SENSITIVITY ANALYSIS The solution obtained by simplex or graphical method of LP is based on deterministic assumptions i.e. we assume complete certainty in the data and the relationships of a problem namely prices are fixed‚ resources known‚ time needed to produce a unit exactly etc. However in the real world‚ conditions are seldom static i.e. they are dynamic. How can such discrepancy be handled? For example if a firm realizes that profit per unit is not Rs 5 as estimated but instead closer
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Health economics What is sensitivity analysis? Matthew Taylor PhD MSc Senior Consultant‚ York Health Economics Consortium‚ University of York G While economic models are a useful tool to aid decision-making in healthcare‚ there remain several types of uncertainty associated with this method of analysis. G One-way sensitivity analysis allows a reviewer to assess the impact that changes in a certain parameter will have on the model’s conclusions. G Sensitivity analysis can help the reviewer to
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Linear Programming Notes VII Sensitivity Analysis 1 Introduction When you use a mathematical model to describe reality you must make approximations. The world is more complicated than the kinds of optimization problems that we are able to solve. Linearity assumptions usually are significant approximations. Another important approximation comes because you cannot be sure of the data that you put into the model. Your knowledge of the relevant technology may be imprecise‚ forcing you to approximate
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Sensitivity analysis is a technique that indicates exactly how much a project’s profitability (NPV or IRR) will change in response to a given change in a single input variable‚ other things held constant. Sensitivity analysis begins with a base case developed using expected values (in the statistical sense) for all uncertain variables. Then‚ each uncertain variable is usually changed by a fixed percentage amount above and below its expected value‚ holding all other variables constant at their expected
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REPORT ON PROJECT EVALUATION FOR KALAHI-CIDSS PROJECT‚ PHILIPPINES Introduction This report considers the following project evaluation methodologies in the context of the KALAHI – Comprehensive and Integrated Delivery of Social Services (CIDSS) Project in the Philippines (“the Project”): (a) financial analysis; (b) economic analysis; (c) social cost benefit analysis; (d) other evaluation methods including willingness to pay‚ planning balance sheet and cost effectiveness analysis. In order
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Sensitivity Analysis The variables used to develop the table‚ including sales price‚ variable costs‚ unit sales‚ and the unit growth rate‚ are all most likely‚ or base-case‚ values‚ and the resulting $25‚517 NPV shown in Part 5 is called the base-case NPV. Now we ask a series of "what if" questions: "What if unit sales falls 30 percent below the most likely level?" In our sensitivity analysis we hold the other variables at their base case levels and then examine the situation when the key variables
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Sensitivity Analysis Source: Introduction to Management Science 10 e‚ Anderson Sweeney Williams Example 1 Max s.t. 5x1 + 7x2 x1 < 6 2x1 + 3x2 < 19 x1 + x2 < 8 x1‚ x2 > 0 x2 8 7 6 5 4 3 2 1 x1 + x2 < 8 Max 5x1 + 7x2 x1 < 6 Optimal: x1 = 5‚ x2 = 3‚ z = 46 2x1 + 3x2 < 19 x1 1 2 3 4 5 6 7 8 9 10 x2 8 7 6 5 4 3 2 1 5 5 Feasible Region 1 1 1 2 3 4 4 4 3 3 2 2 5 6 7 8 9 10 x1 Example 1 • Range of Optimality for c1 The slope of the objective
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PROJECT PLANNING AND EVALUATION (under the Guidance and Supervision of Prof. Limuel C. Cirineo‚ Ed.D) I. INTRODUCTION: Before anyone is going to do something‚ there is nothing as sensible as planning. A plan as we know is something thought about and chalked out in advance before the real action takes place and is actually a recipe for success. But then‚ the word ’plan’ does not need much of a definition. It has been used so much that it has become quite hackneyed. So‚ we all know what it means
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ARTICLE IN PRESS Technovation 28 (2008) 633–643 www.elsevier.com/locate/technovation Post-project reviews as a key project management competence Frank T. Anbaria‚c‚Â Elias G. Carayannisb‚c‚1‚ Robert James Voetschd‚2 a Department of Decision Sciences‚ School of Business‚ Funger Hall 415‚ 2201 G Street‚ NW Washington‚ DC‚ USA Department of Information Systems and Technology Management‚ School of Business‚ Funger Hall 415‚ 2201 G Street‚ NW Washington‚ DC‚ USA c The George Washington
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also believed that the customer base that had already tried the fresh pasta would have higher awareness of the pizza product. The Cucina Fresca project‚ introducing fresh pasta had been successful‚ however there are certain differences between the pasta and pizza project: In the fresh whole grain pasta market‚ the company had the first mover advantage. Pasta required TruEarth to upgrade its manufacturing facility‚ thereby requiring more initial investment. Another competitor had also tested a
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