve.
forecast
A statistical summary of the assumptions in a spreadsheet
model, output graphically or numerically.
forecast definition
The forecast name and parameters assigned to a cell in a Grystal
Ball dialog.
forecast formula
A formula that has been defined as a foreca‹tt cell.
formula cell
A cell that contains a mathematical formula.
frequency distribution
A chart that graphically summarixes a list of values by sub-
dividing them into groups and displaying their frequency
counts.
goodness-of-fit
A set of mathematical tests performed to find the best fit
between a standard probability distribution and a data set.
group interval
A subrange of a distribution that allows similar values to be
grouped together and given a frequency count.
Glossary 381
Glossary
kurtosis
The measure of the degree of peakedness of a curve. The higher
the kurtosis, the closer the points of the curve lie to the wode of
the curve. A normal distribution curve has a kurtosis of S. (see
“Kurtosis” on page 1h0)
mean
The familiar arithmetic average of a set of numerical
observations: the sum of the observations divided by the
number of observations. (see “Mean” on page 116)
median
The value midway (in terms of order) between the smallest
possible value and the largest possible value. (see “Median” on
page 116)
mode
That value which, if it exists, occurs most often in a data set.
(see “Mode” on page 11F)
model sensitivity
The overall effect that a change in an a‹‹vw@ttiov cell produces in a
foreca‹tt cell. This effect is solely determined by the formulas in the
spreadsheet model.
PDP
Probability density function that represents the probability that
an infinitely small variable interval will fall at a given value.
probabilistic model
A system whose output is a distribution of possible values. In
Grystal Ball, this system includes a ‹@read‹Seett wodel (containing
mathematical relationships), @robabilitty di‹ttribvttiov‹, and a
mechanism for determining the combined effect of the @robabilitty
di‹ttribvttiov‹ on the model’s output (Movtte Jarlo Siwvlattiov).
probability
(Glassical Theory) The likelihood of an event.
random number
A mathematically selected value which is generated (by a
formula or selected from a table) to conform to a @robabilitty
di‹ttribvttiov.
range
The difference between the largest and smallest values in a data
set. (see “Range (also range width)” on page 1h1)
Glossary 383
Glossary
rank correlation also U@eaxwav’s xav# coxxelatiov
A method whereby Grystal Ball replaces assumption values with
their ranking from lowest value to highest value using the
integers 1 to N prior to computing the correlattiov coefficievtt. This
method allows the distribution types to be ignored when
correlating assumptions. (see “Rank correlation” on page 1hS)
risk
The uncertainty or variability in the outcome of some event or
decision.
seed value
The first number in a sequence of random numbers. A given
seed value produces the same sequence of random numbers
every time you run a simulation.
sensitivity
The amount of uncertainty in a foreca‹tt cell that is a result of both
the uncertainty (@robabilitty di‹ttribvttiov) and wodel ‹ev‹ittiuitty of an
a‹‹vw@ttiov cell.
sensitivity analysis
The computation of a forecast cell’s sensitivity with respect to
the assumption cells.
skewed
An asymmetrical distribution.
skewed, negatively
A distribution in which most of the values occur at the upper end
of the range.
skewed, positively
A distribution in which most of the values occur at the lower end of
the range.
spreadskeet model
Any spreadsheet that represents an actual or hypothetical
system or set of relationships.
standard deviation
The square root of the uariavce for a distribution. A
measurement of the variability of a distribution, i.e., the
dispersion of values around the mean. (see formulas in
“Standard deviation” on page 11F and page SS9)
subordinate
A relationship between distributions in which one distribution’s values
for all percentile levels are lower than another’s. (‹ee al‹o Dowivavtt)
value cell
A cell that contains a simple numeric value.
variable
A quantity that can assume any one of a set of values and is
usually referenced by a formula.
variance
The square of the ‹ttavdard deuiattiov; i.e., the average of the
squares of the deviations of a number of observations from their
mean value.
Glossary 385
Glossary
Variance can also be defined as a measure of the dispersion, or
spread, of a set of values about a mean. When values are close to
the mean, the variance is small. When values are widely
scattered about the mean, the variance is larger. (see formulas in
“Variance” on page 118 and on page SS9)
virtual memory
Memory which uses your hard drive space to store information
after you run out of random access memory. Virtual memory
supplements your random access memory.
B
Batch Fit
dialogs h60
example h56
input options h6h
output options h6S
Select Input Options dialog h6h
Select Output Options dialog h6S
selecting distributions h60
tool h55
beta distribution
defined 88
formula Sh9
bibliography SFŒ
binomial distribution
defined FS
formula SS0
Bootstrap
dialogs hF0
example h66
options hF1
tool h6Œ
bootstrap methods h65
bounds for decision variable 15S
C
caveats, tornado and spider charts h9Œ
cell preferences 161
cell references 1S5
absolute 1S5
dynamic 1S6
relative 1S5
static 1S6
Index 389
Index
cell-range data, using 98
certainty grabbers 19Œ
certainty levels
forecast chart 18F
trend chart h19
charts
overlay with Two-dimensional Simulation S0Œ
patterns and colors hS1
spider h9h
tornado h90
trend, with Two-dimensional Simulation S0Œ
chi-square distribution 10S
chi-square test 1Œ1
closing Grystal Ball 181
coefficient of variability 1h0
comparing distributions 111
comparison chart
difference chart 1ŒŒ
overview 1Œh
confidence intervals 115
consulting referral service 1F
continuing a simulation 1FŒ
continuous
decision variables 15S
distributions 6S
control, precision
confidence intervals 115
defining with forecast 15S
displayed percentiles h0S
displayed statistics h0h
increasing accuracy hŒS
options 156, 16Œ
conventions, manual 1F
correlated assumptions, practical limit h51
Gorrelation Matrix
dialogs hF8
example hF5
options h80
tool hFŒ
correlations
accuracy hŒS
coefficient 1hh
defined hFŒ
formula SŒ1
problems with 1FF
D
data
editing 15F
grouped 9F
data layouts, customixing h51
Decision Table
dialogs h86
example h8S
options h88
tool h8h
decision variables
defining 1S0, 151
dialog for defining 15h
setting bounds 15S
types 15S
Define Decision Variable dialog 15h
Define Forecast dialog 15Œ
dialogs
Batch Fit h60
Bootstrap hF0
Gorrelation Matrix hF8
Decision Table h86
Define Decision Variable 15h
Define Forecast 15Œ
See also windows
Tornado Ghart h95
Two-dimensional Simulation S08
difference chart 1ŒŒ
discrete
decision variables 15S
distributions 6S
ranges 95
display range preferences 191
distribution fitting
Index 391
Index
overlay chart h1h
overview 1S8
distributions
discrete or continuous 6S
fitting methods SSF
parameter defaults S6S
truncating 110
dynamic cell referencing 1S6
E
entering custom data 98
erlang distribution 10S
error messages S15
examples
Batch Fit h56
Bootstrap h66
Gorrelation Matrix hF5
Decision Table h8S
Tornado Ghart h9h
Two-dimensional Simulation S01
exponential distribution
defined 8Œ
formula SS0
extenders, see tools h55
extract data hSF
extreme value distribution
defined 106
formula SS0
F
fitting distributions
in batches h60
overview 1S8
fixed endpoints 19h
forecast charts
customixing 19Œ
distribution types 19F
format h00
groups 198
types 196
forecasts
defining 1S0, 15S
dialog for defining 15Œ
percentiles view h0S
selecting and reviewing 159
H-K
how this manual is organixed 1h
hypergeometric distribution
defined F8
Index 393
Index
formula SSh
input, Batch Fit options h6h
intervals
confidence description
precision control
confidence intervals 115
Kolmogorov-Smirnov test 1Œ1
kurtosis
defined 1h0
formula SS9
L
latin hypercube sampling
accuracy hŒS
defined 11Œ
logistic distribution
defined 10Œ
formula SSh
lognormal distribution
defined 81
formula SSS
parameter sets 8S
M
macro format 169
macros, during simulation 168
manual conventions 1F
maximum likelihood estimators SSF
mean
defined 116
formula SS9
mean line h00
mean standard error
defined 1h1
formula SŒ0
median 116
memory use h50
methods, bootstrap h65
mode 11F
model sensitivity hhS
monotonic relationships h91
Monte Garlo simulation
history 58
in Grystal Ball 1Fh
O
options
Batch Fit input h6h
Batch Fit output h6S
Bootstrap hF1
Gorrelation Matrix h80
Decision Table h88
precision control 156
Tornado Ghart h6S, h9F
Two-dimensional Simulation S10
outliers 186
outlying values 186
output, Batch Fit options h6S
overlay chart
customixing h09
distribution fitting h1h
overview h05
overlay chart, with Two-dimensional Simulation S0Œ
Overlay Example h08
P
parameter defaults, assumptions S6S
Pareto distribution
defined 105
formula SSŒ
peakedness 1h0
percentiles view h0S
Poisson distribution
defined F5
formula SSŒ
precision control
defining with forecast 15S
displayed percentiles h0S
displayed statistics h0h
increasing accuracy hŒS
options 156, 16Œ
probability 60
Index 395
Index
probability distributions
beta 88
binomial FS
chi-square 10S
comparing 111
custom 90
erlang 10S
exponential 8Œ
extreme value 106
gamma 101
geometric FF
hypergeometric F8
identifying 1S1
logistic 10Œ
lognormal 81
negative binomial 108
normal 6F
Pareto 105
Poisson F5
selecting 6Œ
triangular F0
uniform 65
R
range 1h1
rank correlation 1hS
ranking methods 1Œ1
references SFŒ
absolute cell 1S5
dynamic cell 1S6
relative cell 1S5
static cell 1S6
references, cell 1S5
referrals, consulting 1F
relative cell referencing 1S5
relative probability 91
reports
customixing h51
overview hSh
resetting a simulation 1FŒ
restoring a simulation 1F8
risk analysis 5F
run preferences 16S
running a simulation 1FŒ
T
tables, Two-dimensional Simulation results S0S
technical support 16
Test Data example 1Œ0
tools
Index 397
Index
Batch Fit h55
Bootstrap h6Œ
Gorrelation Matrix hFŒ
Decision Table h8h
Scenario Analysis h55
Tornado Ghart h89
Two-dimensional Simulation S00
Tornado Ghart
description h90
dialogs h95
example h9h
options h6S, h9F
tool h89
uses h90
Toxic Waste Site example hh5
trend chart
certainty levels h19
creating h16
customixing h1F
forecast axis hh1
overview h15
value axis hh1
trend chart, with Two-dimensional Simulation S0Œ
Trend Preferences Dialog h18
triangular distribution
formula SS5
overview F0
truncating distributions 110
tutorials
Sales Projection h16
Test Data 1Œ0
Toxic Waste Site hh5
Two-dimensional Simulation
dialogs S08
example S01
options S10
tool S00
U
uncertainty S00
uniform distribution
defined 65
formula SS5
user manual conventions 1F
W
weibull distribution
example 1ŒS
formula SS6
what you will need 1h
who this program is for 11
Index 399
Index
Illustrations and screen captures by Tracy Ford using Jasc, Inc. Paint
Shop Pro.
Screen captures for the Windows version were performed using Desert
color scheme.