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You have received this Profit Plan Newsletter as a licensed
user of Profit Plan® -- Your Vision of Tomorrow®.
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PROFIT PLAN PLANNING TIPS - May, 2002
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May Contents:
On-site Consulting -- Enhancing Your Vision
Profit Plan v2001 Update Release
Functional Cosmetics
So what is a cell?
Using Underline Fonts
Using Cell Borders
Automatic Summary and Subtotal Underlines
Projects and Economic
Order Quantities - (Cont.)
Tracking Project Inventory - Overview
Safety Stock and Lead Time Demand
Inventory Cash Requirements - First Cut
Using Classical Economic Order Quantity (EOQ
Tip: How to Find Special Functions in Formula One
Upgrading to Profit Plan v2001
Topics Coming in the June Issue
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On-site Consulting -- Enhancing Your Vision…
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Managing your business is critical to your success. Modeling that business is a great way to improve that management. But in many ways modeling your business will be one of the toughest challenges you will ever face. Why? Because it forces you to think through just what drives your operation and what your operation drive. Often, you find yourself asking "Why are we doing that? And why that way? What are the alternatives and how do we figure out what the cost or benefit is from doing any of them?"
If you would like a seasoned business professional with an MBA - Finance and extensive management experience to help you sort through your options and collaborate on your Profit Plan, please call. You may find that a one-day visit at your site clears away the confusion and evolves just the strategy you need to get on track.
We can help. We may even have the time! Call (425) 483-0850
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Profit Plan v2001 Build 1351 Update Release
(download only)
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An update to Profit Plan v2001 is available for all of our current Profit Plan v2001 clients on the internet. Download it at your convenience from our Update.2001 web site. There you will find full particulars about how to install and activate it. For many of you this release will be FREE. For others, a very modest update fee may be involved.
The Authorization Password needed to activate your copy of a Profit Plan v2001 Update is unique to each of you and your company. But once issued, the authorization will remain active for any future Update release in the Profit Plan v2001 series. So feel free to surf to our Update.2001 site periodically to see if you have the latest and greatest available! Simply compare the "Build" number displayed in your copy's Help / About dialog with that found on the site.
The current Update edition at the site is Profit Plan v2001 Build 1351. It is identical to the release available last month except that this release allows project planning in models of any size. All prior releases restricted the use of project plans to models with an overall chart of accounts of less than approximately 210 lines.
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Functional Cosmetics -- Subtotal Underlines
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In keeping with our theme that cosmetics can be functional, today we will
talk about that simple little thing called a subtotal underline. Now we
all know what that is, right? It is that little line we have been drawing
since grade school to separate the numbers we are adding up from the totals
we computed from them. Since we have been seeing them all our lives, we
take unconscious clues from them. Correctly placed and drawn, we immediately
understand when we see them what is underlying detail and what is a summary
total.
Back in grade school, we all learned how to draw an underline with our pencil. As with everything else in life since then, however, underlines are just a bit more complex these days than our pencil drawn lines of yesteryear. So, today we will learn how to use a couple of tools that Profit Plan provides for creating underlines (among other things.) But before we get there, we need to make sure everyone is on the same page by talking a bit about a couple of true basics some of you never really thought about -- cells, and fonts.
A cell can be thought of as simply an area on the screen that contains all the information needed to display a single specific concept. These cells are arranged in rows and columns line the squares on a checker board. The top-left cell is row 1 column "A" and has the address A1. The cell on the second row in the second column (B) is located at "B2".
Profit Plan uses this cellular structure for the Chart of Accounts, Assumptions Sheets and most other reports and schedules. For Profit Plan to know which cell has your interest at the moment, you need to click it. This gives the cell "focus" and now Profit Plan knows its address.
Each cell has certain attributes (properties) that control how the contents of the cell are displayed on the screen and printed on paper. For example, one attribute is its numeric "format"; i.e., how a number is displayed (with decimal, comma, currency symbol, etc.) Another attribute is its "font" face; basic style, italic, bold, underlined renditions and color. A third attribute is its background "pattern"; clear, cross-hatch, lined, etc. Another attribute is the appearance of the cell's borders.
Once we click a cell (or click and drag to select multiple cells), we can set the cell attributes to change the visual display of the selected cell(s). This does NOT alter the actual CONTENTS of the cell; just how it appears on the screen
Fonts are graphical representations of the letters and numbers we learned to draw in grade school. Each font family has its own basic style. Almost all families include four distinct variations; a "normal" style, a "bold" rendition, an "italic" version, and an underline font. The underline font is typically very similar to its parent "normal" font but has an underline beneath the main portion of each character (except the blank character.)
To apply an underline font is simple. Select the cell(s) and then click the "U" button on the Format toolbar. This selects the underline font for the font family named at the left of the Format toolbar. The number or text is redisplayed using the underlining font.
The advantage of setting a cell's font attribute to underlines is that every non-blank character within the cell is automatically underlined. No hassle. No need to go back and underline again later. But there is a real disadvantage for use as a subtotal underline. Back in grade school we learned to make our subtotal underline at least as big as the resulting total that appeared below it. And we still expect this visual clue today. But if the last value above the subtotal was only one digit long, the underline is only one character wide, regardless of the size of the resulting subtotals
So underline fonts are nice, but not practical for robust numeric presentations. What next?
Using Cell Borders for Useful Purposes top
Instead of setting the Underline font attribute for our selected cells, use the Borders tools to make the cell borders serve as an underline instead. First, select the cells of interest, as before. But now use the Border dropdown panel and select a single or double line for the top or bottom (or both) borders of the cell. Voile, underlines that change width with the width of the column, rather than the width of the last number underlined. (See Profit Plan Newsletter Vol 1, No 3 for more about this panel.)
While manually selecting and setting border attributes produce the results desired, there is a downside to this. As the chart of accounts changes over time, what was once a subtotal might no longer be, or it may have migrated up or down the page. So Profit Plan provides an automated method to maintain subtotals. The tool is a form available from the Format / Subtotal Underlines main menu.
Automatic Summary and Subtotal Underlines top
The "Automatic Summary and Subtotal Underlines" form is available from the Format / Subtotal Underlines menu ONLY when an Assumptions and Data Entry Sheet is being viewed. This form can be used to control underlining on the current Assumptions and Data Entry Sheet and simultaneously on other assumptions sheet views (Monthly, Quarterly, etc.) and on associated standard reports (like income statements and balance sheet reports.)
The simplest way to use this form is simply to open it and immediately click Apply Now! Then scroll through the Assumptions Sheet and review the results. (When scrolling, the Automatic Summary..." form will fall behind the Assumptions and Data Entry Sheet. To reactivate, click it in the system tray at the bottom of the screen.)
If the results are reasonable (as will typically be the case unless the chart of accounts is somewhat unusual), apply the results to all associated views and reports:
This form has three other tabs that may be useful in fine-tuning. The first tab allows you to force underlines to appear above all "Subtotal" accounts. The other two tabs allow control of when and how subtotals appear with summary accounts that are not subtotals.
So what is the difference between a "subtotal" account and any other summary account? Summary accounts are naturally occurring accounts that summarize results in a chart of accounts. Examples would be Net Income, Total Assets, Total Equity, and other accounts whose "account type" appears indented in the Chart of Accounts. (See Appendix I in User's Guide for full list) Subtotal accounts, by contrast, are created via the "Sum" button on the Edit Account window of the Account Setup Tab, can appear anywhere, and sum any arbitrary set of accounts selected.
Summary accounts (and Subtotal accounts if so selected on the "For Subtotals Only" tab), can have underlines inserted above and/or below them always, or depending on the presence of leading or trailing blank lines.
The defaults of this form usually work well. They are:
In summary, use underlines to make your model more readable and presentable. Using cell borders for underlines generally produce more satisfactory results than font underlines but may require slightly more work to apply. When using border underlines, begin by applying defaults using the Format / Summary Totals menu. Several options are available there. If not completely to your satisfaction, use the Borders button or the adjacent dropdown list to apply border lines as desired to all selected cells.
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Projects and Economic Order Quantities - (Cont.)
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Last month we finished adding most of the income statement planning items for our garden shed "project" to the sample "Johnson Industrial Supply" financial model. We hope you have followed along with this project plan thus far. Each step builds upon the last, so it will become increasingly difficult to follow if you missed the last two issues. If you have, please detour to the Projects and Economic Order Quantities section of our March issue. There we touched on some key concepts... project planning, planning items, non-financial assumptions types, the BizPlan "Project Financials" window, and more. Then follow on to the April issue, where we added cost of sales considerations and developed a new Gross Profit for the firm with and without the garden sheds.
Today we are going to pick up from there. And for those of you who didn't actually work through the discussion last month and would like to follow along this month, take the time to download the partially complete Johnson Supply Project - phase2.zip model and open it up in Profit Plan now. (You will need Profit Plan v2001 Build 1350 or later to load it properly.)
Tracking Project Inventory - Overview top
So far, it looks like the Garden Shed sales project will work out well. Using our current estimates, we should generate a gross margin of $200,000 on the sale of 642 sheds at an average sale price of $1,306 and a direct unit cost of $600 each. Not shabby! But we have many other costs and potential risk factors yet to consider.
Today we are going to work on inventory related issues that may make that $200,000 gross margin seem less likely and perhaps not as large. First, let's consider lead times.
Since Misumi does not maintain warehouses in the USA, Johnson Supply expects to experience an average shipping and handling delay of 6 weeks (45 days) from date of placing a purchase order until the date the shed is stocked in-house. Further, Misumi requires a wire transfer of funds in full before shipping. So each order hits Johnson's cash balance on the date of the order. Depending on the size of the order, this could create some periodic cash flow issues that may require a line of credit to solve. So how to handle all this? Let's see...
Safety Stock and Lead Time Demand - Unit Requirements top
If Johnson Supply was less risk averse, it might use the following logic... The builders typically know at least two weeks before a shed is needed that their buyer wants one. So if it takes only one day to site and erect one, Johnson Supply could be out of stock for up to say 10 days from the date of a builder's order and still have it delivered in time for installation on the buyer's schedule. But the down side of this strategy is two-fold. First if the shed is really needed NOW (because someone forgot to order it sooner), they may lose the sale to a competitor supplier. Second and, more importantly, they may lose the builder as a long-term customer, if stock outs occur on other than a rather infrequent basis.
The amount of stock to carry in inventory to guard against this type of contingency is called "Safety Stock". If Johnson carries two weeks of inventory on hand as a minimum desired stock level, they should be able to fill all incoming orders, as long as at least that minimum safety stock is replenished before inventory is depleted. In fact, one viable inventory control technique for the sheds would be to place an order every Monday for one week's worth of sheds, based upon an anticipated schedule of builders' orders expected to arrive from the builders six weeks into the future.
To store these thoughts in our Johnson Supply model, let's proceed as follows:
First, rename the current "INVENTORY" account to "INVENTORY- BASELINE"
The current "Inventory" account in Johnson Supply's chart of accounts really represents historical ongoing business. It is part of the company's current basis operations, and has nothing to do with the current garden shed sales project we are planning. Rather, it is part of the "baseline" operations of the business, i.e. the account will be required to continue doing business regardless of the outcome of the garden shed "project".
To make this very clear, let's rename the current Inventory account. Since this account is simply part of the original chart of accounts, we will simply rename it in the Chart of Accounts...
- Select the Account Setup tab.
- Click the "Inventory" account.
- Press F2, to enter field edit mode, or right-click and select the pop up Edit Account option.
- Add " - Baseline" behind the name "Inventory"
- Press the [Enter] key. (If using the Edit Account window, click "OK".)
Now add a new INVENTORY - GARDEN SHEDS on ORDER (UNITS) planning item.
This account will carry a unit inventory (count) of garden sheds on order.
- Click "View Assumptions" button to go to Assumptions Sheet.
- Click "Create/Maintain Project Accounts" button to open project form.
- In Item Account Name field, enter "Inventory - Garden Sheds on Order (units)."
- In Line Item Description field, enter "Assume six weekly orders outstanding at all times, based on anticipated demand six weeks ahead."
- Click "OK" to return to the Assumptions Sheet.
Now enter the estimate for the number of sheds on order at any given time:
- Open the Assumptions Designer (with the new account selected.)
- Insure the Time Horizon Options.. is set to "All forecast periods."
- ISelect Assumption Type as " Avg Days of Account..."
- Select "15.. Garden Sheds - Units Sold" from the Account(s) to Use in Formula list.
- Enter 45 as the Value factor (days of lead time needed to fill a purchase order).
- Click OK. This yields an average of 79 sheds on order at any given time.
(Obviously we haven't dealt with seasonality here, but this will be handled in the Monthly Assumptions sheet later. First we build a conceptually sound model. Then we refine it in the Monthly view later.)
Next, add a new INVENTORY - GARDEN SHEDS on HAND (UNITS) planning item.
Earlier we said we wanted at least two weeks stock on hand as safety stock, to insure we could handle any builder's order in a timely fashion. Let's plan this now.
- With cursor still on the "Inventory - Garden Sheds on Order (units)" item, right-click and select "Insert Planning Item" from the right-click pop up menu. (This has the same effect as the "Create/Maintain Project Accounts" button when on an Assumptions Sheet.)
- In Item Account Name field, enter "Inventory - Garden Sheds on Hand (units)".
- In Line Item Description field, enter "Target two weeks of safety stock on hand always."
- Click "OK" to return to the Assumptions Sheet.
Now establish desired inventory on hand at the desired Safety Stock level...
To insure our desired service level of being able to handle at least two weeks worth of "early" orders without stocking out, we set our assumption accordingly:
- Right-click "Inventory - Garden Sheds on Hands (units)" in 1997 and open the Assumption Designer.
- Select "Average Days of Account" as the Assumption Type.
- Select Assumption Type as " Avg Days of Account..."
- Select "15. Garden Sheds - Units Sold" from the Account(s) to Use in Formula list.
- Enter 14 as the Value to use for the number of days of garden shed sales.
- Click OK. The average inventory on hand is now set at 25 units, or an average of two weeks of projected shed unit sales.
Safety Stock and Lead Time Demand - $ Requirements top
So how do we finance this new inventory? There are basically three sources; our own Cash, vendor financing, or outside funding. Obviously if Johnson Supply can get the vendor to at least wait for payment until the sheds are delivered, the full 79 units of average "on order" inventory need not be handled from cash reserves. Rather all the outstanding orders could be balanced against an "Accounts Payable - Misumi" account instead. Even better, if "Net 30 days after delivery" could be negotiated, Misumi would end up fully funding the safety stock on hand as well.
For the moment, unfortunately, we know that Misumi won't float a new customer. So right now, let's just value the inventory units and see where our cash requirements fall.
Add an INVENTORY - GARDEN SHEDS ON ORDER ($) planning item
- With cursor still on the "Inventory - Garden Sheds on Hand (units)" item, right-click and select "Insert Planning Item" from the right-click pop up menu.
- In Item Account Name field, enter "Inventory - Garden Sheds on Order ($)".
- In Line Item Description field, enter "Average value of outstanding shed purchase orders."
- Click "OK" to return to the Assumptions Sheet.
Now establish the on-order inventory value using the unit cost figures in the COGS section.
- Right-click "Inventory -Garden Sheds on Order ($)" in 1997 and open the Assumption Designer.
- Select "User Defined" as the Assumption Type. (An "=" sign appears in the Formula window.)
- Select "17. Garden Sheds - Average Unit Cost" from the Account(s) to Use in Formula list. This adds "I17" to the formula.
- Enter "*" to indicate multiplication. (Resulting in "=I17*".)
- Select "65. Inventory - Garden Sheds on Order (units)" from the Accounts to Use list. At this point, the "Result (if apply) field shows $47,454.90. We need to convert this to $1,000s to be consistent with the rest of the model. So...
- Enter "/1000" and press the [Enter] key. The result is now 47.45, as is appropriate.
- Click OK. The average inventory on order will require $47,450 to float. So we really want to get the vendor to finance this eventually.
Add an INVENTORY - GARDEN SHEDS ON HAND ($) planning item
- With cursor still on the "Inventory - Garden Sheds on Order ($)" item, right-click and select "Insert Planning Item" from the right-click pop up menu.
- In Item Account Name field, enter "Inventory - Garden Sheds on Hand ($)".
- In Line Item Description field, enter "Average value of sheds on hand in inventory."
- Click OK to return to the Assumptions Sheet./li>< /li>
Now establish the on-hand inventory value using the unit cost figures in the COGS section.
- Right-click "Inventory - Garden Sheds on Hands ($)" in 1997 and open the Assumption Designer.
- Select "User Defined" as the Assumption Type. (An "=" sign appears in the Formula window.)
- Select "17. Garden Sheds - Average Unit Cost" from the Account(s) to Use in Formula list. This adds "I17" to the formula.
- Enter "*" to indicate multiplication. (Resulting in "=I17*"
- Select "66. Inventory - Garden Sheds on Hand (units)" from the Accounts to Use list. (At this point, the "Result (if apply) field shows $14,763.75. We need to convert this to $1,000s to be consistent with the rest of the model. So...)
- Enter "/1000" and press the [Enter] key. The result is now 14,76, as is appropriate.
- Click OK. The average inventory on hand for safety will consume $14,764 in Cash. Maybe we can get extended terms from the vendor later. But what about now?
Inventory Cash Requirement - First Cut. top
One advantage of adding our planning project directly in the original model is that the impact of each item can be immediately seen in the Cash account. At this point, since no provision has yet been made to fund the inventory through Misumi or otherwise, every dollar added to inventory is immediately taken from the Cash account. To prove this to yourself, try the following:
Note that the Cash balance is currently $164 in 1997. Now, with your cursor on the "Inventory - Garden Sheds on Hand ($)" account in 1997, click the "Cut" button (looks like scissors) on the Standard toolbar or press [Ctrl] and [X] keys together. This clears the value from 1997 and saves it on an internal clipboard. Now look at the Cash account again. Magically it has increased to $175, since the on-hand inventory is now zero.
To restore the value again. simply press Ctrl-V or click the Paste button on the Standard toolbar.
But wait. The "Units" values shouldn't affect Cash directly at all. Let's make sure they don't.
Place the cursor on the "Inventory - Garden Sheds on Hand (units)" in 1997 and press Ctrl-X. Oops. The Cash account just went to $203. So press Ctrl-V to restore the formula from the clipboard. Now lets figure out why this is happening.
Remember that each new planning item automatically takes its account type from its template account (the account below which the new planning item is inserted). In our case above, we used the original inventory account as the starting template to create the "Inventory - Garden Sheds on Order (units)" item. Then each additional new item was added directly below the last one. Hence all four of the resulting planning items have the same Inventory account type. But the two "unit" account items should not be affecting dollars. These are "non-financial accounts used for convenience when computing inventory values. So lets fix this situation right now.
Changing the account types automatically causes Profit Plan to now review and refresh the Assumptions Sheet. Voila! The unit amounts are no longer included as financial values and Cash jumps accordingly. Johnson should finish the year with $268 in the bank, so apparently there is no real need for vendor financing at this point. True, it would be nice, but at least it does not appear to be critical at the moment. We can pay cash with each purchase order, if we must.
Using Classical Economic Order Quantity (EOQ) Theory top
Thus far the model has not even considered the issue of "economic order quantities". We simply set up a rule that said "Order one week's worth of sales every week, based upon the demand expected in six weeks. This will work. Johnson Supply will have a steady stream of incoming orders sufficient to handle expected demand. Plus they have a two week buffer in safety stock to handle contingencies. But is this rule really the way to go, or is there a more cost effective way to plan purchase orders?
Quantitative Methods theory has attempted to derive a formula that will produce the optimum size for a purchase order. This optimum size is generally called the "economic order quantity", or EOQ for short. The economic order quantity is that quantity at which the cost of ordering an item plus the cost of carrying that item in inventory is minimized. Implicit in the theory is that aside from safety stock, average inventory will be 1/2 of the size of the standard order quantity
Without going into the calculus behind the EOQ theory, lets examine the resulting EOQ formula and try to apply it to the Garden Shed project in Johnson Supply. First we need some definitions.
With these definitions, then EOQ = SQRT( 2 * D * P / H).
Using this classical formula, let's see what the EOQ might be for the Garden Sheds.
First let's assume that the cost of bank wires, processing and follow up time, etc. adds up to $30 per order. If we also assume away quantity discounts and freight differentials, then P = $30.
Next, we have already estimated our 1997 unit demand (D) for sheds as 642 sheds.
Finally, let's do a quick estimate of per unit holding costs. First, let's assume that Johnson's cost of capital is 12%, and that warehouse rent, insurance, taxes, etc. costs of the inventory is $0, for simplicity today. Then H = $600 * 0.12 = $72 per unit/year.
The result is EOQ = SQRT((2 * 642 * 30)/ 72 )
= SQRT(535)
= 23 units.
Interesting. The average demand per week for sheds is 642 / 52 = 12.3 units per week. So the EOQ is close to two weeks of average demand. Given this, let's sharpen up our original decision rule to order two weeks' worth of sheds every other week instead. This gives us an easily managed rule that also tends to minimize inventory costs.
With this new rule, on any given day, we will still have six weeks' demand worth of units on order, even though these will be in only three orders, rather than the six under our original concept. So we won't change the Inventory - Garden Sheds on Order (units) computation at this point
We do need to adjust our average inventory balance however. Aside of any considerations of safety stock, under the old weekly ordering of weekly quantities rule, we always had an average of 1/2 week's supply on hand from the last order received on any given day. So our original rule's two weeks worth of safety stock really consisted of 1.5 week's worth of true contingency stock and an average balance left of 1/2 week's worth of the stock on hand from the last order received.
Now, with the new two week order quantity, we will have an average of a full week's worth of stock left on hand from the last order received on any given day. Hence, keeping the same 1.5 week contingency stock level as before means the average stock on hand will increase from the initial 1/2 week to a full week. So let's adjust the "Garden Sheds on Hand (units)" assumption so it will explicitly generate a full 1.5 weeks (10.5 days) of contingency safety stock plus one half of the actual EOQ unit order.
Adjusting INVENTORY - GARDEN SHEDS ON HAND (UNITS) planning item for EOQ
- Right-click "Inventory - Garden Sheds on Hands ($)" in 1997 and open the Assumption Designer.
- Select "User Defined" as the Assumption Type. We will now convert the "Avg Days of Account" assumption to include only 10 days of sales plus 1/2 the EOQ.
- Click and change the "14" in "=14*I15/365" to 10.5, so only 10.5 days contingency stock will be included. The result should read "=10.5*I15/365".
- Now click to the right of the "365" in the Formula field and enter "+SQRT(2*".
- Select "15. Garden Sheds - Units Sold" from the "Account(s) to Use..." list. This adds "I15" to the formula.
- Enter "*30/72)/2" to indicate multiplication by the cost of ordering and division by the cost of holding. (The final "/2" divides the EOQ value by two to compute the average order value on hand.) The formula now reads "=10.5*I15/365+SQRT(2*I15I30/72)/2"
- Press the [Enter] key. The "Result (if apply)" now shows 29.14 units on hand on average.
- Drag the Assumptions Designer so you can see the current Cash balance forecast for 1997. It is predicted to be roughly $268 (thousand), using the one week's demand order criteria.
- Click OK, to now apply the new two week order rule and close the Assumptions Designer.
Note that the Cash balance immediately dropped from the $268 level to $265. This would be expected, given the fact that liabilities haven't changed and the Inventory balance now is higher by $3 (thousand). Profit Plan has simply adjusted the Cash balance to keep the balance sheet in balance.
But wait, you say. If we are now using an "economic order quantity", why haven't the "economics" improved? Shouldn't Cash have increased, rather than decreased?
The answer is yes, so there must still be more to the story. Here is what is missing.
In the last newsletter, we came up with a $600/unit Cost of Goods Sold and said it included the average cost of freight, order processing, etc. What we didn't say was under what inventory management rules those costs applied. What we now know is that the average cost of goods is influenced by our order size.
If increasing the order size is to pay off, we need to see a reduction in the cost of goods sold. We will build that into our project next month.
Summary - Project Plan to-date top
We began consideration of garden shed inventory by reviewing how much stock we felt was necessary to avoid lost sales and decided to minimize inventory balances by ordering an average week's worth of sales units each week, looking ahead six weeks. This would maintain a steady flow of product and keep inventory levels low, but with the expense of more frequent ordering.
Next we examined what might be an "economic order quantity" and considered the direct costs of placing orders and carrying inventory balances. This resulted in a new strategy with less frequent ordering with larger order sizes. But the actual result led to a model showing a decline of cash and no increase in profits.
Next month we will fine tune how the model handles purchasing and holding costs. Then we will begin considering alternative ways to finance the project without tying up the firm's cash in inventory.
If you would like to compare your solution so far against ours thus far, feel free to download a copy of Johnson Supply Project - phase 3.zip now.
===================================================================== topWhen computing the economic order quantity in the previous section, we needed to compute a square root. This was easy to do using Formula One's built-in "SQRT" function. There are more than 100 such functions available from within Formula One, the spreadsheet component Profit Plan uses for storing the data and executing spreadsheet computations for your models.
If you have used a function in Excel, chances are good you will find the same one in Formula One and it will work the same way.
To look up a Formula One function for use in a special computation on an Assumptions Sheet or in the Worksheet tab, you will need to access Formula One's help file. This is most easily done by selecting the main Worksheets tab within Profit Plan. (If this tab is not visible, select View / Show / Worksheets from the main menu.)
From the Worksheets tab, select Help / Advanced Functions. Or right-click any worksheet in that tab, select Worksheet Designer from the popup menu, and then select Help from Formula One's own Workbook Designer menu.
===================================================================== topFor those of you who are not yet using Profit Plan v2001, you probably have figured out that it really would be a lot easier if you were. And if you are worrying about updating now and then finding out a new version has just been released, don't waste a lot of time over it.
Yes, Profit Plan v2003 will arrive. But so will Christmas. And we keep our upgrade costs quite modest. So why not make life a little easier on yourself and upgrade now? You know you should.
Simply visit our no-hassle Profit Plan v2001 Upgrade Order Form and upgrade today.
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Browsing Old Newsletters
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If you want to review past issues of our Profit Plan Tips newsletter, you can do so by clicking this Newsletter Index link.
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Topics in the June Issue
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In June, we will continue our planning example. We now understand the concepts of "Economic Order Quantities" (EOQ) and "safety stock". Next month, we will finish up the question of how much Johnson should place in an order. Then we will address "Economic Reorder Points" (ERP) to see if our "safety stock" approach makes sense. And we still need to create an "Accounts Payable - Misumi" so we evaluate just what it would be worth if we could negotiate better terms with them.
There is still a lot left to figure out! We'll learn a bit more next month.
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