Sensitivity Analysis

Considering estimate ranges is better than using conservative selection criteria, but there is an even better technique. Sensitivity analysis allows the decision maker to understand the full range of possible impacts of inaccuracy. The term sensitivity refers to the relationship between the relative change in an estimated factor and the resulting desirability of the alternative. More precisely, if the estimate for a factor is off by some given percentage, does the value of the alternative change a little bit or a lot? Sensitivity analysis shows how much inaccuracies in an estimate would impact the final decision. A moderate change in some factor could have a relatively small impact on desirability, whereas a small change ...

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