This assignment is to

This assignment is to be completed in groups and submitted

MIS775 DECISION MODELS FOR BUSINESS ANALYTICS TRIMESTER 1, 2018 Page 1 MODULE 2: STOCASTIC DECISION MODELS & RISK ANALYSIS ASSIGNMENT 2 (30% of UNIT MARK) Requirements: This assignment is to be completed in groups and submitted via CloudDeakin as a MS Excel file and a MS PowerPoint file. The Excel file must be an original created by you for this assignment. Extensions must be negotiated at least one week prior to the above deadline by email. Requests for extensions made within 1 week of the deadline will only be considered if progressive work to date is submitted with the request. Late submissions (for more than 5 days and without an agreed extension) will not be marked but will be considered in a pass/fail situation. The 5% penalty is applied for every day of late submission up to 5 days (without an agreed extension). Assignment Details: You are required to develop a spreadsheetbased decision model that can be used to investigate and explore decisions and risks relating to taking a mortgage loan to purchase a property. The model needs to be generic enough to cater for single or multiple ownership (e.g. a couple purchasing using a joint mortgage loan) and enable the decision maker to explore the size the loan that is viable/manageable within different scenarios of income, living expenses, loan amount, the deposit made on the loan, repayment amount, other financial commitments etc., the amount of interest paid and understand the risks associated with meeting the loan commitments. The decision model must be realistic and easy to use. The level of complexity modelled, for example, the choice of deterministic vs. stochastic inputs, input distributions, time units modelled etc., is left to your discretion. However, the model must enable the user to input the following living expenses and loan details/options: Council Rates Electricity Gas Water Telephone/mobile Cable TV House Insurance Internet Maintenance Groceries Entertainment Medical Cloths Other No data are provided, you are required to create a fictitious client and demonstrate the utility of the decision model using real data where available (e.g. mortgage interest rates) and creates data where it is not (e.g. salaries, living expenses). Deadline for submission: 8:00AM Monday 21 May 2018 (week 11). MIS775 DECISION MODELS FOR BUSINESS ANALYTICS TRIMESTER 1, 2018 Page 2 The minimum requirements of the decision model are: 1. Ability to enter loan details, salaries and living costs to explore decision options relating to the loan amount and repayments to calculate outputs such as total interest paid and duration of loan. 2. Ability to understand the impact of variation to the loan interest rate, salaries and cost of living over the duration of the loan. 3. Stochastic treatment of some of the inputs to explore resulting simulated output and summarise risks. 4. Enable the decision maker to explore and understand the risks associated with decision. The PowerPoint presentation should form the content of a report that includes: 1. A brief description of the model (maximum 100 words) 2. A bubble diagram or similar capturing the conceptual model used and assumptions behind the decision model (Optional: you can use Analytica). 3. The decision model copied from the spreadsheet. 4. The Best and Worst case scenarios (for the data you have used) and a brief discussion of the consequences. 5. Summary report of the sensitivity analysis of inputs. 6. Risk analysis report corresponding to the simulation modelling along with summary of input parameters/distributions used. 7. Optional: The model to be solved to get the optimal solutions (bonus mark +1) Marking rubric File Marks* Model description, conceptual model as a bubble diagram and assumptions PowerPoint 5 Spreadsheetbased decision model PowerPoint & Excel 5 Scenario and Sensitivity analysis reports PowerPoint & Excel 8 Stochastic variables including choice of distributions PowerPoint & Excel 5 Simulated output distribution and Risk analysis report PowerPoint & Excel 5 Overall presentation PowerPoint & Excel 2 * Total unit mark for assignment 2 is 30%. Feedback prior to submission Students are able to seek assistance from the teaching staff to ascertain whether their assignment conforms to submission guidelines, via: Discussion Forum: Module 2 Discussions or Assignment 2 Discussions, so other students can also benefit from your questions and replies Feedback after submission Your assignment feedback will be returned within 2 weeks in a rubric via CloudDeakin with an overall mark together with comments. MIS775 DECISION MODELS FOR BUSINESS ANALYTICS TRIMESTER 1, 2018 Page 3 Assurance of Learning This assignment assesses following Graduate Learning Outcomes and related Unit Learning Outcomes: Unit Learning Outcome (ULO) Graduate Learning Outcome (GLO) ULO1. Conceptualise, formulate and represent a business problem as a decision model. ULO2. Develop and solve business problems using advanced decision modelling techniques such as optimisation, stochastic modelling and risk analysis in spreadsheets. ULO3. Interpret and analyse the results; investigate the sensitivity of the solutions to the assumptions of the decision model. GLO1: Disciplinespecific knowledge and capabilities GLO4: Critical thinking GLO5: Problemsolving

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