Business Case Analysis with R


This book is no longer available for sale.

Business Case Analysis with R

A Simulation Tutorial to Support Complex Business Decisions

About the Book

Please Note: This title is no longer available here. It is now republished by Springer/Nature/Apress.

This is a tutorial for learning how to use the statistical programming language R to develop a business case simulation and analysis.

The tutorial follows the case in which a chemical manufacturing company considers constructing a chemical reactor and production facility to bring a new compound to market. There are numerous uncertainties and risks involved, including the possibility that a competitor brings a similar product online. The company must determine the value of making the decision to move forward and where they might prioritize their attention to make a more informed and robust decision. While the example used is a chemical company, the analysis structure it presents can be applied to just about any business decision, from IT projects to new product development to commercial real estate.

The purpose of the book is not to teach you R in a broad manner. Rather, it shows you how to

  • Set up a business case abstraction
  • Model the inherent uncertainties in the problem with Monte Carlo simulation
  • Communicate the results graphically
  • Draw appropriate insights from the results

About the Author

Robert D. Brown III
Robert D. Brown III

Robert D. Brown III is the President of Incite! Decision Technologies LLC, a consultancy supporting senior decision-makers facing complex, high-risk opportunities. These opportunities usually include strategic planning, project selection, planning & risk management, and project portfolio analysis & management.

Mr. Brown has devoted his twenty-year career to providing solutions to his clients’ complex problems by employing creative thinking and advanced quantitative business, engineering, and systems analysis. His client experience spans diverse industrial and commercial fields including petroleum & chemicals, energy, utilities, logistics & transportation, pharmaceuticals, electronics manufacturing, telecommunications, IT, commercial real estate, federal agencies, and education.

Through Incite, Mr. Brown delivers analysis, decision support tools and systems, and training in decision-making and risk management with the goal to help his clients measure the value and the risk associated with the important decisions they face in order to make informed trade-offs and choices.

Mr. Brown graduated from the Georgia Institute of Technology in 1992 with a Bachelors of Mechanical Engineering (Co-op program) with an emphasis in control systems.

Reader Testimonials

John A Dutton
John A Dutton

With the guidance provided by the book, I was able to develop a very useful model of climate change impacts on a hypothetical electric utility, including probabilistic demand and production of hydro and solar power.

Salil Athalye
Salil Athalye

You can spend hundreds of dollars buying college textbooks on this subject matter but many of these books don’t help you actually start implementing a system and using it. That’s why this book is a hidden gem.

Matt Marzillo
Matt Marzillo

This book is a great resource for anyone looking to learn more about running simulations and getting some real world experience by test driving Robert's R code. A technical book that is easy read...for the price, it's really hard to pass up!

Carlos Ortega
Carlos Ortega

The novel approach it offers is that is written in a very easy to follow R programming language. Perhaps it is the only book about this subject and entirely written in R.

Table of Contents

    • 1.1 Acknowledgments
    • 1.2 Why use R for Business Case Analysis?
    • 1.3 What You Will Learn
    • 1.4 What You Will Need
    • 2.1 The Case Study
    • 2.2 Abstract the Case Study with an Influence Diagram
    • 2.3 Set Up the File Structure
    • 2.4 Style Guide
    • 2.5 Write the Deterministic Financial Model
    • 2.6 Write a Pro Forma Table
    • 2.7 Conduct Deterministic Sensitivity Analysis
    • 3.1 Why and How Do We Represent Uncertainty?
    • 3.2 What is Monte Carlo Simulation?
    • 3.3 The Matrix Structure of Business Case Simulation in R
    • 3.4 Useful Distributions for Expert Elicited Assumptions
    • 3.5 Modify the Influence Diagram to Reflect the Risk Layer
    • 3.6 Include the Run Index
    • 4.1 Cash Flow and Cumulative Cash Flow with Confidence Bands
    • 4.2 The Histogram of NPV
    • 4.3 The Cumulative Probability Distribution of Net Present Value
    • 4.4 The Waterfall Chart of the Pro Forma Present Values
    • 4.5 The Tornado Sensitivity Chart
    • 4.6 Closing Comments
    • 5.1 Appendix A - Deterministic Model
    • 5.2 Appendix B - Risk Model
    • 5.3 Appendix C - Finance Functions
    • 6.1 How to be a Business Analytics Jedi
    • 6.2 To Framing…And Beyond!
  • Notes

The Leanpub 60 Day 100% Happiness Guarantee

Within 60 days of purchase you can get a 100% refund on any Leanpub purchase, in two clicks.

Now, this is technically risky for us, since you'll have the book or course files either way. But we're so confident in our products and services, and in our authors and readers, that we're happy to offer a full money back guarantee for everything we sell.

You can only find out how good something is by trying it, and because of our 100% money back guarantee there's literally no risk to do so!

So, there's no reason not to click the Add to Cart button, is there?

See full terms...

80% Royalties. Earn $16 on a $20 book.

We pay 80% royalties. That's not a typo: you earn $16 on a $20 sale. If we sell 5000 non-refunded copies of your book or course for $20, you'll earn $80,000.

(Yes, some authors have already earned much more than that on Leanpub.)

In fact, authors have earnedover $13 millionwriting, publishing and selling on Leanpub.

Learn more about writing on Leanpub

Free Updates. DRM Free.

If you buy a Leanpub book, you get free updates for as long as the author updates the book! Many authors use Leanpub to publish their books in-progress, while they are writing them. All readers get free updates, regardless of when they bought the book or how much they paid (including free).

Most Leanpub books are available in PDF (for computers) and EPUB (for phones, tablets and Kindle). The formats that a book includes are shown at the top right corner of this page.

Finally, Leanpub books don't have any DRM copy-protection nonsense, so you can easily read them on any supported device.

Learn more about Leanpub's ebook formats and where to read them

Write and Publish on Leanpub

You can use Leanpub to easily write, publish and sell in-progress and completed ebooks and online courses!

Leanpub is a powerful platform for serious authors, combining a simple, elegant writing and publishing workflow with a store focused on selling in-progress ebooks.

Leanpub is a magical typewriter for authors: just write in plain text, and to publish your ebook, just click a button. (Or, if you are producing your ebook your own way, you can even upload your own PDF and/or EPUB files and then publish with one click!) It really is that easy.

Learn more about writing on Leanpub