Week 10 - Introduction to business modelling

Question 1

Define what a ‘Model’ is?

Answer 1

a simplified representation of a situation or problem.

Question 2

Define what a ‘Spreadsheet’ is?

Answer 2

is a row-and-column layout of text, numerical data, and logical information.

Question 3

What does ‘Optimisation modelling’ help do?

Answer 3

helps find the best solution to a problem by maximising or minimising an objective (e.g., profit, cost).

Question 4

What are the 3 main parts of a model?

Answer 4

1. Decision variables → what you control (e.g., how much to produce).
2. Objective function → what you’re trying to optimise (e.g., maximise revenue).
3. Constraints → rules or limits (e.g., budget, resources).

Question 5

What does ‘Linear programming (LP)’ deal with?

Answer 5

deals with linear relationships among variables.

Question 6

What are the 4 main processes involved in modelling?

Answer 6

1. Understanding the real problem.
2. Translating it into a mathematical model.
3. Implementing it in a spreadsheet.
4. Using Solver to find the best outcome.

Question 7

Why should models be tested for sensitivity?

Answer 7

To see how changes in data affect results.

Question 8

Optimisation is widely applicable. Name 3 parts of a business that it is often used in?

Answer 8

1. Operations
2. Finance
3. Logistics