A production possibilities curve in Excel it is a way of expressing values of a business production process. This curve indicates how and what is the potential in terms of the production of a certain article, doing so in relation to a specific period.
This possibility curve reflects the production possibilities frontier In business processes, with the wonderful Excel tool it is possible to represent this study in a graphical way, and if you want to learn how to use Excel for this task, keep reading.
How to elaborate a curve in Excel and graph production possibilities frontier?
When we talk about production processes, we normally refer to articles or products that any company makes, these processes deserve a in-depth study of production values that are generated in a certain period of time, thrown as results.
These results can be reflected in a simple graph of a worksheet in Excel, what is needed to run or make a production possibilities curve is basically to put the data in a certain way within Excel, working with the appropriate coordinate axes.
In this sense, the first thing we will do is set two variables: one that represents the number of spaces to store the products, and another that reflects the amount of products produced in each space.
Also then we will start putting those values on the respective axes, assigning columns and rows with specifications for it, in a perpendicular way to establish the parameters in these axes.
Then select by moving the cursor in all the committed cells of the axes, and now you must insert the graph; To do this, you choose the option of ‘Insert’, and then ‘Graphics’, and then you will click on the dispersion tool, and you will choose the option of ‘Dispersion with smoothed lines and markers’; automatically, the worksheet will insert the chart with the curve.
What is this production possibilities curve made in Excel for?
The production possibilities curve in Excel, as said at the beginning, is the reflection of the production possibilities frontier of a company. For this knowledge a database with the production numbers of a company is necessary.
The organization of these numbers through coordinate axes is the process that is done in Excel with the elaboration of said possibilities curve, this being a simple process to apply in this Microsoft software, for the subsequent explanation of the results obtained.
This curve is very useful, since it is a well studied and systematized process by the spreadsheet, which is needed in a detailed study. In fact, making this type of curve is the equivalent of making an advanced line chart in Excel, which reflects the importance of making a production possibilities curve in Excel.
The production possibilities frontier made in Excel allows managers and executives of a company, have a knowledge about the production process, and from there draw conclusions based on whether the process is optimized, or lacks more investment.
What are the implications of making a production possibilities curve in Excel?
Because this possibility curve is a way of interpretation in the business production processes, there are certain implications in the elaboration and analysis of it.
When making this curve in Excel, you need a knowledge that involves the use of Excel formulas, so that the graph is optimized.
On the other hand, after having elaborated this curve of possibilities, which in Excel is taken as some known data points, the analysis of the same is the purpose of the whole procedure, therefore, the vast knowledge of the production process is involved.
All this must be taken into account to make a curve of production possibilities in Excel, and that the process is optimized and reflects what we need to see. As an aesthetic recommendation, it is good to put colors to the cells in Excel, so that the discussion and study of the curve be more didactic.