A Spreadsheet Scenario Analysis Technique That Integrates with Optimization and Simulation

Scenario analysis is a widely used technique, and business students should be proficient in running scenarios through a spreadsheet model. We propose 10 desirable properties for a scenario analysis technique, and show that the Microsoft Excel Scenario Manager tool satisfies only one of them. We provide a tutorial for a better technique that can be programmed into an existing spreadsheet in a matter of minutes. We show how to integrate the technique with the Excel Solver to allow for rapid optimization of multiple scenarios and with the Crystal Ball add-in for Monte Carlo simulation to enable simulation of multiple scenarios. Our undergraduate and MBA students are able to learn the technique with little difficulty.