TEACHING FORECASTING, CASH BUDGETING AND INVENTORY MODEL, BUILDING USING SBTOOLS Developments In Business Simulation & Experiential Exercises, Volume 17, 1990 213 TEACHING FORECASTING, CASH BUDGETING AND INVENTORY MODEL, BUILDING USING SBTOOLS™ Robert G. Schwartz, Mercer University Richard D. Teach, Georgia Institute of Technology Samuel H. Letson, III, Mercer University ABSTRACT Students, entrepreneurs and small business owners have need to efficiently and effectively develop forecasting, cash budgeting, and inventory building and control models for business planning, whether for classroom or business development purposes. Efficiently being able to create different financial alternatives will not necessarily yield more effective planning results, but does allow for “easier exploration of business options. While no proof’ is at hand to indicate the teaching or learning effectiveness of such exploration, intuitively, additional modeling of the options may lead to more effective decision making. Lotus 1-2-3m, has created an opportunity to develop easy to use templates. A financial template was developed to allow for more efficient modeling of cash budgeting, forecasting and inventory building and control. The computer based instruction aspects of the template involve the potential learning which occurs by shifting the burden of calculation from the planner to the computer. This paper describes the use of SBTools ™ as a computer based instruction tool. BACKGROUND With the advent of the personal computer in the late 70s, significant educational and commercial interest in computer based instruction developed (Niemiec and Walberg, 1987). While substantive research continues into the efficiency and effectiveness of computer based instruction (Davis and Mount, 1984; Dossett and Hulvershorn, 1983; Bracey, 1987; Kulik and Kulik, 1987; Niemiec et. a1, 1986; Sterkel et. al, 1986; Miles et. al, 1986; Golden and Smith 1988), its use in the classroom has been extensive (Newman, 1988; Hu and Saunders, 1986). Simulations and financial models utilizing the popular Lotus 1-2-3™ are numerous and diverse and include investment and portfolio analysis (Wingender and Ball, 1988); oil and gas well investment (Wingender and Wurster 1987); material resource planning (Schroeder and Gentry. 1987); cost/volume/profit relationships (Well, 1987) decision making (Prentice Hall, 1988); marketing; finance (South-Western Publishing Co., 1987); cost accounting (South-Western Publishing Co., 1985); and small business management (south-Western Publishing Co., 1985) to name just a few. SBTools ™ SBTools ™ is a partially integrated set of planning tools designed for the small business owner and manager, entrepreneur, or student. The program originated when one of the authors frequently encountered small business owners and managers who were confused by the accrual statements they were receiving from their accountants each month. The most acute point of confusion was the difference between what the accrual statement defined as profit, and what the owner knew was the cash balance in the company’s checkbook (a cash measure). This confusion supported the business owner in his or her continued rationalization to not perform strategic planning. As a result, at times during the year the company would run short of cash, while at other times, cash was adequate. With an enhanced understanding of the company’s projected cash flow, an owner would be better prepared for the slow periods, thus increasing the stability and the viability of the business. With this in mind, SBTools™ was written to be a computer tool managers and owners, entrepreneurs and students could use to both track and forecast their cash needs, as well as to introduce them to strategic planning in a simple format. SBTools ™ is a Lotus 1-2-3™ template. Because SBTools™ was written with its own macros, the user needs only to have access to Lotus 1-2-3m, not a working knowledge of it. The SBTools ™ menu is short and easy to use. The SBTools ™ template includes the following: * Cash Budget, * inventory Statement, * income Statement, * Balance Sheet DISCUSSION The authors have found the use of the template effective and efficient in terms of their business planning needs. The linkages between various parts of the worksheet allow for less expenditure of time in its use. The program also allows for the rapid development of a number of alternative options in the business planning process, thus affording the potential of more effective planning. Students have found the program somewhat difficult to use, partially because they become submerged in Lotus 1-2-3 ™ and confuse Lotus commands with SBTools™ commands. This difficulty can be overcome by expending additional classroom time explaining the use of the template. A second difficulty is that students have generally had no practical experience in building forecasts, cash budgets, and inventory models. Thus, the financial planning further confuses the student. The concept of “ramp-up is sophisticated and causes additional difficulties. A third difficulty is caused by the enhanced efficiency of the template. The student typically procrastinates in the development of his or her budget. This creates further difficulty and is a pervasive problem in the use of microcomputers in general at the university level. Some of this difficulty can be ameliorated by altering course sequencing. On a positive teaching note, whether for student, entrepreneur or small business owner, utilizing SBTools ™ produces a more consistent financial model of the firm. Utilizing the same budgeting approach allows for a consistent planning experience. Forcing a consistent methodology on the end-user may create some distaste. the consistency makes for a more complete job. The cost benefit in utilizing a consistent and common approach for the instructor is time saved in teaching and time saved in grading. Rather than having to deal with a diversity of financial formats, one format saves extensive grading and teaching time. Utilizing a consistent format with the entrepreneur and small business owner also saves both the consultant and the owner substantial amounts of time Generally, the same difficulties have arisen when the template is use for planning purposes by entrepreneurs or small business owners. The difficulties have been overcome by working directly with these end users. The same positive aspects of the use of the template also are present. Testing of the overall learning effectiveness of the template has not yet occurred. Initial testing has begun and will be the subject of a future paper. CONCLUSIONS For the skilled, competent computer literate user, SBTools ™ can be utilized to more efficiently, and likely, more effectively develop financial forecasts. For the less computer literate and financially unsophisticated user, SBTools ™ can be used to more efficiently develop forecasts, cash budgets and inventory models. Moderate to extensive intervention is needed with the less sophisticated user. For the instructor or consultant, consistency of approach should produce a positive cost benefit. The references will be provided upon request Table of Contents Volume 17, 1990 The Impact of Decision Support Systems on the Effectiveness of Small Group Decisions - Revisited The Relationship Between Financial Performance and Other Measures of Learning on a Simulation Exercise Use and Effectiveness of an Analogy-Based Expert System Suggestions for Computerized Business Authors Dealing with Power: An Experiential Exercise Using Movie and Personal Diary Analysis Techniques A Model for Developing Student Skills and Assessing Outcomes Through Outdoor Training Computer-Aided Exercises Versus Workbook Exercises as Learning Facilitator in the Principles of Marketing Course An Exposition of Guilford's Si Model as a Means of Diagnosing and Generating Pedagogical Strategies in Collegiate Business Education Formal Planning and Simulation Team Performance: A Cross Sectional Approach Cases: Real Organizations in Real Time in the Classroom An Empirical Investigation of the Internal Validity of Marketing Simulation Game An Empirical Evaluation of the Pedagogical Value of Playing a Simulation Game in a Principles of Marketing Course Factors Affecting Effective Teaching of Strategic Planning: Some Preliminary Evidence An Experiential Exercise for Learning About the Relationship Between Organizational Form & the Project Management Process Accounting Communication Skills can be Taught in the Auditing Course Modeling Cost Functions in Computerized Business Simulation: An Application of Duality Theory and Sheppard's Lemma A Life Cycle Analysis of Decision Making for a Strategic Management Team What's the Problem? A Dynamic Model for Teaching Problem Solving Skills Experientially International Currency Fluctuations: Money$im, A Simulation Superstores: A Specialized Retailing Simulation Within a Specialized Marketing Curriculum Factors Affecting Student Perceptions of Learning in a Business Policy Game VC + EL = VL The Name Game: An Experiential Exercise in Intergroup Relations The Effects of Experiential Accounting Work Experience on Student Performance in Intermediate Accounting Courses The Results of Using the Experiential Activity Group Performance Evaluation in a Business Policy Setting Using a Legal Database to Describe the Legal Environment of Marketing (and Business) Matching Environmental Uncertainty and Organizational Configuration An Instructional Computer Simulation of Tampering in QC Executive Evaluation of Student Learning in the Looking Glass Simulation Group Personality Composition and Total Enterprise Simulation Performance An Expert System for Selecting Analytical Techniques for Analyzing Marketing Research Data Effects of Cognitive Styles on Responses in an In-Basket Simulation A Psychometric Analysis of Kolb's Revised Learning Style-Inventory Selecting and Developing Experiential Exercises Using Movies Application of a Real-World Strategic Management Model in the Classroom Demand Equations which Include Product Attributes Consumption as the Objective in Computer-Scored Total Enterprise Simulations The Effects of Decision Format and Evaluation on Simulation Performance, Decision Time, and Team Cohesion The Effects of Computer Related Assignments on Student Performance in Business Administration The Money Game: A Dynamic Simulation Including Random Shocks for Money and Banking Courses Methods for Evaluating Performance on Business Simulations: A Survey The Effects of Synergogy on the Policy Course: Significant Improvements in Student Learning and Teacher Evaluation Conditions and Outcomes of Trust in a Two-Person Bargaining Exercise Bankgame Enhancing Computer Business Simulation with the Use of VGA Graphics An Experiential Approach to Entrepreneurship An Advanced Simulation Method (ASM) for Multiple Objective Problems The Influence of Experiential learning Techniques on Student Recognition of Non-Primary Learning Styles Negotiating Mergers and Acquisitions: A Cocktail Napkin Approach Identification of Unintended Effects in Experiential Laboratory Exercises An Experimental Comparison of Paper and Pencil and Computer Aided Decision Support Tools Porting a Simulation from the IBM World to the Macintosh World A Transaction Cost Analysis of Experiential Learning The Development of Experiential Exercises for Courses in Entrepreneurship and Small Business Management The Assessment Center as and Experiential Classroom Exercise Pricing Strategy Algorithms for Playing Business Simulations Organizational Structures for International Operations: An Experiential Activity Simulation Emphasis in the Business School Capstone Course An Integrated Approach to Computerizing the Business Curriculum Cross-Cultural Business Negotiations Exercise Organizational Socialization and Gender Differences in Students at Work Understanding Student Work Experience: A Content-Analytic Approach Introducing Executive MBA Programs with Management Games An Analysis of Improvement in Business Decision Outcome with Sequential Use of Two Simulation Games Teaching Business Policy Utilizing Mass Lecture and Individual Case Labs Potholes Along the Road to Evaluating Learning Outcomes: The Case of Outdoor Management Training Experiential Learning for Interior Design Students: Using CADD, Lotus 1-2-3, and Wordperfect Cognitive Learning Using a Computer-Based, Qualitative Interactive Business Simulation Sex Discrimination: Does the Woman get the Job or Does the Best Man Win? A Search for Visual Aids to Support Experiential Learning Through the 1990's An Experimental Analysis fo the Effectiveness of Student Role-Playing in Sales Training How to Have Students Learn from their Term Projects Self-Evaluation Exercise (SEE): An Assessment of Class Contribution A Study of the Influence of Team Formation on Attitudes and Performance in Management Games A Hardware Based CIM Simulation Laboratory Model Test Substance Abuse in Organizations Micro Computer Training Models Teaching Forecasting, Cash Budgeting and Inventory Model Building Using SBTools A Comparison of the Effects of Experiential Learning Activities and Traditional Lecture Classes An Adjunct Writing Instruction Assistant, The Computer; With an Illustration Classroom Software for ABC Analysis Utilizing Information Processing Technology to Enhance the Business Policy Simulation Experience Progressive Cases Realistic Job Previews Vs. Traditional Job Previews: Experiencing the Differences and Understanding the Consequences Investment Analysis Using the Pragmatic Multiplier Approach A Computer Simulation Interface for Competitive and Firm Analysis Self-Assessment of Ethical Decision Making Predispositions Preparing Managers for Overseas Assignments An Inquiry into Japanese Marketing: Workshop on Teaching Japanese Marketing The Performance Appraisal Feedback Interview: A Role Play for Human Resources Management Teaching Counselor Selling techniques Using Experiential Techniques to Teach International Topics International Management Simulation Gaming: Current Status and Future Developments A Realism Comparison of Simulation Technologies/Methodologies A Time-Efficient Game to Illustrate Concepts Taught in Management Courses and Management Development Programs Teaching the Management of Technology The Concept of Face and the Applicability of Experiential Exercises in an Oriental Culture's