View online at http://www.palisade.com/news/2008/08_news.asp
Palisade Corporation

In This Issue
What’s New
» Risk and Decision Analysis
   Forum Schedule Announced

» Palisade Partners with
   Rath & Strong

» Free Live Webcasts
» VAIR Financial Modeling
   Courses Featuring @RISK

Case Study
» Can a Single Model Replace
  Simulation in Determining
  Optimal Portfolio Withdrawal
  Rates from a Retirement
  Portfolio?

@RISK Modeling Tips
» TopRank and @RISK:
   Product Launch

» Oil and Gas Production
   Forecasting

@RISK Function
of the Month

» The Discrete Distribution

Palisade Analytics
in the Press

» Analytics Training
» Emergency Preparedness
» Finance
» Medicine
» Online Retail
» Personal Finance
» Project Management
» Psychology
» Robotics

» 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
representative

Free Webcasts


Mitigating Project Specification Risk using @RISK
Dr. William McKibbin
Global Director of DFSS, Bausch&Lomb Inc.

» 21 Aug 2008, 11am-Noon ET

Data Analysis and Statistics for Decision Making Using StatTools 5.0
John McKenzie Founder, Innovastat Corporation
» 28 Aug 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.

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

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

» 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
Oslo: 28-29 Oct
London: 5-7 Nov
London: 4-5 Dec

» Latinoamérica
   (en español)
San José, Costa Rica:
   25-27 de agosto
Panama City, Panama: 8-10 de septiembre

» North America
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
:
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
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

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

PrecisionTree
Visual decision analysis for spreadsheets

NeuralTools
Sophisticated neural networks for spreadsheets

StatTools
Advanced statistical analysis for spreadsheets

Evolver
The Innovative Optimizer
for Windows


The DecisionTools Suite

2008 Palisade Risk & Decision Analysis Conference - e-focus
  2008 Palisade Risk & Decision Analysis Conference

Schedule Announced
The program schedule for the 2008 Palisade Risk & Decision Analysis Conference is now available.  The Conference is a two-day forum covering risk, decision, and data analysis from all angles. Full of real-life case studies using @RISK and the DecisionTools Suite as well as hands-on software training, the event will show you new approaches to the problems you face every day.  You will also learn about to apply the all-new DecisionTools Suite 5.0 to a variety of situations.

» See the Conference Program
» Register now and Save US $200
» Watch testimonials from last year’s conference on YouTube

The Hyatt and Manhattan
The Palisade Risk & Decision Analysis Conference will take place at the gorgeous Hyatt Regency Jersey City on the Hudson. The hotel offers stunning views of New York City. Join us for cocktails and a dinner cruise around Manhattan and the Statue of Liberty, embarking from the Hyatt.

» Book your room now for only US $309


Palisade Partners with
Six Sigma Consultancy Rath & Strong
Palisade is pleased to announce the formation of a partnership with the management consultancy Rath & Strong, based in Lexington, Massachusetts. Rath & Strong is an acknowledged leader in the field of change management and counts many Fortune 500 companies among its clients. The firm’s current consulting and training emphasizes Lean Six Sigma, and the goal of its new partnership with Palisade is to expand the role of Monte Carlo simulation in Lean Six Sigma practice. Palisade’s software @RISK 5.0 will be an important analytic tool for Rath & Strong, and Palisade will advise the firm’s consultants on the use of Monte Carlo simulation in process improvement.

» Read the full press release
» Quality Digest recently covered the partnership


Free Live Webcasts
Mitigating Project Specification Risk using @RISK
Presented by Dr. William McKibbin
Global Director of DFSS, Bausch&Lomb Inc.
» 21 August 2008, 11:00 AM – Noon ET

What we will discuss in detail in this free live webcast are the kinds of projects contractors bid on (fully-specified versus quasi-specified), typical issues that arise, applicable distributions, and then, a case study application.

Data Analysis and Statistics for Decision Making Using StatTools 5.0
Presented by John McKenzie
Founder, Innovastat Corporation
» 28 August 2008, 11:00 AM – Noon ET

We are awash in data but sometimes do not use it to its full potential for the analysis of decisions. Innumeracy and statistical illiteracy hampers the analyst's ability to think critically when data is part of the decision making process. John McKenzie will demonstrate how StatTools can be easily used for managing your data set, deriving descriptive statistics, exploratory data analysis, determining normality, inferential statistics (both parametric and non-parametric), time series, regression, logistic regression and quality control. He will use some interesting data sets from historical events and from scientific experiments in the explanation of the StatTools functions.

» Learn more about webcasts and register

 

VAIR Financial Modeling 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



Case Study
Can a Single Model Replace Simulation in Determining Optimal Portfolio Withdrawal Rates from a Retirement Portfolio?
Presented at the 2007 Risk & Decision Analysis Conference
Dr. Michael Tucker
Professor of Finance
Fairfield University, Dolan School of Business

Milevsky and Robinson (2005) have derived a formula using the gamma distribution to estimate the probability of running out of money during retirement. The initial assumptions are a fixed withdrawal rate in real dollars for the retirement portfolio. What is uncertain is the performance of the underlying assets. @RISK is used to gauge the probability of running out of money under uncertainty. An Excel macro linked to @RISK calculates the probability of ruin at each withdrawal rate for each age and life expectancy.

» Download the presentation
» Download the model


Product Spotlight

TopRank and @RISK:
Product Launch

TopRank recognizes @RISK distribution functions and incorporates them in What-If analyses. This ability provides more flexibility and accuracy in modeling the possible input values in your What-If analysis. In this example, Jupiter Corporation is building a new model of 4-door sedan. Assuming that the car will generate sales for the next 5 years, management has identified 5 factors that can influence the total revenue during that period. Several of these factors have probability distributions associated with them. During a What-If analysis, TopRank sees the probability distributions associated with these items and performs a smart sensitivity analysis using them, stepping through the range of the distribution while spacing the steps such that each interval encompasses equal amounts of probability.

» Download example model: ProductLaunchTopRankRISK.xls

Oil and Gas Production Forecasting
This is a simple model forecasting production for a particular oil well.  The estimated reserves within the well are uncertain and are represented with a Lognormal distribution function.  The mean is 500,000 STB and the standard deviation is 50,000 STB.

The output in the model is the NPV of the reserves for the first 10 years of production.  Other factors considered include the decline rate, the gas-oil ratio (GOR), the prices of oil and gas, as well as the rate of increase of the prices of oil and gas.  The only input factor that contains an @RISK probability distribution function is reserves, but you could make the model more realistic by using distribution functions to describe the decline rate, GOR, price of oil, etc.

» Download example model: OilProdForecast.xls


Product Spotlight

Application Settings
@RISK 5.0, and the entire DecisionTools Suite 5.0, contains an Application Settings dialog where you can specify customizable defaults such as graph settings, window configurations, simulation settings, and more.  This is located on the Utilities menu.

» See how Application Settings works


Function of the Month

The Discrete Distribution

This is a user-defined distribution in which the user specifies all possible
outcomes and their probabilities. It can be used where it is believed there are
several discrete outcomes (e.g. worst case, expected case, best case), to
replicate some other discrete distributions (such as the Binomial distribution),
and to model discrete scenarios.

RiskDiscrete({X1,X2,...,Xn},{p1,p2,...,pn}) specifies a discrete distribution with
a number of outcomes equaling n. Any number of outcomes may be entered.
Each outcome has a value X and a weight p which specifies the outcome's
probability of occurrence. As with the RiskHistogrm function, weights may
sum to any value — they are normalized to probabilities by @RISK.

Examples

RiskDiscrete({0,.5},{1,1}) specifies a discrete distribution with 2 outcomes
valued 0 and .5. Each outcome has an equal probability of occurrence as the
weight for each is 1. The probability of 0 occurring is 50% (1/2) and the
probability of .5 occurring is 50% (1/2).

RiskDiscrete(A1:C1,A2:C2) specifies a discrete distribution with three
outcomes. The first row of the worksheet — A1 through C1 — holds the
values of each outcome while row 2 — A2 through C2 — holds the probability
“weight” of each occurring.

Guidelines Weight values p must be greater than, or equal to, zero and the sum of all weights must be greater than zero.



Palisade Software Techniques in the News

Analytics Training
@RISK Demonstrates Financial Statement Modeling & Analysis
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: OilVoice, August 6, 2008

A new VAIR training course uses Palisade’s flagship software to teach the concepts and applications of Monte Carlo simulation.

Emergency Preparedness
Weighing In on Coastal Protection
Technique: Decision analysis   » see DecisionTools Suite 5.0
Source: Daily Comet, Thibodaux, LA, August 1, 2008

Residents of Louisiana get hands-on experience using multivariate analysis to help the Army Corps of Engineers officials set priorities in case of future weather disasters.

Finance
A.M. Best Rates Collateralized Debt Obligations
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: MarketWatch, August 6, 2008

A worldwide insurance-rating and information agency used Monte Carlo simulation to evaluate the complicated packages of debts known as CDOs that are currently on the market.

Medicine
Predicting Treatment Outcomes for Hepatitis
Technique: Decision trees   » see PrecisionTree
Source: 7thSpace Interactive, August 9, 2008

A new diagnostic model uses gene expression to predict the outcome of treatments for hepatitis C.

FDA Clears Monte Carlo Dose Calculation Algorithm
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: BioOptics World, July 21, 2008

The Monte Carlo algorithm is widely accepted as the gold standard for calculation of dosages.  Now a specialized version of the algorithm allows highly precise radiation treatments.

Online Retail
Logistics: The Key to e-Retail Success
Technique: Neural networks   » see @RISK 5.0
Source: Supply Chain Management Review, July 24, 2008

In order to facilitate the movement of goods purchased online, neural network pattern recognition, and other advanced data management techniques will have to be blended.

Personal Finance
Nest Egg Nostradamus
Technique: Decision analysis   » see DecisionTools Suite 5.0
Source: Pioneer Press, St. Paul, MN, August 8, 2008

Caught with two mortgages in the housing slump, Dan and Nancy Boxrud turned to one of many financial advisers offering dedicated software for decision analysis.

Project Management
Assessing Overall Risk when Uncertainties are Linked,
by using Decision Trees

Technique: Decision trees   » see PrecisionTree
Source: TechRepublic, July 29, 2008

Project managers can use probability-based decision trees to assess a series of related risks.

Psychology
Anorexia Can Take 25 Years Off Life
Technique: Decision analysis   » see DecisionTools Suite 5.0
Source: National Post, Toronto, July 17, 2008

Canadian researchers used decision analysis software to analyze mortality statistics for 954 anorexia patients in BC over a 20-year period.

Robotics
Artificial Intelligence Has Potential to Overcome Human Handicaps
Technique: Neural networks   » see NeuralTools 5.0
Source: Medical News Today , July 24, 2008

An interdisciplinary team of European researchers has developed a robotic arm and hand that moves and 'senses' like a human and is controlled by a neural network, a human-inspired electronic 'brain'.>

Robots Train Themselves to Move
Technique: Neural networks   » see NeuralTools 5.0
Source: BBC News, August 6, 2008

Researchers in Leipzig have developed software that allows robots use trial and error to “learn” to move.

 


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

Live Chat
©2008 Palisade Corporation, visit www.palisade.com

Palisade Corporation
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