Quick-Start Guide for Crystal Ball
15 Pages Posted: 21 Oct 2008
Abstract
This technical note provides an introduction to Crystal Ball and is designed for first-year MBA students, so it includes the basic knowledge of Crystal Ball that they will need in a Decision Analysis course.
Excerpt
UVA-QA-0658
Rev. Sept. 10, 2013
Quick-Start Guide for Crystal Ball
(Oracle) Crystal Ball (CB) is a powerful simulation program that functions as an add-in for Microsoft Excel. To access CB functions in Excel, choose the Crystal Ball option from the Excel menu (once CB is installed). Most problems will involve four aspects of CB: Assumptions, Forecasts, Run Preferences, and Forecast Windows. The purpose of this note is to provide a quick, practical introduction on how to create, run, and view the results of a CB simulation using these four basic parts. By way of illustration, we continue an example from another note:
A company must decide whether to continue a certain product line for the next quarter. The firm must spend an additional $ 500,000 in fixed costs to continue the product line (above and beyond the per-unit variable costs). One of the firm's clients is considering making a large purchase of this product. The firm must make the decision to continue the product line immediately before it knows: (1) whether the client will make the large purchase, and (2) the level of general sales, separate from the large purchase. The company knows with certainty the per-unit variable costs and the per-unit revenue from each source. The company's Best-Guess Excel model follows.
Best-Guess Model
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Keywords: Crystal Ball, simulation, decision analysis, continuous probability distributions, discrete probability distributions, risk profile, expected value
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