Question: How is this done in Excel? For the Stochastic Model, use a Normal Distribution Curve, with the Mean being the Average Weekly Sales, and the
How is this done in Excel?
For the Stochastic Model, use a Normal Distribution Curve, with the Mean being the Average Weekly Sales, and the weekly Standard Deviation being $5,000. That is, all weekly sales will fall between the Average - 3 Standard Deviation and Average + 3 Standard Deviation. For example, if average weekly says is 100,000 then the 99% of weekly sales would fall between 85,000 and 115,000. Use the RANDBETWEEN function in excel to get this random sales number. To get discount per week, once again use a RAND () function to get a 0 (no loyalty card) or a 1 (loyalty card) and calculate the random discount based on loyalty card info. Calculate new sales, and difference in profit margin (The cost of the Loyalty Program). Now, since this is a stochastic model, you need to run it three times (use the F9 function to re-calculate spreadsheet). Make sure you tabulate each iteration so you can get a MEAN of the Cost of Loyalty Program.
| Supermarket | Calendar Week | Average Sales in $ ('000s) | |
| Average Weekly Sales over 5 years | 1 | $350.00 | |
| Normal Distribution | 2 | $360.00 | |
| Standard Deviation | 5 | 3 | $350.00 |
| 3Sigma Mininmum 44.5% of Sales | 15 | 4 | $380.00 |
| 3Sigma Maximum 44.5% of Sales | 15 | 5 | $370.00 |
| Probability of Loyalty Card | 0.63 | 6 | $380.00 |
| Discount Loyalty Card | 0.04 | 7 | $350.00 |
| 8 | $380.00 | ||
| 9 | $360.00 | ||
| 10 | $330.00 | ||
| 11 | $350.00 | ||
| 12 | $390.00 | ||
| 13 | $390.00 | ||
| 14 | $380.00 | ||
| 15 | $350.00 | ||
| 16 | $340.00 | ||
| 17 | $380.00 | ||
| 18 | $400.00 | ||
| 19 | $360.00 | ||
| 20 | $510.00 | ||
| 21 | $500.00 | ||
| 22 | $380.00 | ||
| 23 | $390.00 | ||
| 24 | $370.00 | ||
| 25 | $360.00 | ||
| 26 | $370.00 | ||
| 27 | $550.00 | ||
| 28 | $480.00 | ||
| 29 | $380.00 | ||
| 30 | $350.00 | ||
| 31 | $330.00 | ||
| 32 | $340.00 | ||
| 33 | $380.00 | ||
| 34 | $360.00 | ||
| 35 | $390.00 | ||
| 36 | $340.00 | ||
| 37 | $370.00 | ||
| 38 | $350.00 | ||
| 39 | $370.00 | ||
| 40 | $330.00 | ||
| 41 | $340.00 | ||
| 42 | $320.00 | ||
| 43 | $380.00 | ||
| 44 | $360.00 | ||
| 45 | $480.00 | ||
| 46 | $510.00 | ||
| 47 | $550.00 | ||
| 48 | $550.00 | ||
| 49 | $400.00 | ||
| 50 | $500.00 | ||
| 51 | $480.00 | ||
| 52 | $550.00 |
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