Grad Students at IE Business School in Spain Use @RISK to Simulate Catastrophe
A tsunami in Japan; earthquakes in Turkey; a hurricane along the U.S.’s East Coast. The year 2011, it would seem, has had more than its fair share of natural disasters.
Yet, is there any way businesses can better prepare to expect the, well, unexpected?
That’s the question Dr. Milo Jones’s graduate students are tackling with the help of Palisade’s @RISK software at the Instituto de Empresa Business School, Madrid. In a course titled “The Multinational Firm and Geostrategy,” Dr. Jones uses the software to illustrate the possible effects of various geopolitical scenarios (pandemics, earthquakes, terrorist attacks, etc.) on a firm's revenues, expenses and operations.
“We first spend a great deal of time working on the logic of the model and the thinking that lies behind each cell – what I call non-quantitative analysis,” Dr. Jones says. “Once that is established, however, Monte Carlo simulation is really the only way to generate any meaningful quantitative information, because that ‘pre-model’ thinking reveals there are numerous variables and imponderables – just like real life.”
The models are meant to bring home the lesson that risks and opportunities can never be summarized in a single number, Dr. Jones says. “The same scenario or country can contain different risks and opportunities for different firms,” he says.
Dr. Jones says it’s important to introduce management students to @RISK software because it:
- Teaches a way of thinking about the real world and actual business outcomes.
- Offers a graphical tool for demonstrating the business effects of volatile, uncertain, complex and ambiguous environments.
For more information about Milo Jones, PhD, please visit:
@RISK teaches a way of thinking about the
real world and actual business outcomes.
- Dr. Milo Jones, IE Business School
Over 60,000 students use the DecisionTools Suite annually in their MBA and graduate level programs. In 2010, over 800 universities worldwide adopted the DecisionTools Suite. Professors in business, engineering, OR, and other fields keep their students on the cutting edge by teaching the latest analytical techniques from Palisade. Some major schools with programs and courses that standardized on the DecisionTools Suite last month include:
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New Jersey Institute of Technology|
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University of Minnesota
University of Southern Indiana
University of Virginia
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Valdosta State University
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||American University of Sharjah
Fundação de Apoi a Universidade de São Paulo
Gdynia Maritime University
Instituto Tecnologico y de Estudios Superiores de Monterrey
Pontifica Universidad Catolica del Peru
UNIL Universite de Lausanne
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@RISK is a wonderful tool which helps
business people make accurate, efficient
financial projections, as well as
establish which risks their
Dr. Gabriel Rovayo, Professor
Instituto de Desarrollo
The DecisionTools Suite is a great way to present quantitative techniques in a straightforward, easy-to-understand way. Each month we feature an example or tip illustrating how students can gain "real world" benefits by implementing quantitative analysis.
Selecting Advertising Media
Excerpted from RISKOptimizer for Business Applications by Roy L. Nersesian, published by Palisade Corporation
One of the classic applications of linear programming is selecting advertising media. If a manager desires to run ten ads in seven magazines, how many ads should be placed in each magazine to satisfy a budget constraint while maximizing exposure to the widest possible audience? The setup in linear programming requires the readership and targeted audience to be known and entered as single or discrete values. Reality is not a single value. Magazine sales are not constant, but vary from issue to issue. If an advertisement is placed in the next issue, readership is no longer a discrete value, rather a range
of values that may be described in terms of historical sales. Moreover the target audience is not known with precision. While market surveys do provide guidance as to the nature of the readers, these are only estimates whose accuracy depends on the size of the sample.
Download the example spreadsheets, and Chapter 2 from
RISKOptimizer for Business Applications
The DecisionTools Suite is included in dozens of major textbooks, and is a key component of more titles every year. Authors use the DecisionTools Suite to illustrate key analytical concepts and build examples demonstrating the value of quantitative techniques in business, OR, and engineering.
Introduction to Financial Models for Management and Planning
by James R. Morris and John P. Daley
This text provides graduate level instruction on the development of models for financial management and planning. By working through the problems and models in this text, readers will learn how computer based models should be structured to analyze a firm’s investment and financing. The authors emphasize modeling problems related to financial management, firm valuation, forecasting, and security pricing. Monte Carlo simulation is emphasized and access to the Monte Carlo simulation software @RISK is included with the text. A solutions manual and PowerPoint® lectures are available for instructors who adopt the text.
» Learn more from the publisher
» See a list of books bundled with Palisade software
Professors, PhD candidates, practitioners and others often use the DecisionTools Suite as part of a complex analysis to address important problems. These analyses are published in white papers. Each month we will feature a different academic white paper addressing a wide range of issues.
Novel offshore vertical axis wind turbines
CARBON BRAINPRINT CASE STUDY
Analysis: David Parsons and Julia Chatterton
School of Applied Sciences, Cranfield University
Case study experts: Professor Feargal Brennan and Dr Athanasios Kolios School of Engineering, Cranfield University
As part of the transition to a ‘low carbon economy’, renewable technologies are expected to play an increasing role in reducing dependence on fossil fuels for energy and electricity. Wind power in particular is likely to become a much larger contributor to the UK’s energy mix. The current dominant design for large, grid-connected wind turbines is a three blade rotor with a
horizontal rotating axis. The concept of a vertical axis wind turbine (VAWT) is relatively new, but has several advantages over horizontal axis alternatives. It is able to capture the wind from any direction, and the vertical axis is such that the rotor equipment is located at base level, making it is simpler and less costly to install and maintain.
The Energy Technologies Institute (ETI) is a UK-based company formed from global industries and the UK government. One of three projects looking at new turbine design and concepts for offshore wind is the Novel Offshore Vertical Axis (NOVA) project, a UK-based consortium
launched in January 2009 to look at the feasibility of a NOVA turbine.
This case study used @RISK to considered the potential reduction in greenhouse gases (GHGs) that could be achieved through the installation of NOVA wind turbines, in comparison to conventional horizontal axis wind turbines (HAWTs) for offshore power generation. The increased power rating of the NOVA turbines compared to current HAWTs is expected to provide considerable reductions in lifetime greenhouse gas emissions. It compared the emissions from 1 GW installations over 20 years, based on a life cycle analysis of construction, operation and disposal. The comparison used the popular Vestas V90 3 MW model and the proposed NOVA
10 MW units.
View the full paper
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Palisade Corporation is the world’s leading provider of risk and decision analysis software and solutions. Founded in 1984, its products @RISK and the DecisionTools Suite are used by over 95% of the Fortune 100, in nearly every industry around the world. Palisade is headquartered in New York State, and has offices in London, Sydney, Rio de Janeiro, and Tokyo.
What is The DecisionTools Suite?
The DecisionTools Suite is the world’s only integrated set of risk and decision analysis programs. The Suite includes @RISK for Monte Carlo simulation, PrecisionTree for decision trees, and TopRank for “what if” sensitivity analysis. In addition, DecisionTools Suite comes with StatTools for statistical analysis and forecasting, NeuralTools for predictive neural networks, and Evolver and RISKOptimizer for optimization. All programs work together seamlessly, and all integrate completely with Microsoft Excel for ease of use and maximum flexibility.
The Suite is offered in three affordable and flexible licensing options for those in academia: Student Versions, Course Licenses and Full Academic Versions.
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