Ravindra BagaleCourses & study guides

11. What-If Analysis

11.1 Goal Seek

Goal Seek changes one input until a formula reaches a target value. Behind the scenes it tries value after value – an iteration (पुनरावृत्ती) process – until the result is close enough.

Steps in Excel – break-even orders per day

  1. Data › Forecast › What-If Analysis › Goal Seek…
  2. Set cell: B13 (Profit) › To value: 0 › By changing cell: B2 (Orders per day) › OK.
  3. Goal Seek shows the solution: 506.76 orders/day. Click OK to keep it or Cancel to restore 400.
  4. Round up for the business answer: about 507 orders per day to break even.

Check by hand: margin per order = 320 × 18% − 28 = ₹29.60; per month 30 × 29.60 = ₹888 per daily order; 4,50,000 ÷ 888 = 506.76 ✓.

Another question: at 400 orders/day, what AOV is needed to break even? Set B13 to 0 by changing B3 → about ₹363.89.

Ravindra Bagale's Tip

If you give Goal Seek's By changing cell a cell that contains a formula, Excel gives an error – it must be an input cell (a typed value). Many students make this mistake. And Goal Seek changes only one input – if you need to change two or three inputs together, use Solver. If you don't want to keep the result, don't forget to press Cancel.

Practice task

Using Goal Seek find: the delivery cost per order that makes profit ₹50,000 at 400 orders/day, and the gross margin % needed to break even.