# Probability of Business Applications by vzz15822

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```									                                       Decision Making with Insight

Harry Markowitz - Nobel Laureate in Economics

Better decision making starts with this handbook/software duo!

Designed for the classroom and for individual use in the workplace,
Decision Making with Insight includes both Insight.xla 2.0 software
and a concise, practical handbook, which is filled with useful
tutorials and exercises that explain how the accompanying suite of
add-ins can be applied. After introducing important general
spreadsheet skills, the book covers Monte Carlo simulation,
decision trees, queuing simulations optimization, Markov chains,
and forecasting. Dr. Sam Savage, recognized worldwide as a
leading innovator in management science education, also draws on
his extensive consulting experience to provide compelling,

Changes to this new edition include bootstrapped hypothesis
testing, a discussion of conditional probability with tree flipping,
introduction to cellular automata, and new exercises throughout.

Click on topics below
Monte Carlo

Decision Trees                                      Probabilit
y
Wheel
Praise for
Insight

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Decision Making with Insight

e information visit www.Duxbury.com

Page 2
Tree editing tool bar
makes tree creation
easy

Presentation command                                             Test Results
creates customizable
graphics.                                          Yes 1%
Infected

Test Results

No 99%

Flip Tree command allows
levels to be interchanged
while updating probabilities.
PgDn for More

Infected

Test+ 3%
Test Results

Infected

Test- 97%
Home

est Results                      True Positive
Test+ 98%

Test- 2%           False Negative

est Results
Test+ 2%           False Positive

Test- 98%          True Negative

Infected
Yes 33.11%            True Positive

No 66.89%             False Positive

Infected
Yes 0.02%             False Negative

No 99.98%             True Negative
XLSim® offers the simplicity of
its predecessor, SIM.xla, with
numerous improvements

   Several New Distribution Functions Including Multivariate Normal and
Lognormal, Random Permutations, Row-wise and Column-wise resampl
   Freeze and Thaw command allows easy sharing of simulation models, ev
with those who do not have XLSim®.

data. Number of bins can be changed on the fly.
scroll
   Blitzogram™ interactive histograms provide gut feel for concepts such as
Central Limit Theorem (see example below).

The Blitzogram on the left was developed by Cineval L
to demonstrate the effects of diversification across Ho

Informs Transactions on Education.

A commercial version of XLSim is available at www.An
Home

ncluding Multivariate Normal and
ow-wise and Column-wise resampling
sy sharing of simulation models, even

on the fly.
rovide gut feel for concepts such as the
below).

the left was developed by Cineval LLC of Los Angeles
effects of diversification across Hollywood films
to see online article in Optimize Magazine for

Dr. Savage’s electronic publication on Blitzograms in the
ns on Education.

ion of XLSim is available at www.AnalyCorp.com
Probability Wheel

The Probability Wheel included with INSIGHT.xla 2.0. Now with smoother action on fast
computers
Most analytical decisions are made in the face of uncertainties which may be hard to
quantify. The probability wheel assists people in assessing the probability of an
uncertain outcome based on their personal beliefs. For example, to determine your
estimate of the probability that it will rain tomorrow imagine two games of chance. In
the first game, you win \$100 if it rains tomorrow. In the second game, you win \$100 if
the spinner on the probability wheel comes up Blue. Now adjust the size of the blue

The wheel is easily interpreted                             60 %
by people of all ages and
Probability
backgrounds. For example, when
my oldest son was six, he
overheard a conversation
concerning the gender of an                                 YES            NO
unborn child. He promptly                                    60             40
volunteered: "there is a 50/50
chance of a boy or girl, it’s like                                                                 Spin
when the line on the wheel is                                     rand 0
straight up and down."
Settings
The wheel also converts to the
simple spinner I use in my
experiments on what people

Experiment with Impulse and Friction until you get smooth results on your hardw
Unless arrow goes through several full rotations the trials may not be independe

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Probability Wheel

Note: If spinner does not appear round, select and stretch it, then save file
Settings

Wheel Type
Impulse       Friction
Spinner       OK
Probability Wheel
5           2

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Probability Wheel

Home
ther action on fast

ch may be hard to
bability of an
determine your
ames of chance. In
ame, you win \$100 if
he size of the blue                        Click
here to

YES

NO
Click
here to

“I love this book. It’s helped
Spin                  me connect my stats training
to the real world, providing
language I can use to better
Settings                work with my students. . . .
Covers all the basic topics for
an MS survey course.

Tom Grossman -

you get smooth results on your hardware.
tions the trials may not be independent.

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Probability Wheel

ect and stretch it, then save file

heel Type
Spinner       OK
Probability Wheel

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Rarely has such sound theory been provided in such an entertaining           Sam Savage has given us an enormously pr
manner. INSIGHT is a must read..                                             analysis tools such as simulation, decision tr
Harry Markowitz - Nobel Laureate in Economics                                tools are taught in many business schools bu
often skewed toward the theoretical and man
“I love this book. It’s helped me connect my stats training to the real      making the transition to use them in actual bu
world, providing language I can use to better work with my students. . . .   John P. Gould - Professor & Former Dean
Very good organization. . . Covers all the basic topics for an MS survey     Graduate School of Business
course.”
Tom Grossman - University of Calgary                                         I must say that the information was just as co
INSIGHT hits you right where you learn.                                      Kirk Johnson - Kraft Foods
William Perry - Former Secretary of Defense of the United States
Sophisticated concepts developed over seve
Sam Savage is the perfect Zen master of spreadsheets.                        faithfully and beautifully captured in spreadsh
Brad Osgood - Director, Science, Mathematics, Engineering Core,              concepts both understandable and usable by
Stanford University                                                          material is not just for the novice. Profession
that can be used immediately to solve import
A savage onslaught against the algebraic curtain                             David G. Luenberger - Professor, Stanford
Bill Machrone - PC Week                                                      Investment Science
Business schools teach the theory and the math, but Sam's approach is
intuitive and visual. His tools work right in the spreadsheet, so most       “ . . . A great product . . . Shows how OR too
people can hit the ground running and bosses will have no trouble            familiar environment of Excel. The software i
reading and interpreting the results.                                        work with. . . . The tutorials are well done, as
Matthew Raphaelson - Senior Vice President, Wells Fargo &                    John Charnes - University of Kansas
Company
May I say that I am absolutely elated with yo
Probably the most important text I read in the last two years.               have been given an extremely usable way to
Bruno Monastero - In his review at Amazon.com                                tools in my actual daily business decisions.
Dr. Udo Henseler - Vice President and CFO
Not until I got my copy of Insight had I been able to make any progress      Company
with using statistics to analyze stock market data.
Ron McEwan - Independent Trader                                              INSIGHT.xla is in a class by itself.
James M. Clark - Editor, Financial Enginee
plaud INSIGHT                               Home

ge has given us an enormously practical way to use business
ools such as simulation, decision trees, and optimization. These
aught in many business schools but the approach is, alas, too
wed toward the theoretical and many students feel uneasy
e transition to use them in actual business situations.
Gould - Professor & Former Dean, University of Chicago

that the information was just as compelling as a good novel... I
nson - Kraft Foods

ated concepts developed over several decades have been
nd beautifully captured in spreadsheet form--making these
both understandable and usable by a wide audience. And this
not just for the novice. Professionals will find useful programs
e used immediately to solve important and realistic problems.
Luenberger - Professor, Stanford University and Author of
nt Science

eat product . . . Shows how OR tools can be applied using the
vironment of Excel. The software is well developed and easy to
. . . The tutorials are well done, as well as being useful.”
rnes - University of Kansas

that I am absolutely elated with your work. For the first time I
n given an extremely usable way to employ business analysis