Using @RISK to Improve Success of
New Ventures at Australia’s Swinburne
University of Technology
In new ventures there is often very little known about the market that is to be exploited. There is no sales history and often no experience delivering the product or service in question. Sometimes it might not even be known if the product that is the centre of the business will work. Many of these unknowns can be resolved to some extent through market research and by trying less risky versions of technology before committing to a full blown venture.
However, the lack of business history is paramount. With no history, the suitability of a business model is hard to be sure of. A chosen business model might be overly sensitive to typical random fluctuations in the assumed parameters. Compound this with the above sources of ambiguity and it can be seen how the risk and uncertainty in new ventures is different from that of many other ventures.
It will always be the case that there are those unknown events that could propel a new venture into high levels of success. There will also be other unknowns that can kill a new venture. The economist Frank Knight called these factors “uncertainties” to distinguish them from “risks,” with which could be associated probabilities.
Until the sensitivity of a model to randomness is known, the business model itself is an uncertainty. This adds further difficulty to new venture management. Researchers Dr Clint Steele and Kourosh Dini of Australia’s Swinburne University of Technology decided to use Palisade’s @RISK software to resolve this issue. With Darcy Naunton of the Australian venture capital firm Adventure Capital they put this idea to the test. The plan: use @RISK to apply probabilistic design to a new venture.
» Read the full case study
» More about Australia’s Swinburne University of Technology
The defining feature of an entrepreneur is
dealing with unknowns, and using @RISK
allows an entrepreneur to really focus this
skill on fewer unknowns.
Clint Steele, Swinburne University of Technology
The DecisionTools Suite is a great way to present quantitative techniques in a straightforward, easy-to-understand way for students.
Modeling a Startup and Shutdown Option
Excerpted from Decision Making Under Uncertainty with
RISKOptimizer, by Wayne Winston, published by Palisade Corporation
This example is an extension of last month’s model where we valued a 10 year lease of a gold mine. In this month’s example, we are interested in the value of owning a gold mine over the next 20 years, where a mine owner would like to value the option of shutting down the mine (to save fixed operating costs) when the price of gold is low and reopening the mine when the price of gold increases. This example has the current price of gold set to $400 per ounce and the annual volatility is 30%. It costs $250 per ounce to extract an ounce of gold. In addition, a fixed cost of $1,000,000 is incurred each year the mine is open. After observing the price of gold for the year we may (for a cost of $1,500,000) shut down an open mine or (for a cost of $2,000,000) open a shut down mine. This example demonstrates how @RISK and RISKOptimizer can be used with real options theory to value this situation.
Download example files and view step-by-step instructions
» View previous example in last month's newsletter
Over 60,000 students use the DecisionTools Suite annually in their MBA and graduate level programs. In 2013, 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:
US and Canada:
Case Western Reserve University
Colorado School of Mines
East Carolina University
Ecole Polytechnique de Montreal
Kennesaw State University
South Dakota State University
Texas A & M University
Universitй de Sherbrooke
University of Alabama at Birmingham
University of Alberta
University of Rochester
University of Tulsa
University of Waterloo
University of Wisconsin, Milwaukee
Virginia Commonwealth University
||Asian Institute of Technology - Thailand |
Curtin Education Centre Pte Ltd - Singapore
DTU National Food Institute - Denmark
EAE Institucion Superior de Formacion Universitaria SL - Spain
Erasmus University - Netherlands
Grupo IBMEC Educacional S/A - Brazil
Guanghua School of Management, Peking University - China
Indian Institute of Management - India
Instituto Tecnolуgico y de Estudios Superiores
de Monterrey - Mexico
National University of Singapore - Singapore
RITI Regional IT Institute - Egypt
The University of Technology, Sydney - Australia
Universidad de la Serena - Chile
Universidad de Monterrey - Mexico
Universitа degli Studi - Italy
Universitй d'AuvergneEcole d'Economie - CERDI France
University of Teesside - United Kingdom
University of Westminster - United Kingdom
There are three easy ways to get the DecisionTools Suite for your students:
Course Licenses available from Palisade. These are economical, annually renewing bulk licenses for both
network lab and laptop installation. Palisade offers a complimentary Live Web Training session to all instructors who order a Course License.
» Learn more
Student Versions from Palisade. These are 12-month versions available for purchase individually by students through either the Palisade web site or the school store.
» Learn more
Textbook Editions available bundled with textbooks.
These are time- and model-limited licenses.
» Learn more
Get DecisionTools Suite 6 for your course by contacting:
Palisade Academic Sales
800-432-7475 / 607-277-8000
The DecisionTools Suite is a key component in major textbooks in business, OR, and engineering.
Decision Analysis for Management Judgment, 4th Edition
By Paul Goodwin and George Wright
In an increasingly complex world, decision analysis has a major role to play in helping decision-makers to gain insights into the problems they face. Decision Analysis for Management Judgment is unique in its breadth of coverage of decision analysis methods. It covers both the psychological problems that are associated with unaided managerial decision making and the decision analysis methods designed to overcome them. It incorporates @RISK and PrecisionTree and its examples are presented and explained in a clear, straightforward manner without using mathematical notation.
» Learn more from the publisher
» See a list of books that discuss Palisade software
The DecisionTools Suite is part of complex analyses published in white papers.
Will clinical studies elucidate the
connection between the length
storage of transfused red blood cells
and clinical outcomes?
Arturo Pereira, Transfusion,
Volume 53, Issue 1, pp. 34-40.
The temporal pattern of the biologic mechanism linking red blood cell (RBC) storage duration with clinical outcomes is yet unknown. This study investigates how such a temporal pattern can affect the power of randomized controlled trials (RCT) to detect a relevant clinical outcome mediated by the transfusion of stored RBCs. An @RISK simulation of four RCTs, each using a specific categorization of the RBC storage time was observed, all of which had a very low power to disclose a harmful clinical effect confined to the last week of the maximum 42-day shelf life of stored RBS’s. The trial’s end-point was evaluated assuming five hypothetical temporal patterns for the biologic mechanism linking RBC storage duration with clinical outcomes. After analyzing the results the author concluded that ongoing RCTs may lack enough power to settle the issue of whether or not the transfusion of stored blood has a negative clinical impact. Therefore, a precautionary reduction of the maximum storage time to 35 days would be advisable.
Read the full paper here
The Academic Global Leader in
Risk and Decision Analysis
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.
» Schools using Palisade software
» Textbooks using Palisade software
» Using @RISK to Improve
Success of New Ventures
at Australia’s Swinburne
University of Technology
» Teaching Tips &
Modeling a Startup and
» Recent School Adoptions
» Licensing Options
» Textbook of the Month
Decision Analysis for
» Featured White Paper
Will clinical studies elucidate
the connection between the
length of storage of
transfused red blood cells
and clinical outcomes?
» About Palisade and the
Click to chat live with
a sales representative
Announcing 2014 Risk Conference dates in Europe, the Middle East, and Africa. Join us for a full day of real-world case studies presented by industry experts, and practical software training presented by Palisade
trainers and consultants.
» Copenhagen: 31 March
» Amsterdam: 3 April
» Dubai: 8 April
» Bogotá: 13 May
» Madrid: 20 May
» London: 7 October
» Frankfurt: 9 October
» Johannesburg: 14 October
» Training Seminars
Rio de Janeiro:
29-31 de janeiro
São Paulo: 19-21 de fevereiro
19-21 de março
Brasília: 9-11 de abril
São Paulo: 14-16 de maio
Rio de Janeiro: 28-30 de maio
London: 28-30 January
London: 27-28 February*
Munich: 4-6 March
London: 4-6 March
Hamburg: 25-27 March
Dubai: 6-7 April
Johannesburg: 15-17 April
London: 22-24 April
Moscow: 23-25 April
Madrid: 21-22 May
* Special Oil and Gas Focus
San Jose: 3 al 5 de febrero
Panamá: 4 al 6 de marzo
Bogotá: 12 al 14 de marzo
Quito: 18 al 19 de marzo
Santiago de Chile:
2 al 4 de abril
Lima, Perú: 6 al 8 de mayo
México, DF: 13 al 15 de mayo
Ottawa: 11-13 February
Atlanta: 18-20 Ferbruary
Washington DC: 4-6 March
Chicago: 15-17 April
Calgary: 4-6 June
» Live Web Training
Project Risk Assessment
10-11 February, 2pm-6pm ET
Quantitative Risk Analysis
11-12 February, 8am-12pm ET
18-19 February, 8am-12pm ET
Quantitative Risk Analysis
using DecisionTools Suite
10-11 April, 9am-1pm ET
24-25 April, 9am-1pm ET
Palisade software is available in fully functional trial versions. Try @RISK or any of our software today!
The complete risk and
decision analysis toolkit
The world's most widely
used risk analysis tool
» @RISK for Excel
» For Project Management
» For Six Sigma
Visual decision analysis
Sophisticated neural networks for spreadsheets
Advanced statistical analysis for spreadsheets
The Innovative Optimizer
Intel and the Intel logo are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries.
|©2014 Palisade Corporation, visit www.palisade.com
798 Cascadilla Street, Ithaca, NY 14850 USA, +1 607 277 8000 firstname.lastname@example.org
Av. Presidente Vargas 435, Sala 501, Centro, Rio de Janeiro CEP 20071-001, +55 (21) 2586-6334 email@example.com
Palisade Europe UK Ltd
31 The Green, West Drayton, Middlesex, UB7 7PN, UK, +44 1895 425050 firstname.lastname@example.org
Palisade Asia-Pacific Pty Limited
Suite 404, L4, 20 Loftus Street, Sydney NSW 2000 Australia, +61 2 9252 5922 email@example.com
Palisade Asia-Pacific, Tokyo Office
〒 150-8512 東京都渋谷区桜丘町 26-1 セルリアンタワー15F 電話 03-5456-5287