EASWARI ENGINEERING COLLEGE

Ramapuram, Chennai – 89

DEPARTMENT OF MANAGEMENT STUDIES

LAB Manual

BA7211

DATA ANALYSIS AND BUSINESS MODELING

I Year MBA – II Semester

Academic Year 2016 – 2017

Prepared By Approved By

LAB In Charge HOD/MBA

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 LIST OF EXPERIMENTS

S.No. Lab Experiments

DESCRIPTIVE STATISTICS
1 Measures of Central Tendency using Excel 2010.
2 Measures of Variability using Excel 2010.
3 Measures of Shape using Excel 2010.
4 Descriptive Statistics using SPSS.
HYPOTHESIS PARAMETRIC TEST USING SPSS
5 Independent T- Test using SPSS
6 One-Way Anova using SPSS
HYPOTHESIS NON- PARAMETRIC TEST USING SPSS
7 Friedman’ S Test
8 Kruskal-Wallis (Kw) Test
9 Mann Whitney U Test
10 Spss - Chi-Square Test
11 Wilcoxon Signed Rank Test
CORRELATION & REGRESSION USING SPSS
12 Pearson’s Correlation
13 Rank Correlation
14 Linear Regression
15 Multiple Regressions
FORECASTING USING SPSS
16 Time Series Data
17 Auto-regression
18 PORTFOLIO SELECTION
RISK AND SENSITIVIY ANALYSIS USING EXCEL
19 Calculating Present Value
20 Calculating Net Present Value
21 Risk Analysis using Sensitivity Analysis
REVENUE MANAGEMENT USING TORA
22 Linear Programming Problem-Minimization
23 Linear Programming Problem-Maximization
TRANSPORTATION & ASSIGNMENT MODEL USING TORA
24 Transportation & Assignment Model Using TORA
25 Assignment Model Using TORA
26 NETWORKING MODELS USING TORA
QUEUING THEORY USING TORA
27 Queuing Models for Single Scenario
28 Queuing Models for Comparative Analysis
29 INVENTORY MODELS USING EXCEL
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 DESCRIPTIVE STATISTICS
Exercise No: 1

MEASURES OF CENTRAL TENDENCY

Aim:
To display the central tendency values of Median and Mode using MS-Excel 2010.
Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start Programs MS office MS Excel 2010.

 Create a blank workbook or worksheet.

 Type this example for calculating Central tendency.

Step 2: Median
Enter the data to calculate Median value.
 Choose the cells range for calculating Median.

1 Data

2 10

3 7

4 9

5 27

6 0

7 4

Formula Description (Result)

=MEDIAN(A2:A7) Median of numbers in
list above

By using the formula, the median value will be displayed.

 Median which is the middle number of a group of numbers; that is, half the
numbers have values that are greater than the median, and half the numbers have
values that are less than the median. For example, the median of 10, 7, 9, 27, 0 and
4 is 8.
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Step 3: Mode
Open the next sheet and enter the data to calculate the Mode value.
Choose the cell range to calculate the Mode.

1 Data

2 5

3 9

4 5

5 2

6 16

7 4

Formula Description (Result)

=MODE(A2:A7) Mode of numbers in list above

By using the formula, the Mode value will be displayed.

 Mode, which is the most frequent number, occurred in a group of number. For
example, the mode of 5, 9, 5, 2, 16 and 4 is 5.
Step 4:
To Rename the sheet, use the command
Right click on the tab sheet  Rename, as Median and next sheet as Mode.

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Step 5: Average
Enter the subject marks data to calculate average.

Step 6:
To calculate “Total”, Keep the cursor in the Total Column and Use the formula,
=Sum(D2:H2). That is, =Sum(cell number of first subject : cell number of last subject). Repeat it
for all succeeding cells.

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Step 7:
To calculate “Average”, Keep the cursor in the Average column and use the formula,
=Average(I2/6). That is, =Average (cell number of Total/ Total number of subject). Repeat it for
all succeeding cells.

Step 8:
To calculate the Result, Keep the cursor in the Result column and use the formula,

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= if(and(Cell no. of PM>=50, Cell no.FM>=50,………………………….Cell no. of BAS)>=
50),”PASS”,”FAIL”) . Repeat it for all succeeding cells.

Step 9:
 To save the file, use the command.
 File → Save (Standard bar) or Use Ctrl + S or Use Save icon in the formatting bar and
give the spreadsheet name.

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OUTPUT:

Output for Median

Output for Mode

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Output for Average

Result:
Thus the Central Tendency values of Average, Medianand Mode are displayed using MS-
Excel 2010.

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Exercise No: 2
MEASURES OF VARIABILITY
Aim:
To calculate the measures of variability values using Ms-Excel 2010.

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start → Programs → MS office → MS Excel 2010.
Create a blank workbook or worksheet.
Type this example for calculatingmeasures of variability.
Step 2:
Enter the values to calculate Quartiles.

Step 3:
Enter the formula =QUARTILE (array, quart).
Array is the array or cell range of numeric values for which you want the quartile
value.
Quart indicates which value to return.

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 If quart equals QUARTILE returns

0 Minimum value

1 First quartile (25th percentile)

2 Median value (50th percentile)

3 Third quartile (75th percentile)

4 Maximum value

Step 4:
To get the standard deviation,

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 Description (Result)

Standard deviation of breaking strength.

Step 5:
To calculate the correlation value,

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 Description (Result)

Correlation coefficient of the two data sets.

Step 6:
Save the file and get the output.

OUTPUT:

Quartiles:

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Standard Deviation:

Correlation:

Result:
Thus we displayed the measures of variability – Quartiles using Ms Excel.

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Exercise No: 3
MEASURES OF SHAPE

Aim:
To calculate the measures of shape values using Ms-Excel 2010.

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start → Programs → MS office → MS Excel 2010.
Create a blank workbook or worksheet.
Type this example for calculating Skewness.

Step 2:
Enter the values to calculate Skew.

Step 3:
To get the skew value,

Description (Result)

Skewness of a distribution of the data set.

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Step 4:
Enter the data to calculate the Kurtosis,

Step 5:
To get the kurtosis value, use formula,

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 =KURT(A2:A11).

Description (Result)

Kurtosis of the data set

OUTPUT:

Output for skew:

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Output for Kurtosis:

Result:
Thus the measures of shape are displayed using Ms Excel.

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Exercise No: 4
DESCRIPTIVE STATISTICS USING SPSS
Aim:
To display the Descriptive Statistics of measures of central tendency, variability and
shapes using SPSS.

Procedure:

Step 1:
To enter into SPSS window, use the command
Start  SPSS 11.5 for windows.

Step 2:
The Data Editor contains two tabs as data view and variable view.
 In the variable view, enter the required column names.

Variable view is a characteristic of an item or individual.

Step 3:
Open the data view tab, enter the details of employees.
 Data should be entered for 50 employees.

Data view is the set of individual values associated with a variable.

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Step 4:
To save the file, use the command
File  Save or Ctrl + S or Save file icon.

Step 5:
To begin the Descriptive Statistics, use the command
Analyze  Descriptive Statistics  Frequencies.

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Step 6:
Frequencies dialog box will appear, add the variable. Click on Statistics  Frequencies
Statistics; choose Mean, Median, Mode, Quartiles, Skewness and Kurtosis. Then, click on
Continue and Ok.

OUTPUT:

Result: Thus the descriptive statistic values are displayed using SPSS.
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Exercise No: 5
INDEPENDENT T- TEST USING SPSS

Aim:
To find whether there is any significant difference of spending amount using independent
sample t-test from data set cellular in Hypothesis parametric test.

Procedure:

Step1:
To enter into SPSS window, use the command
Start  SPSS 11.5 for windows.
Step 2:
The Data Editor contains two tabs as data view and variable view.
In the variable view, enter the required column names.

Variable view is a characteristic of an item or individual.

Step 3:
Open the data view tab, enter the details.
 Data should be entered for 50 persons.

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Data view is the set of individual values associated with a variable.

Step 4:
To save the file, use the command
 File  Save or Ctrl + S or Save file icon.

Step 5:
To begin the independent sample t-test
 Analyze  Compare means  Independent sample t-test

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Step 6:
Independent sample t-test dialogue box appears as below

 select amount spent as the test variable

 select gender as the grouping variable
 click define groups
 type one as the group one value and two as the group two value
 click continue
Step 7:
Click ok in the independent-sample T-test dialogue box. The output will be displayed.
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OUTPUT

Result:
Accept Ho (i.e) null hypothesis. There is no significant difference between the scores
obtained by male and female candidates.

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Exercise No: 6
ONE-WAY ANOVA USING SPSS

Aim:
To analyze the differences between groups mean and their associated procedures (among
and between groups) in Hypothesis Parametric test, using One-way ANOVA.

Procedure:

Step 1:
Opening the sample data
• Go to Program Files,” “SPSS” and correspondingfolder.
• Open the file.

Step 2:
Click AnalyzeCompare Means One-Way Anova.

Step 3:
Add ‘’skills fully used “in dependent list and “age” in the factor list.

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Step 4:
Check the “Descriptive” option under Statistics and “Exclude cases analysis by analysis”
under Missing Values. Click “Continue” and “OK”.

OUTPUT:

Descriptives
Skills Fully Used
95% Confidence Interval for
Mean Minimu Maximu
N Mean Std. Deviation Std. Error Lower Bound Upper Bound m m
18-25 yrs 7 4.43 .535 .202 3.93 4.92 4 5
26-40 yrs 74 3.80 1.110 .129 3.54 4.05 1 5
41-50 yrs 46 3.89 1.059 .156 3.58 4.21 1 5
51-58 yrs 5 3.40 1.342 .600 1.73 5.07 2 5
Total 132 3.85 1.081 .094 3.66 4.03 1 5

ANOVA
Skills Fully Used
Sum of
Squares df Mean Square F Sig.
Between Groups 3.639 3 1.213 1.040 .377
Within Groups 149.330 128 1.167
Total 152.970 131

Result:
Thus the differences between groups mean and their associated procedures (among and
between groups) in Hypothesis Parametric test, using One-way ANOVA have been analyzed.

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 HYPOTHESIS NON- PARAMETRIC TEST

Exercise No: 7

FRIEDMAN’ S TEST
Aim:
To test for differences between groups when the dependent variable being measured is
ordinal using Friedman’s test.

NOTE:A Friedman test was then carried out to see if there were differences in perceived effort
based on music type.

Procedure:

Step 1:
Opening the sample data
• Go to Program Files,” “SPSS” and corresponding folder.
• Open the file.

Step 2:
Click Analyze > Nonparametric Tests > Legacy Dialogs > K Related Samples.

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Step 3:
K Related Samples dialog box will be opened.

Add variables to the test variables column.

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Step 4:
Make sure that Friedman is selected in the –Test Type– area.

Click the button. You will be presented with the following Several Related
Samples: Statistics dialogue box, as shown below:

Step 5:
Click continue and ok. Get the output.

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OUTPUT:

The Ranks table shows the mean rank for each of the related groups, as shown below:

The Test Statistics table informs you of the actual result of the Friedman test, and whether there
was an overall statistically significant difference between the mean ranks of your related groups.
The table looks as follows:

Inference:
Thus, a statistically significant difference in perceived effort depends on, χ2(2) = 7.600, p
= 0.022.

Result:
Thus the differences between groups when the dependent variable being measured is
ordinal using Friedman’s test have been analyzed.

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Exercise No: 8
KRUSKAL-WALLIS (KW) TEST
Aim:
To compare three or more sets of scores that comes from different groups using Kruskal-
Wallis Test.

Example:
The researcher runs a Kruskal-Wallis test to compare this ordinal, dependent measure
(Pain Score) between the three drug treatments (i.e., the independent variable is the type of drug,
with more than two groups).

Procedure:

Step 1:
Opening the sample data
• Go to Program Files,” “SPSS” and corresponding folder.
• Open the file.

Step 2:
Click Analyze > Nonparametric Tests > Legacy Dialogs > K Independent Samples.

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Step 3:

Add the variables to the test variables column by selecting the Kruskal-Wallis H.

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Step 4:
Press the button and type "1" into the Minimum box and "3" into
the Maximum box. This is defining the range of the values for the categories of the independent
variables.

Step 5:

Click the button.

Click the button. Tick the Descriptive checkbox if you want descriptives
and/or Quartiles if you want quartiles. You will be presented with the following if you
select Descriptives:

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Click the button. Click the button.

OUTPUT:

Inference
A statistically significant difference between the different drug treatments (H(2) = 8.520, p
= 0.014), with a mean rank of 35.33 for Drug A, 34.83 for Drug B and 21.35 for Drug C.

Result:
Thus, the sets of scores that come from different groups have been analyzed using
Kruskal-Wallis Test.

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Exercise No: 9
MANN WHITNEY U TEST

Aim:
To determine the difference between two independent variables in Mann-Whitney U Test
using SPSS.

Procedure:

Step 1:
Opening the sample data
• Go to Program Files,” “SPSS” and corresponding folder.
• Open the file.

Step 2:
Click Analyze > Nonparametric Tests > Legacy Dialogs > 2 Independent
Samples... on the top menu, as shown below:

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Step 3:
You will be presented with the Two-Independent-Samples Tests dialogue box, as shown
below:

Step 4:
Transfer the dependent variable, Cholesterol , into the Test Variable List: box and the

independent variable, Group , into the Grouping Variable: box by using the button or by
dragging-and-dropping the variables into the boxes.

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Step 5:

Make sure that the Mann-Whitney U checkbox is ticked in the –Test Type– area and
the Grouping Variable: box is highlighted in yellow (as seen above). If it is not highlighted in
yellow, simply click your cursor in the Grouping Variable: box to highlight it.

Click the button. The button will not be clickable if you have not highlighted
the Grouping Variable: box as instructed in Step 4. You will be presented with the following
screen:

Step 6:
Enter 1 into the Group 1: box and enter 2 into the Group 2: box. Remember that we
labeled the Diet group as 1 and the Exercisegroup as 2.

NOTE: If you have more than two groups in your study (e.g., three
groups: diet, exercise and drug groups), but only wanted to compared two (e.g.,
the diet and drug groups), you could type in 1 to Group 1: box and 3 to Group 2: box (i.e., if you
wished to compare the diet with drug group).

Step 7:
Click the button.
 If you wish to use this procedure to generate some descriptive statistics, click on
the button and then tick Descriptiveand Quartiles within the –Statistics– area.
You will be presented with the dialogue box below:
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 Step 8:
Click the button, which will bring you back to the main dialogue box with
the Grouping Variable: box now completed, as shown below:

 Click the button. This will generate the output for the Mann-Whitney U test.

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OUTPUT:

Inference:
Thus, the cholesterol concentration in the diet group was statistically significantly higher
than the exercise group (U = 110, p = .014).

Result:

Thus the differences between two independent variables have been determined in Mann-
Whitney U Test using SPSS.

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Exercise No: 10

SPSS - CHI-SQUARE TEST

Aim:
To find whether there is significant difference between two given variables using Chi-
square in SPSS.

Problem:
College wants to identify the influence of UG education academic performance. The data
for 15 students with the degrees B.Com, BBA, BSc, BEwith academic gradesA, B, C are given
below

DEGREE INTERVIEW GRADE

B.Com A
BBA B
BSc C
BE A
B.Com B
BBA C
BSc A
BE B
B.Com C
BBA A
BSc B
BE C
B.Com A
BBA B
BSc C

NULL HYPOTHESIS: H0: There is no association between the grades obtained on their
interview and graduation.

ALTERNATIVE HYPOTHESIS: H1: There is association between the grades obtained on

their interview and graduation.

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INFERENCE:
Since the significant value is 0.959 which is greater than the level of significance 0.05
the null hypothesis is accepted.
Thus there is no association between the grades obtained on the interview and their
graduation

PROCEDURE:

Step 1: Enter the values in the data editor.

Step 2: To perform the chi-square test, you must first weight the cases. To weight the
cases, from the Data Editor menus choose
Data  Weight Cases
a) Select Weight cases by
b) Select Income categories as the frequency variable
c) Click Ok
The cases are now weighted by frequency
Step 3: To begin the analysis from the menus choose
Analyze  Nonparametric Tests  Chi-Square
The chi-square test dialog box appears
Step 4:Select level of education as the test variable
Click Ok.

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OUTPUT:

RESULT:
High significance values indicate that the observed distribution does not conform to the
hypothesized distribution. The distribution of education of education differs from the distribution
hypothesized.

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Exercise No: 11
WILCOXON SIGNED RANK TEST
Aim:
To compare the Wilcoxon signed rank test is the non-parametric version of a paired
samples t-test.

Procedure:

Step 1:
To enter into SPSS window, use the command
Start  SPSS 11.5 for windows.

Step 2:
The Data Editor contains two tabs as data view and variable view.
In the variable view, enter the required column names.

Step 3:
Click Analyze > Nonparametric Tests > 2 Related Samples... on the top menu, as
shown below:

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Step 4:
You will be presented with the Two-Related-Samples Tests dialogue box, as shown
below:

Step 5:

Transfer the variables you are interested in analyzing into the Test Pairs: box.
Make sure that the Wilcoxon checkbox is ticked in the –Test Type– box. You will end up with a
screen similar to the one below:

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Step 6:

If you want to generate descriptives or quartiles for your variables, select them by clicking

the button and ticking the Descriptive and Quartiles checkboxes under the –Statistics–
box.

Step 7:

Click the button. You will be returned to the Two-Related-Samples

Tests dialogue box.Click the button.

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OUTPUT:

Inference:

Thus, there is no relationship between the two variables. A statistically significant value Z
= -1.807, p = 0.071. H0 is accepted.

Result:

Thus the Wilcoxon signed rank test is the non-parametric version of a paired samples t-
test has been compared.

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 CORRELATION AND REGRESSION USING SPSS

Exercise No: 12
PEARSON’S CORRELATION
Aim:
To analyze and to show the strength and direction of relationship between any 2 variables
and also and whether the relationship is positive or negative by using Correlation method.

Procedure:

Step 1:
Opening the sample data
• Go to Program Files,” “SPSSInc,” “SPSS,” and folder.
• Create an “Employee Data file”

Step 2:

Enter the data in the data view tab.

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Step 3:

Click Analyze (from the top menu bar), then click Correlate (from the ANALYZE
options), then choose Bivariate (from the Correlate Model options).

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Step 4:
From the left hand column, choose your variables you want to check the relationship for.
Then click on the arrow. You can choose any number of variables. Here choose the two variables
Educational level and current salary from “Employee data.sav” file.

Choose if you want Pearson (for interval or ration parametric test) or a Spearman (nominal
or ordinal nonparametric test).

Step 5:
Choose if you want one or two tailed test (use one tailed only if you know there is a
relationship and also the direction of the relationship – gives a more powerful design when you
do).

Step 6:

Then finally, clickOK.

To save the file, use the command

 File  Save or Ctrl + S or Save file icon.

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OUTPUT:

Inference:

Thus the variables are chosen for analysis and found that the Correlation is significant at
the 0.01 level (2-tailed).

Result:
Thus the strength and direction of relationship between any 2 variables and also and
whether the relationship is positive or negative by using Correlation method has been analyzed.

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Exercise No: 13
RANK CORRELATION

Aim:
Tomeasure the relationship between ranking of different ordinal variables or different
rankings of the same variable, using correlation.

Procedure:

Step 1:
Opening the sample data
 Go to Program Files, “SPSS” and corresponding folder.

Step 2:
Enter the data in the data view tab.

Step 3:
Click Analyze (from the top menu bar), then click Correlate (from the ANALYZE
options), then choose Bivariate (from the Correlate Model options).

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Step 4:

Add the required variables into the Variable Column. Check the option that says
Spearman under Correlation Coefficient and then click OK to get the output.

NOTE:A rank correlation coefficient measures the degree of similarity between two rankings,
and can be used to assess the significance of the relation between them.

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OUTPUT:
Correlations

High Long
Jump Jump Shot Put
Spearman's rho High Jump Correlation
1.000 .850(**) -.450
Coefficient
Sig. (2-tailed) . .004 .224
N 9 9 9
Long Jump Correlation
.850(**) 1.000 -.433
Coefficient
Sig. (2-tailed) .004 . .244
N 9 9 9
Shot Put Correlation
-.450 -.433 1.000
Coefficient
Sig. (2-tailed) .224 .244 .
N 9 9 9

** Correlation is significant at the 0.01 level (2-tailed).

Inference:

From the above output, we infer that there is a high positive correlation between the
positions obtained by the athletes in High Jump and Long Jump.It is statistically significant at
0.01 levels. There is a negative correlation between the positions obtained by the athletes in Long
Jump and Shot-put.

Result:

Thus the relationship between ranking of different ordinal variables or different rankings
of the same variable, using correlation has been measured.

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Exercise No: 14

LINEAR REGRESSION
Aim:
To estimatelinear regression analyzes and the coefficients of the linear equation.

Procedure:

Step 1:
Opening the sample data
• Go to Program Files, “SPSS” and corresponding folder.
• Open “Employee Data.sav” file

Step 2:
Click ‘Analyze,’ ‘Regression,’ then click ‘Linear’ from the main menu.

Step 3: Then put ‘Beginning Salary’ as Dependent and ‘Educational Level’ as Independent.

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Step 4: Clicking OK gives the result.

OUTPUT:

Result:
Thus linear equation is estimated and output is shown using Linear Regression.

Exercise No: 15

MULTIPLE REGRESSIONS
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Aim:
To predict the value of a variable(dependent) based on the value of two or more other
variables(independent).

Procedure:

Step 1:
Opening the sample data
 Go to Program Files,“SPSS” and corresponding folder.

Step 2:
Enter the data in the data view tab.

Step 3:
Click Analyze > Regression > Linear... on the main menu, as shown below:

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Step 4:
You will be presented with the Linear Regression dialogue box below:

Step 5:

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 Transfer the dependent variable, VO2max , into the Dependent: box and the
independent variables, age , weight , heart_rate and gender into the Independent(s): box,
using the buttons, as shown below (all other boxes can be ignored):

Step 6:
Click the button. You will be presented with the Linear Regression:
Statistics dialogue box, as shown below. In the -Regression Coefficients- area,
leave Estimates ticked, as well as Model Fit in the top right hand corner.

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Step 7:
In addition to the options that are already selected, select Confidence intervals from
the -Regression Coefficients- area and leave theLevel(%): at 95. Then select Descriptives. You
will end up with the following screen:

 Click the button. You will be returned to the Linear Regression dialogue
box.
 Click the button. This will generate the output.

OUTPUT:

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Statistical significance

Estimated model coefficients

This is obtained from the Coefficients table, as shown below:

Statistical significance of the independent variables

Result:
Thus, the independent variables statistically significantly predict the dependent
variable, F(4, 95) = 32.393, p < .0005 (i.e., the regression model is a good fit of the data).

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 FORECASTING USING SPSS
Exercise No: 16

TIME SERIES DATA

Aim:
To predict the value of time series data – forecasting using SPSS.

Procedure:

Step 1:
Opening the sample data
 Go to Program Files,” “SPSS” and corresponding folder.

Step 2:
Enter the data in the data view tab.

Step 3:
To calculate the value, use the command

AnalyzeTime seriesExponential Smoothing.

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Step 4:
You will be presented the Exponential Smoothing dialog box, as shown.
Add the required variable to the variables column, then click ok.

Step 5:
You’ll get the output, as shown
 The highlighted columns are the output variation.

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Exercise No: 17
AUTOREGRESSION

Aim:
To predict the value of auto regression – forecasting using SPSS.

Procedure:

Step 1:
Opening the sample data
 Go to Program Files,” “SPSS” and corresponding folder.

Step 2:
Enter the data in the data view tab.

Step 3:

To calculate the value, use the command

AnalyzeTime seriesAuto-regression.

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Step 4:
Auto-regression dialog box will be appeared.
Add the dependent variables and independent variables to the variables column.

Step 5:
You’ll get the output, as shown
 The highlighted columns are the output variations.

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OUTPUT:

Result:
Thus the forecasting values are found for auto-regression using SPSS.

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Exercise No: 18

PORTFOLIO SELECTION

Aim:

To use linear programming to create the maximum returns portfolio using MS-Excel 2010.

Problem formulation of a portfolio selection problem as a linear program is as follows:

Maximize r1x1 + r2x2+ r3x3 (Maximum – return objective)

Subject to

β1 x1 + β2 x2 + β3 = 1.1 (fixed beta for the portfolio)

x1 + x2 + x3 = 1 (proportions should add up to 1)

x1,x2,x3>= 0. (No short-selling)

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start Programs MS office MS Excel 2010.

 Create a blank workbook or worksheet.

 Type this assumption example for calculating portfolio selection

Step 2:

In Excel, create a worksheet that presents the three beta coefficients, the three rates of return,
three trial proportions values, the objective function, the total beta constraint, and the total
proportion constraint.

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 Security Proportion Return Beta
in in in
in portfolio Beta Return portfolio portfolio portfolio
Gold 1.2 0.1 0.916667 0.091667 1.1
Mutual fund 1.1 0.5 0 0 0
Share 0.8 0.35 0 0 0

Step 3: Invoking solver

Excel 2010: Select File > Options. On the left pane, select Add-Ins. On the right pane, next to
Manage Add-Ins, click on Go. The Add-Ins list will pop up. Put a checkmark next to Solver Add-
in and click OK. Solver will appear as a menu selection under the Data tab.

Step 4:

Filling out the Solver dialog box

Fill-in all the necessary information in the Solver dialogue box as follows:

1. Set the target cell equal to the cell that contains the total return,

2. Specify Max as the type of objective,

3. Specify the cells containing the proportion values as Changingcells,

4. Click Add to add the three constraints,

5. Select Simplex LP as the Solving Method,

6. Click on Solve to get the solution.

7. After execution is complete, select to Keep the Solver Solution.

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Step 5:

Excel will revise the proportions in column D, and the total return in E6.

Choose the report type Answer,Sensitivity report or Limit for final result, save the file and Click
Ok.

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OUTPUT:

Microsoft Excel 12.0 Sensitivity Report

Adjustable Cells
Final Reduced Objective Allowable Allowable
Cell Name Value Cost Coefficient Increase Decrease
Gold in
$D$3 portfolio 0.916666667 0 0.02 1E+30 0.005
Mutual fund
$D$4 in portfolio 0 -0.008333333 0.01 0.008333333 1E+30
Share in
$D$5 portfolio 0 -0.003333333 0.01 0.003333333 1E+30

Constraints
Final Shadow Constraint Allowable Allowable
Cell Name Value Price R.H. Side Increase Decrease
$G$6 in portfolio 1.1 0.016666667 1.1 1E+30 1.1

Result:

These correspond to the proportions that maximize the total return (optimal solution), and
the maximum return (optimal value).

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 RISK AND SENSITIVITY ANALYSIS USING EXCEL

Exercise No: 19
CALCULATION OF PRESENT VALUE

Aim:
To compute thepresent value using Excel.

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start →Programs→MS office → MS Excel.

Step 2:Calculating present value

The PV function returns the present value of future cash flows. Money in the future has a
different value than money today. This function tells us how much that future money is worth
right now. Its syntax, with required arguments in bold, is PV(rate, nper, pmt, fv, type).

Step 3:
Go to Auto sum Option in the Menu bar and choose
“More Functions”

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Step 4:
Choose the Category “Financial Function” from the list of various functions

Step 5:

In finance function choose “ PV”

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Step 6:

Please enter the values in the following Arugments displayed

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 Compute the present value of a series of future receipts, sometimes called an annuity. One
payment of $1,200 for eachten years. The value of those payments right now is $6,780.27.or type
the formula in the cell.

=PV(12%,10,1200,0,0)

Step 7:

Enter the values Rate = 12%

Nper= 10
Pmt = 1200
Fv =
Type = 0

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 That formula looks like this:

=PV (12%, 10,-1200, 0, 0)

OUTPUT:

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Result:
The sum total of the payments constitutes the entire transaction, so there is no future
value. Also, the default value of zero for the type argument is included. Both the fv argument and
the type argument are optional, but they are included here for clarity.

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Exercise No: 20

CALCULATION OF NET PRESENT VALUE

Aim:
Tocalculate the net present value of an investment by using a discount rate and a series of
future payments (negative values) and income (positive values).

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
Start →Programs→MS office → MS Excel.

Step 2:
Type this example of Colum A values into a new spread sheet; to Calculate the (NPVs)
of this investment

A B
1 Data Description
2 10% Rate
3 10,000 Investment
4 3,000 Return from first year
5 4,200 Return from second year
6 6,800 Return from third year

Step 3:
Determination of NPV

S.No A B
1 Data Description
2 10% Annual discount rate
Initial cost of investment
3 -10,000 one year from today
4 3,000 Return from first year
5 4,200 Return from second year
6 6,800 Return from third year

Syntax:
NPV function
NPV (rate, value1, value2…)

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  Rate is the rate of discount over the length of one period.

 Value1, value2 ... are 1 to 254 arguments representing the payments and income.

 Value1, value2 ... must be equally spaced in time and occur at the end of each
period.
 NPV uses the order of value1, value2, ... to interpret the order of cash flows. Be
sure to enter your payment and income values in the correct sequence.Arguments
that are numbers, empty cells, logical values, or text representations of numbers
are counted; If an argument is an array or reference, only numbers in that array or
reference are counted. Empty cells, logical values, or text in the array or reference
are ignored.

 Type the formula for calculating NPV

=NPV(discount_rate, value1, value2, ... value_n )

Step 4:

Type the formula in the calculating cell and enter the values in the NPV formula space,

= NPV ( Rate = 10%, Value 1 = - 10000, Value 2 = 3,000, Value 3 = 4,200, Value 4 = 6,800)

Finally close the braces and enter.

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OUTPUT:

Formula Description (Result)

Net present value of this investment
(1,188.44)

Result:
Net present value of this investment is 1,188.44.

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Exercise No: 21

RISK ANALYSIS USING SENSITIVITY ANALYSIS

Aim:
To compute the Net Present Values (NPVs) of the two projects for each of the possible
cash flows using sensitivity analysis in Microsoft Excel.

 Calculate the (NPVs) of the two projects.

Project X Project Y
Particulars (‘000) (‘000)
Initial Cash outlays (t = 0) Rs.40 Rs.40
Cash inflow estimates (t = 1 - 15)
Worst 6 0
Most-likely 8 8
Best 10 16
Required rate of return 0.10 0.10
Economic life (years) 15 15

Procedure:

Step 1:
To enter into MS-Excel Sheet, Use the command
 Start →Programs→MS office → MS Excel.

Step 2:
Type the values in thousands

Project X Project Y
Particulars (‘000) (‘000)
Initial Cash outlays (t = 0) 40000 40000
Worst 6000 0
Most-likely 8000 8000
Best 10000 16000
Required rate of return 0.1 0.1
Economic life (years) 15 15

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Step 3:
Determination of PV

=PV (0.1, 15,6000,0) = 45636

= PV (0.1, 15,8000,0) = 60848
=PV (0.1, 15,10000,0) = 76060

Similarly do it for other cases, Most-likely and Best for Project Y and Project Y.

Step 4:
Determination of NPV
 NPV returns the net value of the cash flows. Because of the time value of
money, receiving a dollar today is worth more than receiving a dollar
tomorrow. NPV calculates that present value for each of the series of cash
flows and adds them together to get the net present value.

The formula for NPV is:

Where n is the number of cash flows, and i is the interest or discount rate

Present Value – Investment cost.

45636 – 40000 = 5636. Similarly do it for all the cases for Project X and Project Y.

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OUTPUT:

Project X Project Y
Expected cash
inflows PV NPV PV NPV
Worst 45636 5636 Nil (Rs.40000)
Most-likely 60848 20848 60848 20848
Best 76060 36060 121696 81696

Result:

Choosing Project X – No possibility of suffering losses

Project Y - Possibility of paying a very high return as compared to Project X.

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 REVENUE MANAGEMENT USING TORA
Exercise No: 22

LINEAR PROGRAMMING PROBLEM - MINIMIZATION

Aim:
To solve the given LPP (Minimization) using TORA.

Min z = 4X1+3X2.
Sub to 2X1+X2 >= 10,
X1+X2 >= 6,
3X1+2X2 <= 6. X1>0, X2>0.

Procedure:

Step 1:
Click the TORA software and run it. Choose Linear Programming and click go to Input
screen. Give Title name and enter the values for Number of variables and constraints and Press
enter.

Step 2:
Enter the variable name X1 AND X2.

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Step 3:
Please enter the Number of Variables and Constraints. Click on the Field for changing
Maximize and Minimize options.

Step 4:
Click SOLVE Menu, Then save the data.

Step 5:

Click on the Screen –Choose the following options -Solve problem → Algebraic → Iterations →
Dual simplex method.

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Step 6:
Finally Choose Go to Output screen and Choose All iterations. Click OK option for the
result.

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OUTPUT:

Result:
Thus the Given LPP is solved using TORA and the problem has “No feasible solution”.

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Exercise No: 23

LINEAR PROGRAMMING PROBLEMS- MAXIMIZATION

Aim:
To solve the given LPP (Maximization) using TORA.
Max z = 3X1+2X2.
Sub to 2X1+X2 <=2,
3X1+4X2 >= 12,
X1>0, X2>0.

Procedure:

Step 1:
Click the TORA software and run it. Choose Linear Programming and click go to Input
screen. Give Title name and enter the values for Number of variables and constraints and Press
enter.

Step 2:
Enter the variable name X1 AND X2.

Step 3:
Please enter the Number of Variables and Constraints. Click on the Field for changing
Maximize and Minimize options.

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Step 3:

Click SOLVE Menu, Then save the data.

Step 4:
Click on the Screen –Choose the following options -Solve problem → Algerbric →
Iterations → Two Phase method.

Step 5:
Finally Choose Go to Output screen and Choose All iterations. Click OK option for the
result.

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OUTPUT:

RESULT:
Thus the Given LPP is solved using TORA and the problem has “No feasible solution”.

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 TRANSPORTATION & ASSIGNMENT MODEL USING TORA

Exercise No: 24
TRANSPORTATION PROBLEM

Aim:
To solve the transportation problem using TORA.

D E F G Supply
A 11 13 14 17 250
B 16 18 14 10 300
C 21 24 13 10 400
Demand 200 225 275 250 950

Procedure:

Step 1:
Click the TORA software and run it. Select the transportation problem from the Main
menu. Or Right click and choose transportation problem.

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Step 2: Choose Enter a new problem. Click Go to Input Screen.

Step 3: Give Title and enter Sources and Destination and Press Enter Button.

Step 4:
Input Grid – Screen will be displayed. Now please enter Sources and Destination values.

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 Step 5:
After the Sources and Destination values are entered. Clicks SOLVE Menu. It asks to save
the data. Give a file name and Save the data.

Step 6:
Now Choose Solve Problem and click Final solution.

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OUTPUT:

Result:
Thus the problem is solved and Objective Value (Minimum Cost) = 12075.00 is found
using TORA.

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Exercise No: 25
ASSIGNMENT PROBLEM

Aim:
To solve the given Assignment problem using TORA.

Example
A taxi hire company has one taxi at each of five depots a, b, c, d and e. A customer
requires a taxi in each town, namely A,B,C,D and E. Distances (in kms) between depots (origins)
and towns (Destinations) are given in the following distance matrix:
a b c d e Supply
A 140 110 155 170 180 1
B 115 100 110 140 155 1
C 120 90 135 150 165 1
D 30 30 60 60 90 1
E 35 15 50 60 85 1
Demand 1 1 1 1 1

How should taxis be assigned to customers so as to minimize the distance travelled?

Procedure:

Step 1:
Click the TORA software and run it. Select the transportation problem from the Main
menu. Or Right click and choose transportation problem.

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Step 2:
Choose Enter a new problem. Click Go to Input Screen.

Step 3:
Give the Problem Title and enter Sources and Destination and Press Enter Button. Type
the data.

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Step 4:
Click the Solve now option, it shows the Save dialog box; click yes and save the file.

Step 5:
To solve the problem, use the command,
Solve problem  Final solution. Get the output.

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Step 6:
If you want to see the exact minimum cost value using iterations, the command is Solve
Problem  Iterations  Vogel’s starting solution. Get the output.

OUTPUT:

Objective value is 470.00

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It shows the total number of iteration possibilities.

Result:

Thus the minimize distance travelled is 470.00 is found for Assignment problem using
TORA.

Exercise No: 26
NETWORKING MODELS USING TORA

Aim:

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 To compute the earliest start, earliest finish, latest start and latest finish of each activity of
the project and to find critical path using TORA.

Activity 1-2 1-3 2-4 2-5 3-4 4-5

Duration 8 4 10 2 5 3
(in days)

Procedure:

Step 1:
Click the TORA software and run it. Click on the screen – Choose Project planning –
Critical Path Method.

Step 2:
In the new screen Choose “Enter New Problem “option and click “Go to Input Screen”
Button displayed in the screen.

Step 3:
Enter the Title of the program in the “Problem title” then click Enter.

Step 4:
Enter the values – From Node, To Node, Activity symbol, Duration given in the problem.
(i.e) From Node is 1, To Node is 2, Activity symbol is 1-2,and Duration is 8. Similarly enter for
all the activities.

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Step 5:
After entering values. Click “SOLVE MENU” Button. Then Save the program.

Step 6:
Then Click “SOLVE problem“, Then click “Go to Output Screen”.

Step 7:
In “Select Output option”, in the pull down menu, You have Choose “CPM Calculations”.
(Bar chart option for graphical representation).

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Step 8:
Then Click “All steps” Tab displayed in the screen.

Step 9:
In “Select Output option”, In the pull down menu, you to have Choose “CPM Bar chart”.
You can adjust the “Change start of “and “by” options for schedule changes, it will reflect in the
chart.

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OUTPUT:

Forward pass completed – Earliest time 21

Earliest Start - 18

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OUTPUT:

CPM Bar chart

Result:
Thus the Forward pass completed – Earliest time 21 and Earliest Start – 18, critical path is
found successfully using TORA.

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 QUEUING THEORY USING TORA
Exercise No: 27

QUEUING MODELS – SINGLESCENARIO

Aim:
To find Length of the system (Ls), length of the queue(Lq), Waiting time of the system
(Ws) and Waiting time of the queue (Wq).

Example:
A self-service store employs one cashier at its counter. An average of nine customers
arrives every 5 minutes while the cashier can serve 10 customers in 5 minutes. Assuming Poisson
distribution for arrival rate and exponential distribution for service rate, find.
1. Average number of customers in the system.
2. Average number of customers in queue or average queue length
3. Average time a customer spends in the system.
4. Average time a customer waits before served.

Procedure:

Step 1:
Click the TORA software and run it. Select the Queuing Analysis from the Main menu. Or
Right click and choose Queuing Analysis.

Note:
Arrival rate λ = 9 / 5 = 1.8 Customers/minute
Service rate μ = 10 / 5 = 2 Customers/minute

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Step 2:
Choose Enter a new problem. Click Go to Input Screen.

Step 3:
Give Title and enter No of scenarios and Press Enter Button.

Step 4:
Input Grid – Screen will be displayed.

Enter Lamda = 1.8.Mu = 2 Nbr of servers = 1 System limit = infinity and Source limit =
infinity

Step 5:
After that values are entered. Clicks SOLVE Menu. It asks to save the data. Give a file
name and Save the data.

Step 6:
Now go to Output screen. In output options choose Scenario 1.

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OUTPUT:

Result:
Length of the system (Ls) - 9, length of the queue (Lq)–8.10, waiting time of the
system(Ws) – 5,waiting time of the queue (Wq) - 4.50. Thus the problem is solved using queuing
analysis using TORA.

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Exercise No: 28

QUEUING MODELS – COMPARATIVE ANALYSIS

Aim:
To find Length of the system (Ls), length of the queue (Lq), Waiting time of the system
(Ws) and Waiting time of the queue (Wq) making comparative analysis for three scenarios.

Note:

Scenario 1 –
Arrival rate λ = 16 Customers/Hour
Service rate μ = 20 Customers/Hour
Scenario 2 –
Arrival rate λ = 16 Customers/Hour
Service rate μ = 22 Customers/Hour
Scenario 3 –
Arrival rate λ = 16 Customers/Hour
Service rate μ = 24 Customers/Hour. Compare three scenarios and choose the best scenario?

Procedure:

Step 1:
Click the TORA software and run it. Select the Queuing Analysis from the Main menu. Or
Right click and choose Queuing Analysis.

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Step 2:
Choose Enter a new problem. Click Go to Input Screen.

Step 3:
Give Title and enter No of scenarios = 2 and Press Enter Button.

Step 4:
Input Grid – Screen will be displayed.
Enter Lamda= 16 Mu = 20 Nbr of servers = 1 System limit = infinity and Source limit =
infinity
Enter Lamda = 16 Mu = 22 Nbr of servers = 1 System limit = infinity and Source limit =
infinity
Enter Lamda = 16 Mu = 24 Nbr of servers = 1 System limit = infinity and Source limit =
infinity

Step 5:
After that values are entered. Clicks SOLVE Menu. It asks to save the data. Give a file
name and Save the data.

Step 6:
Now go to Output screen. In Output option choose Comparative analysis.

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OUTPUT:

Result:

Scenario 1 Scenario 2 Scenario 3

Length of the system (Ls) 4.0 2.6 2.0
Length of the queue (Lq) 3.2 1.94 1.33
Waiting time of the system (Ws) 0.25 0.16 0.125
Waiting time of the queue (Wq) 0.20 1.21 0.083

Thus the problem is solved using queuing analysis using TORA. Scenario 3 is better in service.

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Exercise No: 29

INVENTORY MODELS USING EXCEL

Aim:
To calculate the EOB (Economic order batch size).

Example:
A computer manufacturing plant produces 10,000 servers per year. The cost to produce
each server is $2,000. The cost to set up a production run of servers is $ 200, and the cost to hold
a server in inventory for a year is $ 500. The plant can produce 25,000 servers per year if it wants
to. When the plant produces servers, how large a batch should it produce?

Step 1:
To enter into MS-Excel Sheet, Use the command
Start →Programs→ MS office → MS Excel.

Step 2:
Type this example of Colum A values into a new spread sheet; to calculate the EOB
(Economic order batch size)

Note:
K = Cost of setting up a batch for production
h = Cost of holding each unit in inventory for a year
D = Annual demand for the product
R = Annual rate at which the product can be produced. For example, IBM might have the
capacity to produce 25,000 servers per year.

From this formula, we find the following:

o An increase in K or D will increase the EOB.
o An increase in h or R will decrease the EOB.

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 K = $200, h = $500, D = 10,000 units per year, and R = 25,000 units per year.

Step 3:
Enter the parameter values in the cell range C2:C5, calculate EOB.

C7 = 2 * C3 * C5 * C6 {2KDR}
D7 = C6 - C5
F7 = C7 / E7
G7 = SQRT (F7) = 115.47
o .

OUTPUT:

Result:
o The batch size that minimizes costs is 115.47 computers. Thus, we should produce
115 or 116 computers in each batch.

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