6.

6 SENSITIVITY ANALYSIS,
WHAT-IF ANALYSIS, AND
GOAL-SEEKING
Sensitivity Analysis

It attempts to assess the impact of a change in the input data or

parameters on the proposed solution. It allows flexibility to changing
conditions, and tests the following relationships:
■ The impact of changes in external variables and parameters on the
outcome variables
■ The impact of changes in decision variables on the outcome variables
■ The effect of uncertainty in estimating external variables
■ The effects of different dependent interactions among variables
■ The robustness of decisions under changing conditions
Types of Sensitivity Analysis

Automatic Trial-and-Error
It is performed in standard The impact of changes in any
quantitative model variable, or in several variables,
implementations. For example, can be determined through a
it reports the range within which simple trial-and-error approach.
a certain input variable or You change some input data and
parameter value can vary solve the problem again.
without having any significant
impact on the proposed solution.
What-If-Analysis

What will happen to the solution if an input variable, an

assumption, or a parameter value is changed?
For example:
■ What will happen to the total inventory cost if the cost of carrying
inventories increases by 10 percent?
■ What will be the market share if the advertising budget increases by 5
percent?
Goal Seeking

It calculates the values of the inputs necessary to achieve a desired level

of an output (goal). It represents a backward solutions approach.

Example:
■ What annual R&D budget is needed for an annual growth rate of 15
percent by 2018?
■ How many nurses are needed to reduce the average waiting time of a
patient in the emergency room to less than 10 minutes?