Sensitivity Analysis
Sensitivity analysis is useful in consideration of the consequences
of using faulty data in, say, forecasting costs/cash flows. It
involves speculation on alternative scenarios and estimating
the accuracy of data, e.g. Optimistic estimate - Pessimistic
estimate - most likely estimate.
The graph shown above is used in sensitivity analysis. Steeper
curves indicate a higher degree of sensitivity to deviations
from the original estimates.
Reference
- JL Riggs, Production Systems, Wiley, 1987. pp147-14
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