About This Chapter
Sensitivity Analysis in Business - Chapter Summary and Learning Objectives
Most people make decisions based on known variables, but if some of those variables change, you can use sensitivity analysis methodologies to determine how such changes will affect your final decision. Our instructors have created several short lessons that make this complex subject easier to grasp. Each lesson uses pragmatic examples that are supported by clever graphics, so by the time you complete this chapter you will be able to discern more details about the following:
- The definition of sensitivity analysis
- Reasons to use sensitivity analysis in business
- Running analyses with both constant and changing variables
- Using variable linear programming to create graphic interpretations of analyses
|Sensitivity Analysis: Definition, Uses & Importance||Go over the key characteristics of sensitivity analysis, and then determine its uses and necessity in business.|
|Conducting Sensitivity Analysis for Objective Function Coefficients||Define the following terms associated with running a sensitivity analysis: objective function coefficients, reduced costs, range, right-hand side values, shadow prices, and constraints.|
|Graphical Sensitivity Analysis for Variable Linear Programming Problems||Establish the steps for building a graph interpretation of sensitivity analysis using linear programming equations.|
1. Sensitivity Analysis: Definition, Uses & Importance
Decision makers need tools to help them use historical data to predict, as best they can, the future impact of their decisions. In this lesson, we'll learn about one of these tools - the very important sensitivity analysis.
2. Graphical Sensitivity Analysis for Variable Linear Programming Problems
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