March Madness Simulations Demonstrate
Uncertainty and Decision-Making
With 68 teams playing 67 games over three weeks, the annual U.S. men’s college basketball tournament has more than 100 quintillion possible outcomes.
No wonder it’s called “March Madness.”
And no wonder Villanova University Professor Robert Nydick, PhD, finds that the tournament makes an excellent simulation to show his MBA students how @RISK software can measure the impact of uncertainty and enhance decision-making. (See “Simulating the NCAA Tournament” for a similar model, below.)
“@RISK is an incredibly useful tool that allows the user to measure the impact of that uncertainty on a specified output cell, “ Dr. Nydick says. “The fact that a distribution of output values can be identified along with other output statistics provides a tremendous wealth of information that can be used to improve decision making.”
Of course, Dr. Nydick’s “Simulation for Business Analytics” course isn’t just about gauging sports outcomes. He incorporates @RISK software into models looking at everything from inventory to cash flow and investment analysis. Dr. Nydick also exposes his students to other programs in the DecisionTools Suite and appreciates the fact that many of the tools in the suite can “talk” to each.
“I use PrecisionTree to teach decision trees,” he says. “The fact that I can then overlay @RISK onto a decision tree to allow for uncertain probabilities and payoffs within the tree and then study the impact that that uncertainty has on different sequences of decisions provides amazing insights for the students.”
In the fall of 2012, undergraduate students at Villanova will also have a chance to learn about enhancing business decisions with the DecisionTools Suite. Dr. Nydick is the course coordinator for a new course called “Risk and Decision Analytics,” which will be required for all 450 undergraduate business students.
Dr. Nydick is a Professor of Management and Operations and a 25-year veteran at Villanova University, located in Villanova, PA, a suburb of Philadelphia.
» More about Dr. Nydick, his courses, and publications
@RISK is an incredibly useful tool that allows
the user to measure the impact of that
uncertainty on a specified output cell.
Dr. Robert Nydick, Professor at Villanova University
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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Ohio State University
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University of Alberta
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University of Virginia
Washington State University
||Aalto University (Finland) |
Curtin University (Australia)
ESSEC Business School (France)
Fachhochschule Münster (Germany)
Marcus Oldham College (Australia)
National University of Singapore (Singapore)
Politechnika Wroclawska (Poland)
Universidad de Costa Rica (Costa Rica)
Universitaet Bielefeld (Germany)
Universität für Bodenkultur Wien (Austria)
University of Aberdeen (UK)
University of New South Wales (Australia)
University of Western Australia (Australia)
There are three easy ways to get the DecisionTools Suite for your students:
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@RISK was vital to our simulation model.
It allowed us to incorporate uncertainties
and correlations, and to systematically
evaluate each of the policy tools.
Professor Brent Gloy, Cornell University
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.
Simulating the NCAA Tournament
Example model included with the Beta version of @RISK 6.0. The Beta expires on March 31, 2012, and can be installed on the same system as a licensed copy of version 5.x of the DecisionTools Suite or @RISK.
This model simulates the NCAA Basketball Tournament held every year in March ("March Madness"). To run it with real data for any given year, you need to enter the teams and their Sagarin ratings (from the Web) in columns D and E. You might also need to change the names of the regions so that the correct regions play against each other in the semifinals. (It is currently set up so that East plays West and Southeast plays Southwest, as they did in the 2011 tournament.) This "template" will also need to be modified if the NCAA adds more teams to the tournament. In 2011 there were 8 teams (marked darker colors) that played in "round 0."
The basic assumption is that the actual point spread for any game is normally distributed with mean equal to the difference between the Sagarin ratings and standard deviation 10 (the value in cell E2, which you can change if you like).
Download the example spreadsheet
» Download the DecisionTools Suite 6 Beta
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.
VBA for Modelers: Developing Decision
Support Systems for Microsoft Excel,
by Dr. Chris Albright
This book is an essential tool for helping students learn to use Visual Basic for Applications (VBA) as a means to automate common spreadsheet tasks, as well as to create sophisticated management science applications. VBA is the programming language for Microsoft Office. This book contains two parts: The first part teaches students the essentials of VBA for Excel, while the second part illustrates how a number of management science models can be automated with VBA. From a user's standpoint, these applications hide the details of the management science techniques and instead present a simple user interface for inputs and results. Automating models with @RISK is also discussed.
» 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.
Modeling the competitive market
efficiency of Egyptian companies:
A probabilistic neural network analysis
Mohamed M. Mostafa
Auburn University, College of Business
Understanding efficiency levels is crucial for understanding the competitive structure of a market and/or segments of a market. This study uses two artificial neural networks (NN) and a traditional statistical classification method to classify the relative efficiency of top listed Egyptian companies. Accuracy indices derived from the application of a non-parametric data envelopment analysis approach are used to assess the classification accuracy of the models. Results indicate that the NN models are superior to the traditional statistical methods. The study shows that the NN models have a great potential for the classification of companies’ relative efficiency due to their robustness and flexibility of modeling algorithms. The implications of these results for potential efficiency programs are discussed.
View the full paper
Professors using Palisade software share examples and teaching tips they've used in class in Palisade's Academic Webcast series. Register online at no charge.
A Stochastic Simulation Model for Dairy
Business Investment Decisions
To be presented by Dr. Jeffrey Bewley, University of Kentucky
May 24, 2012, 11:00am ET
A dynamic, stochastic, mechanistic simulation model of a dairy enterprise was developed to evaluate the cost and benefit streams coinciding with investments in Precision Dairy Farming technologies. The model was constructed to embody the biological and economical complexities of a dairy farm system within a partial budgeting framework. A primary objective was to establish a flexible, user-friendly, farm-specific, decision-making tool for dairy producers or their advisers and technology manufacturers.
The basic deterministic model was created in Microsoft Excel. @RISK was employed to account for the stochastic nature of key variables within a Monte Carlo simulation. This live webcast will go into detail about the model.
» Read more details about the webcast and register here
» See complete Webcast schedule
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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.
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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.
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Simulating the NCAA
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A Stochastic Simulation Model
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