414 Microsoft Excel 2010: Data Analysis and Business Modeling sales of each product by month. Selecting Count, for instance, would count the number of transactions for each product during each month; selecting Max would compute the largest sales transaction for each product during each month. The Consolidate dialog box should be lled out as shown in Figure 47-5. After clicking OK, the new worksheet looks like the one shown in Figure 47-6. (See le Eastandwestconsolidated.xlsx.) You can see, for example, that 1,317 units of Product A were sold in February, 597 units of Product F were sold in January, and so on. FIGURE 47-5 Completed Consolidate dialog box. FIGURE 47-6 Total sales after consolidation. Now go to cell C2 of East.xlsx and change the February Product A sales from 263 to 363. Notice that in the consolidated worksheet, the entry for February Product A sales has also increased by 100 (from 1,317 to 1,417). This change occurs because the Create Links To Source Data option was selected in the Consolidate dialog box. (By the way, if you click the 2 right below the workbook name in the consolidated worksheet, you’ll see how Excel grouped the data to perform the consolidation.) The nal result is contained in the le Eastandwestconsolidated.xlsx. Chapter 47 Consolidating Data 415 If you frequently download new data to your source workbooks (in this case, East.xlsx and West.xlsx), it’s a good idea to name the ranges including your data as a table. Then new data is automatically included in the consolidation. You might also choose to select some blank rows below the current data set. When you populate the blank rows with new data, Excel picks up the new data when it performs the consolidation. A third choice is to make each data range a dynamic range (see Chapter 22, “The OFFSET Function,” for more information). Problems The following problems refer to the data in les Jancon.xlsx and Febcon.xlsx. Each le contains the unit sales, dollar revenues, and product sold for each transaction during the month. 1. Create a consolidated worksheet that gives the total unit sales and dollar revenue for each product by region. 2. Create a consolidated worksheet that gives the largest rst-quarter transaction for each product by region from the standpoint of revenue and units sold. 417 Chapter 48 Creating Subtotals Questions answered in this chapter: ■ Is there an easy way to set up a worksheet to calculate total revenue and units sold by region? ■ Can I also obtain a breakdown by salesperson of sales in each region? Joolas is a small company that manufactures makeup. For each transaction, it tracks the name of the salesperson, the location of the transaction, the product sold, the units sold, and the revenue. The managers want answers to questions such as those that are the focus of this chapter. PivotTables can be used to slice and dice data in Microsoft Excel. Often, however, you’d like an easier way to summarize a list or a database within a list. In a sales database, for example, you might want to create a summary of sales revenue by region, a summary of sales revenue by product, and a summary of sales revenue by salesperson. If you sort a list by the column in which specic data is listed, the Subtotal command allows you to create a subtotal in a list on the basis of the values in the column. For example, if you sort the makeup database by location, you can calculate total revenue and units sold for each region and place the totals just below the last row for that region. As another example, after sorting the database by product, you can use the Subtotal command to calculate total revenue and units sold for each product and display the totals below the row in which the product changes. In the next section, we’ll look at some specic examples. Answers to This Chapter’s Questions Is there an easy way to set up a worksheet to calculate total revenue and units sold by region? The data for this question is in the le Makeupsubtotals.xlsx. In Figure 48-1 you can see a subset of the data as it appears after sorting the list by the Location column. To calculate revenue and units sold by region, place the cursor anywhere in the database, and then click Subtotal in the Outline group on the Data tab. In the Subtotal dialog box, ll in the values as shown in Figure 48-2. By selecting Location from the At Each Change In list, you ensure that subtotals are created at each point in which the value in the Location column changes. This corresponds to the different regions. Selecting Sum from the Use Function box tells Excel to total the units and dollars for each different region. By selecting the Units and Dollars options in the Add 418 Microsoft Excel 2010: Data Analysis and Business Modeling Subtotal To area, you indicate that subtotals should be created on the basis of the values in these columns. The Replace Current Subtotals option causes Excel to remove any previously computed subtotals. Because you haven’t created any subtotals, it doesn’t matter whether this option is selected for this example. If the Page Break Between Groups option is selected, Excel inserts a page break after each subtotal. Selecting the Summary Below Data check box causes Excel to place subtotals below the data. If this option is not selected, the subtotals are created above the data used for the computation. Clicking Remove All removes subtotals from the list. FIGURE 48-1 After sorting a list by the values in a specic column, you can easily create subtotals for that data. FIGURE 48-2 Subtotal dialog box. Chapter 48 Creating Subtotals 419 A sample of the subtotals results is shown in Figure 48-3. You can see that 18,818 units were sold in the East region, earning revenue of $57,372.09. FIGURE 48-3 Subtotals for each region. Notice that in the left corner of the window, below the Name box, buttons with the numbers 1, 2, and 3 appear. Clicking the largest number (in this case 3) yields the data and subtotals. If you click the 2 button, you see just the subtotals by region, as shown in Figure 48-4. Clicking the 1 button yields the Grand Total, as shown in Figure 48-5. In short, clicking a lower number reduces the level of detail shown. FIGURE 48-4 When you create subtotals, Excel adds buttons that you can click to display only subtotals or both subtotals and details. FIGURE 48-5 Displaying the overall total without any detail. 420 Microsoft Excel 2010: Data Analysis and Business Modeling Can I also obtain a breakdown by salesperson of sales in each region? If you want to, you can nest subtotals. In other words, you can obtain a breakdown of sales by each salesperson in each region, or you can even get a breakdown of how much each salesperson sold of each product in each region. (See the le Nestedsubtotals.xlsx.) To demonstrate the creation of nested subtotals, let’s create a breakdown of sales by each salesperson in each region. To begin, you must sort your data rst by Location and then by Name. This gives a breakdown for each salesperson of units sold and revenue within each region. If you sort rst by Name and then by Location, you would get a breakdown of units sold and revenue for each salesperson by region. After sorting the data, you proceed as before and create the subtotals by region. Then you click Subtotal again and ll in the dialog box as shown in Figure 48-6. FIGURE 48-6 Creating nested subtotals. You now want a breakdown by Name. Clearing the Replace Current Subtotals box ensures that you will not replace your regional breakdown. You can now see the breakdown of sales by each salesperson in each region as shown in Figure 48-7. Chapter 48 Creating Subtotals 421 FIGURE 48-7 Nested subtotals. Problems You can nd the data for this chapter’s problems in the le Makeupsubtotals.xlsx. Use the Subtotal command for the following computations: 1. Find the units sold and revenue for each salesperson. 2. Find the number of sales transactions for each product. 3. Find the largest transaction (in terms of revenue) for each product. 4. Find the average dollar amount per transaction by region. 5. Display a breakdown of units sold and revenue for each salesperson that shows the results for each product by region. 423 Chapter 49 Estimating Straight Line Relationships Questions answered in this chapter: ■ How can I determine the relationship between monthly production and monthly operating costs? ■ How accurately does this relationship explain the monthly variation in plant operating costs? ■ How accurate are my predictions likely to be? ■ When estimating a straight line relationship, which functions can I use to get the slope and intercept of the line that best ts the data? Suppose you manage a plant that manufactures small refrigerators. National headquarters tells you how many refrigerators to produce each month. For budgeting purposes, you want to forecast your monthly operating costs and need answers to the questions that are the focus of this chapter. Every business analyst should have the ability to estimate the relationship between important business variables. In Microsoft Excel, the trend curve, which I’ll discuss in this chapter as well as in Chapter 50, “Modeling Exponential Growth,” and in Chapter 51, “The Power Curve,” is often helpful in determining the relationship between two variables. The variable that ana- lysts try to predict is called the dependent variable. The variable you use for prediction is called the independent variable. Here are some examples of business relationships you might want to estimate. Independent variable Dependent variable Units produced by plant in a month Monthly cost of operating plant Dollars spent on advertising in a month Monthly sales Number of employees Annual travel expenses Company revenue Number of employees (headcount) Monthly return on the stock market Monthly return on a stock (for example, Dell) Square feet in home Value of home The rst step in determining how two variables are related is to graph the data points (by using the Scatter Chart option) so that the independent variable is on the x-axis and the 424 Microsoft Excel 2010: Data Analysis and Business Modeling dependent variable is on the y-axis. With the chart selected, you click a data point (all data points are then displayed in blue), click Trendline in the Analysis group on the Chart Tools Layout tab, and then click More Trendline Options (or right-click and select Add Trendline). You’ll see the Format Trendline dialog box, which is shown in Figure 49-1. FIGURE 49-1 Format Trendline options. If your graph indicates that a straight line is a reasonable t to the points, choose the Linear option. If the graph indicates that the dependent variable increases at an accelerating rate, the Exponential (and perhaps Power) option probably ts the relationship. If the graph shows that the dependent variable increases at a decreasing rate, or that the dependent variable decreases at a decreasing rate, the Power option is probably the most relevant. In this chapter, I’ll focus on the Linear option. In Chapter 50, I’ll discuss the Exponential option, and in Chapter 51, I’ll cover the Power option. In Chapter 58, “Using Moving Averages to Understand Time Series,” I’ll discuss the moving average curve, and in Chapter 80, “Pricing Products by Using Tie-Ins,” I’ll discuss the polynomial curve. (The logarithmic curve is of little value in this discussion, so I won’t address it.) Chapter 49 Estimating Straight Line Relationships 425 Answers to This Chapter’s Questions How can I determine the relationship between monthly production and monthly operating costs? The le Costestimate.xlsx, shown in Figure 49-2, contains data about the units produced and the monthly plant operating cost for a 14-month period. You are interested in predicting monthly operating costs from units produced, which helps the plant manager determine the operating budget and better understand the cost to produce refrigerators. FIGURE 49-2 Plant operating data. Begin by creating an XY chart (or a scatter plot) that displays the independent variable (units produced) on the x-axis and the dependent variable (monthly plant cost) on the y-axis. The column of data that you want to display on the x-axis must be located to the left of the col- umn of data you want to display on the y-axis. To create the graph, select the data in the range C2:D16 (including the labels in cells C2 and D2). Then click Scatter in the Charts group on the Insert tab, and select the rst option (Scatter With Only Markers) as the chart type. You’ll see the graph shown in Figure 49-3. FIGURE 49-3 Scatter plot of operating cost vs. units produced. [...]... cumulative units produced on the x-axis and unit cost on the y-axis After creating the chart, you click one of the data points (the data points will be displayed in blue), then right-click and click Add Trendline In the Format Trendline dialog box, select the Power option and then select the Display Equation On 438 Microsoft Excel 2010: Data Analysis and Business Modeling Chart and the Display R-Squared Value... during late 2000 434 Microsoft Excel 2010: Data Analysis and Business Modeling By the way, why must you use x=1 instead of x=1990? If you used x=1990, Excel would have to juggle numbers around the size of e1990 A number this large causes Excel a great deal of difficulty Problems The file Exponentialdata.xlsx contains annual sales revenue for Staples, Walmart, and Intel Use this data to work through... relationship 441 442 Microsoft Excel 2010: Data Analysis and Business Modeling On the other hand, a correlation near –1 means that there is a strong negative linear r ­ elationship between x and y That is, when x is larger than average, y tends to be smaller than average, and when x is smaller than average, y tends to be larger than average When a straight line is applied to the data, the line has a... suppose you try to predict a 446 Microsoft Excel 2010: Data Analysis and Business Modeling dependent variable y from an independent variable x If x is k standard deviations above average, then your prediction for y will be rk standard deviations above average (here, r=correlation between x and y) Because r is between -1 and +1, this means that y is fewer standard deviations away from the mean than x... B, and Product C produced during each month 4 47 448 Microsoft Excel 2010: Data Analysis and Business Modeling FIGURE 53-1  Data for predicting monthly operating costs You would like to find the best forecast for monthly operating cost that has the following form (which I’ll refer to as Form 1): Monthly operating cost=Constant+B1*(Units A produced)+B2*(Units B produced) +B3*(Units C produced) The Excel. .. independent variable that lie outside the range for which you have data The line in this example should only be used 428 Microsoft Excel 2010: Data Analysis and Business Modeling to predict monthly plant operating costs during months in which production is between a ­ pproximately 450 and 1,300 units The intercept of this line is $ 37, 894.10, which can be interpreted as the monthly fixed cost So, even...426 Microsoft Excel 2010: Data Analysis and Business Modeling If you want to modify this chart, you can click anywhere inside the chart to display the Chart Tools contextual tab Using the commands on the Chart Tools Design tab, you can: ■ Change the chart type ■ Change the source data ■ Change the style of the chart ■ Move the chart Using the commands on the Chart Tools Layout... +B3*(Units C produced) The Excel Data Analysis feature can find the equation for this form that best fits your data Click Data Analysis in the Analysis group on the Data tab, and then select Regression Fill in the Regression dialog box as shown in Figure 53-2 Note  If you haven’t previously installed the Analysis ToolPak, click the File tab, click Options, and then click Add-Ins With Excel Add-ins selected in... monthly stock returns for Microsoft, GE, Intel, GM, and Cisco during the 1990s You can use correlations to try to understand how m ­ ovements in these stocks are related To find the correlations between each pair of stocks, click Data Analysis in the Analysis group on the Data tab, and then select the Correlation option You must install the Analysis ToolPak (as described in Chapters 41 and 42) before you... 42) before you can use this feature Click OK, and then fill in the Correlation dialog box as shown in Figure 52-5 FIGURE 52-4  Monthly stock returns during the 1990s FIGURE 52-5  Correlation dialog box 444 Microsoft Excel 2010: Data Analysis and Business Modeling The easiest way to enter the input range is to select the upper-left cell of the range (B51) and then press Ctrl+Shift+Right Arrow, followed . box tells Excel to total the units and dollars for each different region. By selecting the Units and Dollars options in the Add 418 Microsoft Excel 2010: Data Analysis and Business Modeling Subtotal. is to graph the data points (by using the Scatter Chart option) so that the independent variable is on the x-axis and the 424 Microsoft Excel 2010: Data Analysis and Business Modeling dependent. were $103. 47 million. 432 Microsoft Excel 2010: Data Analysis and Business Modeling FIGURE 50-1 Cisco’s annual revenues for the years 1990 through 1999. To t an exponential curve to this data, begin