The Advantages of Excel Solver

by James Highland

Microsoft Excel is a powerful spreadsheet application that offers many features for the novice end user and advanced programmer alike. The program organizes data in a tabular grid. Simple lists may be organized, but the data can also be processed using advanced tools built into Excel. Excel Solver is one of these utilities. Solver uses a computer's fast processing power to subject any mathematical scenario to rapid data analysis for purposes of finding a solution to complicated formulas.

Linear Algebra

The process of solving equations with a single unknown variable is relatively straightforward. However, when multiple unknowns are part of a set of multiple equations, this process gets much more time consuming and challenging. A key advantage of Solver is the ability to quickly process scenarios involving multiple unknown variables. This is often regarded as "linear algebra." Whereas more conventional Excel formulas process straightforward calculations, Solver takes Excel's math engine much further and runs advanced problem-solving algorithms to discover results for multiple variables simultaneously. This is particularly useful when there are many unknowns, or many different sets of equations, each with its own set of unknown variables. Solver saves hours of manual algebra calculations in these circumstances.

Optimization

Optimization is a key purpose of Solver as used in the corporate world. As with linear algebra, many product development cycles are influenced by multiple factors, each of which can significantly change profit margins or product quality. If the relationship between these factors and a company's desired goals can be expressed mathematically, Solver can quickly identify the value of these factors to meet those goals. For example, if you wish to open a new car service company, and have half a million dollars to do so, you may wish to identify the most number of cars you could buy as your fleet. This is your goal, but there are constraints. The amount of money you have is an obvious restriction, but you may also require certain minimums of different car sizes. If you can express these as mathematical statements, Solver can show you how to satisfy all constraints and still get the largest fleet for your cash allowance. In this way, Solver has optimized your business plan.

Education

While Excel's solver is an excellent introduction into the power of "what if" analysis that many companies use, it is also a limited product for particularly large operations. Many corporations have their own proprietary tools that work similarly to Solver but can handle much larger sets of data and a greater number of simultaneous variables. However, these applications are beyond access to students who need to learn the core fundamentals of both optimization and also linear programming, a related mathematical field. The ubiquity of Excel has led to some educational institutions incorporating Excel Solver as a part of their curriculum. This tool is a major advantage for educational environments that must teach these concepts without spending resources on more advanced software.

About the Author

James Highland started writing professionally in 1998. He has written for the New York Institute of Finance and Chron.com. He has an extensive background in financial investing and has taught computer programming courses for two New York companies. He has a Bachelor of Arts in film production from Indiana University.