manager can look at prediction results, make hypothetical decisions
and see how they affect bottom-line ROA. new decision document
Product Manager input
- must get PM interested in project
- give ideas for decisions to model
- where intial efforts should go
- provide source for existing model
One of the greatest advantages of the scenario planning application
will be letting managers test decisions and see how they unfold in each
scenario. This part of the project has many levels of possibilities, each
improving the usefulness of the scenario planning application.
- Default data without manager control- Initially, projected variable
costs can be computed as a function of projected sales. Period costs can
be directly fed from the current costs stored in the financial model.
- Percent increases/decreases - Managers will be able to directly control
the default values fed into the financial model by indicating percent increases
- Constraints - Constraints must be maintained to keep production and
inventory levels realistic.
- Real-world decisions - Ultimately managers should be able to make decisions
in areas such as job shifts, factory shutdowns, source suppliers, and captial
improvements. The "real-world" decisions would be better supported
by completed source & supply, factory, and marketing models. Development
of these real-world models will require the cooperation of domain experts.
Decision is a heavily overloaded word. With this in mind, I'll use the
A change is made to a single component of the business model. This
change may propagate to other components, but all outside alterations are
made at one component. A decision may also be time triggered and have a
fixed duration. For example, capacity could be increased by building a
new factory, but the increased capacity won't be available for several
years. Another example is production could decrease during a temporary
shutdown. The production rate will only go down for the shutdown period.
A group of atomic decisions. For example, to decrease production and
to increase dealer incentives. Some atomic decisions may need to be prioritized
to handle constraints and overlapping correctly.
Complete Decision Set
A decision set with all information necessary to run a simulation.
A higher level decision. In the previous example, the decision set
might be a part of a real-world decision to decrease factory inventory.
Templates and editors for fine-tuning high-level decisions would be helpful.
- Default and sometimes stub data will be used until the details of the
various models are filled in. The user should be able to see where this
data is coming from, to see what assumptions are behind it, and to edit
the data as appropriate.
- Qualitative decisions must be quantified - NEED good models for
- The tool must be user-friendly. Selection "wizards" and decision
templates would be invaluable as usability tools.
- Real-world decisions must be accurately quantified
- Constraints must be maintained - a factory can't produce more than
- Comparison options should be available to compare decision under several
scenarios or a scenario against several decisions. In a way, selecting
a scenario is making a decision.
- How to control who makes the decisions, how decision makers interact
- Real world decision models could vary greatly, but must be user friendly
- sourcing decision
- job shift changes
- factory shutdowns
- factory improvements
- number of employees
Most decisions (ignoring when scenarios and virtual groups are viewed
will influence three things:
- PINS (Cat sales)
- Factory Production / Inventory Levels
- Period Costs
Note that the first two will impact factory and dealer inventories and
the sales side of the financial model, while the last two will impact the
- There is an immediate need to talk to potential customers of the
scenario planning tool