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Palisade Corporation

In This Issue
What’s New
» Energy Risk Forum in
   Calgary, September

» New York City Conference
» DFSS Webcast
» VAIR Courses Featuring

» Palisade Academic Symposia

Case Study
» Using @RISK for Traffic
   Forecast Analysis

@RISK Modeling Tips
» Discounted Cash Flow (DCF)
» Impact of Price or Other
   Variables on Profit:
   Sensitivity Simulation

What's New in @RISK 5.0
» New Graphs

@RISK Function
of the Month

» The Normal Distribution

Palisade Analytics
in the Press

» Agriculture
» Astronomy
» Energy Economics
» Genetics
» Highway Engineering
» Marketing
» Oceanography
» Penal System
» Rock 'n Roll
» Social Work
» Traffic Control

» Palisade User Forums

Palisade Risk & Decision Analysis Conferences
» Latinoamérica
20-21 octubre, Medellín
» North America
13-14 Nov, New York City
» Asia-Pacific
Spring 2009, Melbourne
» Europe
Fall 2009

Live chat Click
to chat live
with a sales


Free Webcasts
@RISK for design optimization within DFSS-based product development
Presented by Jeff Slutsky, Global Director of DFSS, Bausch&Lomb, Inc.
» 24 July 2008, 11am-Noon ET

DecisionTools Suite 5.0 World Tour
Special live demonstrations of the all-new DecisionTools Suite 5.0. Learn how the Suite products combine to deliver more complete results than any single product can provide.

Dallas, 30 July
Ottawa, 19 August
London, 19 August
Montreal, 21 August
Stockholm, 4 September
London, 22 September
Aberdeen, 23 September

Manchester, 24 September
Dublin, 25 September

» Sign up for a Tour date

Palisade Energy Risk Analysis Forum
A one-day forum covering risk and decision analysis from all angles specific to the energy sector.

Calgary, AB, 25 September

» Register Now for the Energy Forum and Save USD $100

Palisade Academic Symposia
Free one-day events for Professors, lecturers and post graduate students. Find out exactly how and why over 40,000 students are trained annually to perform quantitative risk and decision analysis using Palisade software DecisionTools Suite and @RISK.

Pretoria, 30 September
Frankfurt, 18 October

» Free registration

Regional Seminars
» Africa
Pretoria: 1-2 Oct
Pretoria: 3 Oct

» Asia-Pacific
Sydney: 31 July-1 Aug

» Brasil (em português)
Rio de Janeiro: 21-22 august
São Paulo: 27-29 august
Salvador: 9-10 outubro
Rio de Janeiro: 24-28 nov

» Europe
London: 8-9 Sept
London: 15-17 Oct
London: 28-29 Oct
London: 10-12 Nov
London: 4-5 Dec

» Latinoamérica
   (en español)
Quito, Equador: 28-30 de julio
San José, Costa Rica:
   25-27 de agosto

» North America
Toronto: 5-6 Aug
Seattle: 21-22 Aug
Austin: 10-11 Sept
Boston: 23-24 Sept
Chicago: 29-30 Sept
Baltimore: 8-9 Oct
Calgary: 22-23 Oct
Orlando: 29-30 Oct
Los Angeles: 20-21 Nov
Dallas: 3-4 Dec
Atlanta: 16-17 Dec

Live Web Training
» Project Risk Assessment Using @RISK for Project
2-3 September, 1-5pm ET

» Risk and Decision Assessment Training using @RISK 5.0
Part I
11-12 August, 1-5pm ET
15-16 Sept, 1-5pm ET
13-14 Oct, 1-5pm ET
3-4 Nov, 1-5pm ET
8-9 Dec, 1-5pm ET
Part II
24-25 July, 1-5pm ET
14-15 August, 1-5pm ET
18-19 Sept, 1-5pm ET
16-17 Oct, 1-5pm ET
6-7 Nov, 1-5pm ET
11-12 Dec, 1-5pm ET

» Risk and Decision Assessment using The DecisionTools Suite 5.0
Part I
: 8-9 Sept, 1-5pm ET
Part II: 11-12 Sept, 1-5pm ET

Free Trial Versions
Palisade software is available in fully functional free trial versions. Try @RISK or any of our software today!

The DecisionTools Suite
The complete risk and decision analysis toolkit

The world's most widely used risk analysis tool
@RISK» @RISK for Excel
@RISK» @RISK for Project

Visual decision analysis for spreadsheets

Sophisticated neural networks for spreadsheets

Advanced statistical analysis for spreadsheets

The Innovative Optimizer
for Windows

The DecisionTools Suite

Palisade Energy Risk Analysis Forum - e-focus
What's New
Energy Risk Forum
Calgary, September 25, 2008
Palisade is pleased to announce the first Palisade Energy Risk Analysis forum in Calgary on September 25th, 2008.

The Palisade Energy Risk Analysis Forum is a one-day forum covering risk and decision analysis from all angles specific to the energy sector. From hands-on software training to real-world case studies from industry experts, you will learn new approaches to the problems you face every day. You will also see how new versions of @RISK, PrecisionTree, RISKOptimizer, TopRank, NeuralTools, StatTools, and other Palisade software tools work together to give you the most complete picture possible in your situation. Top-level consultants, industry practitioners, and Palisade experts will present to an audience of professionals in the energy industry.

Whether you are in Oil & Gas, Renewable Energy, Utilities or related Engineering Services, this is an excellent opportunity to network with your peers and fellow @RISK users in your industry.

» More information and register

Palisade Risk & Decision Analysis Conference
New York City, November 13-14, 2008
Be sure to experience the latest in risk and decision analysis techniques and software from industry leaders.

» Register now at the early bird rate for only USD$595

Free Live Webcasts
DFSS-based Design Optimization using Design of Experiments
and @RISK

Presented by Jeff Slutsky
Global Director of DFSS, Bausch&Lomb Inc.
» 24 July 2008, 11:00 AM – Noon ET

This webcast will take you through the fundamental steps of the Design and Optimize phases of a Design for Six Sigma product development effort. The steps involve modeling a physical system using a designed experiment, and using the model to achieve the required system performance using Monte Carlo simulation to estimate system sensitivity and capability.

This webcast is aimed at the practicing product development engineer, quality engineers and technical project managers. Please join us for this journey through these crucial aspects of quality product development and DFSS.

» Learn more about webcasts and register

VAIR Financial Courses Featuring @RISK
Financial Statement Modeling and Analysis with Excel
and @RISK 5.0 - September 8-9 New York City

This class demonstrates efficient model creation and how these financial models should guide commercial discussions. Participants learn how to "negotiate off the financial model." This course is indispensable to the effective use of financial spreadsheets for any industry or sector.

» More information or Register

Palisade Academic Symposia
Pretoria, South Africa - September 30, 2008
Frankfurt, Germany – October 18, 2008

Palisade Academic Symposia are free one-day events for all professors, lecturers and post graduate students. The aim is to provide all the information required to understand how the DecisionTools Suite and @RISK can easily enable quantitative risk and decision analysis to be added into academic syllabi. In addition, you’ll see how these tools and techniques are being used in industry. Find out exactly how and why over 40,000 students are being trained annually to perform quantitative risk and decision analysis using Palisade software DecisionTools Suite and @RISK.

» Registration is free, so register today

Case Study
Using @RISK for Traffic Forecast Analysis
Presented by at the 2008 Palisade User Conference Europe
Transport, Innovation, and Systems (
, a Portuguese transportation consultancy, analyzed the traffic risks using @RISK. The risk analysis of road infrastructure traffic demand studies is traditionally supported by estimated demand values within three scenarios—pessimistic, reference, and optimistic—allowing for a very limited financing risk deterministic analysis.

In this presentation the developed approach draws on @RISK software and a traffic assignment model (supported by PTV VISUM software) which makes setting up financing risk analysis in stochastic terms possible, and allows one to benefit from the results coming from @RISK software. In this way, the quality of decision-making is improved by representing traffic demand results in a probabilities distribution histogram, because it allows us to determine the confidence interval for the mean value of traffic demand (or revenue), and identify the most influential input variables for traffic demand through tornado graphics interpretation.

» Download the presentation

Product Spotlight

Discounted Cash Flow (DCF)
Discounted cash flow (DCF) calculations are a frequent example of the use of @RISK. In the example model, the sources of risk are the revenue growth rate and the variable costs as a percentage of sales. After taking into account the assumed investment, and applying a discount factor, the DCF is derived. Following the simulation, the average (mean) of the DCF is known as the net present value (NPV).

In this example, the results show that the average DCF is positive (about 40), whereas the probability of a negative DCF is about 15%. The decision as to whether to proceed or not with this project will therefore depend on the risk perspective or tolerance of the decision-maker. .

» Example model: CashFlow.xls

Impact of Price or Other Variables on Profit:
Sensitivity Simulation
In this example, Sensitivity Simulation capabilities are being used to analyze how price impacts the simulation results for sales of a new product. The price is not uncertain, but has to be chosen by the decision-maker. Sensitivity Simulation lets you enter all prices being considered using @RISK’s Simtable function.

» Example model: SenSim.xls

Product Spotlight

The release of @RISK 5.0 has spurred tremendous response from our users. Every day customers ask us, “What’s new in @RISK 5.0?” To help answer this question, this series highlights key new features in @RISK 5.0. You can always see a complete list of new features, including short 30-second movies, here:

» What's New in @RISK 5.0

New Graphs
@RISK uses a new graphing engine specifically for simulation data. Graphs can be fully customized by simply clicking on the desired graph element. Graphs can be copied and pasted in Excel, Word, or PowerPoint. See how the new graphing engine works in these under-60-second movies:

» Customizing Graphs
» Graph Titles
» Graph Markers
» Overlay Graphs


Distribution of the Month

The Normal Distribution

This is the traditional “bell shaped” curve applicable to distributions of outcomes in many data sets. The Normal distribution is a symmetric continuous distribution which is unbounded on both sides, and described by two parameters (μ and σ i.e. its mean and standard deviation). The use of the Normal distribution can often be justified with reference to a mathematical result called the Central Limit Theorem. This loosely states that if many independent distributions are added together, then the resulting distribution is approximately Normal. The distribution therefore often arises in the real world as the compound effect of more detailed (non-observed) random processes. Such a result applies independently of the shape of the initial distributions being added.

The distribution can be used to represent the uncertainty of a model’s input whenever it is believed that the input is itself the result of many other similar random processes acting together in an additive manner (but where it may be unnecessary, inefficient, or impractical to model theses detailed driving factors individually). Examples could include the total number of goals scored in the a soccer season, the amount of oil in the world, assuming that there are many reservoirs of approximately equal size, but each with an uncertain amount of oil. Where the mean is much larger than the standard deviation (e.g. 4 times or more) then a negative sampled value of the distribution would occur only rarely (so that the number of goals would not be sampled negatively in most practical cases). More generally, the output of many models is approximately normally distributed, because many models have an output which results from adding many other uncertain processes. An example might be the distribution of discounted cash flow in a long-term time series models, which consists of summing the discounted cash flows from the individual years.

RiskNormal(mean,standard deviation) specifies a normal distribution with the entered mean and standard deviation.


RiskNormal(10,2) specifies a normal distribution with a mean of 10 and a standard deviation of 2.

RiskNormal(SQRT(C101),B10) specifies a normal distribution with a mean equaling the square root of the value in cell C101 and a standard deviation taken from cell B10.

Palisade Software Techniques in the News

New Web Tools Help Farmers Make Productive Decisions
Technique: Decision Analysis   » see DecisionTools Suite 5.0
Source: Montana State University, July 8, 2008

A new set of online decision tools developed at Montana State University help farmers select fertilizer, herbicides, and plant varieties.

The Astronomer's New Assistant
Technique: Neural networks   » see NeuralTools 5.0
Source: Sky & Telescope, July 17, 2008

Neural networks are helping astronomers overcome an age-old enemy of their profession: information overload.

Energy Economics
EnergyWindow Introduces Robust Energy Analytics Tool
Technique: Monte Carlo simulation   » see @RISK 5.0
Source:, June 16, 2008

A new tool to help financial executives plan and control energy costs uses @RISK 5.0 to run the Monte Carlo simulation component of its analysis.

Researchers Working on Final Part Of The Immune System Code
Technique: Neural networks   » see NeuralTools 5.0
Source: Science Daily, July 10, 2008

Danish researchers have used neural networks to decode the genetic material of the human immune system. Their models predict the immune system’s access codes and simulate how the body protects itself from disease.

Highway Engineering
Electronic Path to Bridge Safety
Technique: Neural networks   » see NeuralTools 5.0
Source: Australian IT, July 1, 2008

Australian researchers are developing a bridge management system that incorporates a neural network to predict the safety of 10,000 bridges across Queensland.

GIS + Data Mining = Marketing Intelligence
Technique: Neural networks, decision trees, genetic algorithms
» see DecisionTools Suite 5.0
Source: B-EYE-Network, July 10, 2008

GIS and data mining are naturally synergistic technologies that can be harnessed together to produce powerful market insight from a sea of disparate data.

New Space Mission Helps Offshore Industries Dodge Swirling Waters
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Space Ref, July 1. 2008

The space mission known will run Monte Carlo simulation with satellite observations of the ocean surface to help offshore oil and gas drilling operations avoid dangerous underwater eddies.

Penal System
Cold Calculations about Death Row
Technique: Neural networks   » see NeuralTools 5.0
Source:, June 25, 2008

Of the many, many inmates on death row, only a few will eventually be executed. A new study uses neural networks to find out what characterizes these inmates.

Rock 'n Roll
Punk Rages with His Machines
Technique: Neural networks   » see NeuralTools 5.0
Source: Sydney Morning Herald, June 25, 2008

Each of the robots punk musician Fiddian Warman has planted in his audience is controlled by a neural network, which has "educated" the robots in the finer points of punk.

Social Work
Can Game Theory Save Our At-Risk Kids?
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: San Francisco Chronicle, July 14, 2008

One youth worker with a Yale M.B.A. is sharing the decision analysis techniques she learned in business school with kids in trouble.

Traffic Control
Pardon Me, Is This Space Taken?
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Wireless Week, July 3, 2008

A new wireless neural network technology will link streetlights with parking meters to allow consumers to see which parking spaces are available.

Palisade User Forums

The Palisade User Forums are online discussion boards where users are invited to post questions and share ideas on their use of @RISK and other Palisade software. It’s also a great place to check for announcements regarding updates of Palisade software. Forums are organized by products.

» Join or view the Palisade Forums

Recent topics include:

» Serial correction of inputs

Palisade Corporation

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