Reviewed in March 1999 » Why Plain Old Spreadsheets Are Not Enough

RISKOptimizer, released last month, will feel familiar to anyone experienced with Palisade's long-established @RISK (the product that practically invented the genre of uncertainty modeling add-ins when Lotus 1-2-3 was on almost every PC). To develop an uncertainty-based model, we entered formulas using Palisade's probabilistic functions such as RiskNormal (for a Gaussian normal bell curve) with additional parameters such as mean and standard deviation.

Stands firmly on uncertain ground

To perform uncertainty-based optimization with RISKOptimizer, we had to define a fitness function: a formula in our spreadsheet that RISKOptimizer could use as a measure of success, either by maximizing (as with an income) or minimizing (as with a cost).

Importantly, however, RISKOptimizer also gave us the option of looking at fitness-function statistics from several trials so that we could, for example, seek a combination of values that produced the most consistent possible result (by minimizing the fitness function's variance or standard deviation).

It was easy to include common-sense considerations such as values that could only be integers. With a formula such as =ROUND(RiskTriang(3,7,15),0), we could concisely describe a quantity that is never less than 3, never more than 15, probably close to 7 and unable to have a fractional value. RISKOptimizer also capitalized on other Excel capabilities, for example by letting us execute named macros at selected times (such as at the end of an optimization process, enabling us to automate report generation).

Excel's Visual Basic for Applications can be used to control RISKOptimizer's own large vocabulary of macro commands. A custom application developer should be able to hide RISKOptimizer behind a custom-built front end, using high-level user input to construct and execute a corresponding model.

An interactive tutorial walked us through a representative RISKOptimizer problem, presenting a realistic decision-making situation involving the overbooking of an airline flight. This clarified options and procedures that could otherwise be opaque to anyone but an operations research specialist.

RISKOptimizer 1.0, Palisade's add-in for Microsoft's Excel, works with uncertain quantities and offers an exceptional variety of optimization criteria while sharing the easily documented modeling format familiar to users of Palisade's @RISK.

+ Formula-based notation makes all assumptions apparent; interactive tutorial clarifies many topics that will be new to most users.

- Interactive tutorial falls short in explaining underlying genetic optimization algorithm.

Related Article in the March 1999 PCWeek:
» Why Plain Old Spreadsheets Are Not Enough

For more information, contact:

Randy Heffernan
CEO
Palisade
Tel: +1 607-277-8000
Fax: +1 607-277-8001
rheffernan@palisade.com

Palisade Corporation is a software developer that produces decision support tools for professionals in many lines of work. The company was founded in 1984, and at present more than 400,000 people use Palisade’s software in fields that range from finance to oil and mineral exploration, real estate to heavy manufacturing, and pharmaceuticals to aerospace. Its software is used by many Fortune 500 companies, including Shell Oil, Procter & Gamble, ExxonMobil, Chase Manhattan, and by prominent economic and financial consultants.