Analysis Categories Base-case analysis What-if (sensitivity) analysis Breakeven Analysis Optimization Analysis Risk Analysis

Sensitivity Analysis A systematic way of asking “what-if” scenario questions in order to understand what outcomes could possibly occur that would effect your decision which input assumptions have the most impact on key outputs and thus your decision and should be analyzed further Performed by setting all inputs equal to their base values and changing one variable’s assumed value at a time

Breakeven Analysis Identify a breakeven value (a cutoff level) for a parameter that triggers a target value for a key output Example: at what price will the company earn a 15% return on its investment? Goal Seek in Excel is useful for performing this type of search

Optimization Analysis What decision choices result in the best possible (optimal) value of an output? What is the most or least that can be achieved for an output variable? Solver in Excel or the Optimization platform in RSPE can be used to optimize a model

Risk Analysis Simulate a scenario of possible input values that could occur and observe key outputs Pick many different input scenarios according to their likelihood of occurring Record and summarize the key outputs observed to measure risks Crystal Ball and RSPE can be used to perform simulation for a model