It is simple to create an Excel model of the savings-driven vacation decision discussed earlier. For example, if we assume (for even more simplicity) that we have no current savings, then the influence diagram for the model would be simply:
This could be represented in Excel as:
The estimate is that the (new) Savings would be $2000; you can then consider whether this is sufficient and then decide whether to go on vacation or not.
Note that – for clarity – we have used color-coding, both in the influence diagram(s) and the model: The blue-shaded cells are “inputs”, which are used in calculations, to determine the value of the green-shaded “outputs”. Of course, the Excel worksheet captures the calculation that (new) Savings result by starting with Salary and subtracting Living Expenses. (This requirement is not explicitly stated on the influence diagram, but is captured using the Excel formula in cell C8 in the image).
(Note: The basic structure of Excel and the creation of simple formulas is no doubt familiar to many readers. However, it is covered in later materials for those not sufficiently familiar with it.)
As an example. let us suppose that the Living Expenses are able to be split as:
The revised version of the Savings model could be as follows:
Further enhancements could include adding a granular time axis (e.g. monthly or quarterly). This could help to capture that some items may change in value over the course of the year (such as being fixed for the earlier months before taking a different value in later months. Whether this is worth doings is not a simple question to answer; it needs to be considered on a case-by-case basis, since the extra complexity (and investment) of doing so may not always be worth the additional accuracy achievable (the principle of “diminishing returns” generally applies from some point onwards).