A
technique used to determine how different values of an
independent variable will impact a particular dependent variable under a
given set of assumptions. This technique is used
within specific boundaries that will depend on one or more input
variables, such as the effect that changes in interest rates will have
on a bond's price.
Sensitivity analysis is a way to predict the outcome of a decision if a situation turns out to be different compared to the key prediction(s).
Sensitivity analysis allows decision makers to analyze the sensitivity of each program’s criteria input to the ranking of the programs. The sensitivity analysis can be performed on all programs or only those at a specific gate.
The system looks at a specific program and calculates the necessary
criteria change to the inputs to move that program up or down one slot
in the ranked list. The change is calculated for each criterion
independently.
Changes on some criteria will not have enough
impact to change the program rank, while changes to others will. Some
changes could result in the program moving more than one slot because of
the relationships among the criteria weights, criteria inputs, and the
range of criteria input values.
The programs are marked before calculating the sensitivity. Sensitivity
analysis can be used to test the impact of moving a program either up,
down, or both up and down in rank. The results are displayed by criteria
for each program. You can select a criterion to change and re-calculate
a new ranked program list with that change.
A new approach for sensitivity analysis that enabled the decision makers to test the program rankings and re-evaluate their assessment of the programs.
The one thing we know with absolute certainty is that the strategic
financial plan is wrong. Various externalities will find a way to
interrupt any long-range plan. It is therefore important to know what is
the most impactful. Where must management devote its attention and
endure sleepless nights? Through sensitivity analysis, one assumption at a time is adjusted and the results are summarized in Table
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