Using pertmaster to assess cost savings
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Hi
Many thanks for the reply.
The problem was a missing piece of the puizzle.
When you try and visualise cost savings, the maximum cost saving is actually the minimum cost. What I didnt have was the original cost of the activity that the savings were based on. Once I had this i was able to extrapolate the minimum, most likely and maximum costs, allowing them to be plugged in to pertmaster as normal.
Cheers!
Neil
Dear Neil,
If you have the constraints about the "cost savings" and the situation as you mentioned. You can use solver add-in of excel (it is a numerical method). You can find solver add-in from. Tools-Add-Ins (click solver then OK:). Then Tools--solver.
Then at a empty sheet formulize all of the savings and total savings just for one case (Lets say, 100 for CS1, 200 for CS2 and 150 for CS 3). Formulate the total saving. Then write the constraints. (Amount of materials or just management tendancy, you can use some KPIs). Then open the solver Tools solver.
Target cell (Total savings)
Maximize (or others!!)
By Changing cells (the qtys or % of Cost savings)
Constraints
Then ok.
You will have the maximized cost saving in your calculation sheet. And you can have detailed reprots of the analysis also.
I read my thread again.A little bit confusing(!). If you have any problems mail me with details and I can reply with a example.
[email protected]
Best Regards,
Safak
I dont think Monte Carlo is the right software package for this. It sounds like a standard binomial distribution probability problem.
Excel has the functionality you need, as I recall. And Im sure wikipedia can give you the theory.
Id explain it here, but my stats was always appalling, so i need to look up the formulaes each time i use them.