Understanding the What-If Analysis

Understanding the What-If Analysis

I selected the Deli Scenario Worksheet, which employs the Scenario Manager What-If Analysis tool. This tool facilitates the exploration of potential outcomes under specified conditions. Scenario Manager is essential for tracking outcomes resulting from data manipulation and facilitating variable comparisons (Robison & Barry, 2021). Users can use different variables in data sets to forecast their impact on significant totals, which is crucial for informed decision-making regarding future business or financial strategies (Poatsy et al., 2020). The Burton’s Sandwich Shop worksheet analyzes various budgets by manipulating variables and addresses inquiries such as “What happens if sales increase by x%?” and “What is the impact of an x% increase in costs?”

The Deli Scenario data displays daily sandwich production at various price points. Burton’s Sandwich Shop projects sales of 1278 sandwiches at a price of $4.25 each, yielding a profit of $3,500. The Scenario Summary outlines three events and their impacts on the shop’s operations. In the optimal situation, the shop’s sales could reach 1500 sandwiches, resulting in a profit of $4,246.25. The shop sold 700 sandwiches at $4.50 each, resulting in a profit of $1,735.25 after accounting for expenses. At a reduced price of $4.00 per sandwich, the shop predicts sales of 500 sandwiches due to low demand.

Based on the Ideal Scenario, the shop expects a strong economy and believes that current pricing will increase sales. No price increase is necessary as the customer base grows, assuming other factors remain unchanged (Poatsy et al., 2020). If the business stays profitable, it may need to increase sandwich prices to cover higher production costs, which could lead to a decrease in sales due to the law of demand and supply. In the event of low sales, the shop’s economy may decline, resulting in decreased consumer purchasing power and a potential shift towards more affordable alternatives.

References

Poatsy, M. A., Mulbery, K., Davidson, J., & Grauer, R. T. (2020). Microsoft Excel 2019. Comprehensive. Pearson.

Robison, L. J., & Barry, P. J. (2021). Coordinated financial statements: what-is, what-if and how-much questions. Agricultural Finance Review, ahead-of-print(ahead-of-print). https://doi.org/10.1108/afr-01-2021-0011

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Make sure to review Chapter 6 before posting your discussion. The two worksheets, DeliScenario.xlsx or OutageCosts.xlsx, are using one of the What-If Analysis tools: Deli worksheet is using the Scenario Manager. The Outage worksheet is using a One Variable Data Table.
OutageCosts.xlsx
DeliScenario.xlsx
Choose one of the worksheets and open it up.
Explain:
Which What If Analysis tool is the worksheet using?
Provide a description of the What If Analysis tool and why it was used in the worksheet.
Interpret what the data means.
Discuss what it means for the business.
In response to your peers:
Do you agree or disagree with how your classmates interpreted the data and why?
Is your assessment of the data different than your classmates?
If yes, how is it different?
If no, why do you agree with your classmate?
Make sure to support your thoughts with resources, citing them in APA style.