Sensitivity analysis is the study of how the uncertainty in the output of a mathematical model or system (numerical or otherwise) can

be apportioned to different sources of uncertainty in its inputs. A related practice is uncertainty analysis, which has a greater focus on uncertainty quantification and propagation of uncertainty. Ideally, uncertainty and sensitivity analysis should be run in tandem. Sensitivity analysis can be useful for a range of purposes, including:

Testing the robustness of the results of a model or system in the presence of uncertainty. Increased understanding of the relationships between input and output variables in a system or model. Uncertainty reduction: identifying model inputs that cause significant uncertainty in the output and should therefore be the focus of attention if the robustness is to be increased (perhaps by further research). Searching for errors in the model (by encountering unexpected relationships between inputs and outputs). Model simplification fixing model inputs that have no effect on the output, or identifying and removing redundant parts of the model structure. Enhancing communication from modelers to decision makers (e.g. by making recommendations more credible, understandable, compelling or persuasive). Finding regions in the space of input factors for which the model output is either maximum or minimum or meets some optimum criterion (see optimization and Monte Carlo filtering).

Taking an example from economics, in any budgeting process there are always variables that are uncertain. Future tax rates, interest rates, inflation rates, headcount, operating expenses and other variables may not be known with great precision. Sensitivity analysis answers the question, "if these variables deviate from expectations, what will the effect be (on the business, model, system, or whatever is being analyzed), and which variables are causing it?"

Sensitivity analysis determines how much an output is expected to change due to changes in a variable or parameter. In this case, the output (y-axis) decreases exponentially with an increase in the input (x-axis). Sensitivity analysis helps find the optimal levels for inputs (eg., raw material prices, number of employees, sales price) . Sensitivity analysis is a statistical tool based on seeing how inputs and parameters affect outputs. Sensitivity analysis is a statistical tool that determines how consequential deviations from the expected value occur. Sensitivity Analysis deals with finding out the amount by which we can change the input data for the output of our linear programming model to remain comparatively unchanged. This helps us in determining the sensitivity of the data we supply for the problem. It also helps to determine the optimal levels of each input.

Sensitivity analysis can be useful for a number of reasons, including: Support decision making or the development of recommendations for decision makers (e.g., testing the robustness of a result).

Enhance communication from modelers to decision makers (e.g., by making recommendations more credible, understandable, compelling or persuasive). Increase understanding or quantification of the system (e.g., understanding relationships between input and output variables). Model development (e.g., searching for errors in the model).

In order to conduct a sensitivity analysis, all of the inputs and parameters are connected via an algorithm to produce the output. For example, a model of the inputs and parameters for a company interest in creating a new product may include information about expected availability of raw material, inflation rates, and number of employees working in R&D. The output would be the profit generated by the new product. The sensitivity analysis entails changing each variable and seeing how that changes the output Figure 0. Generally, only one variable is changed at once, with all of the others fixed at their base value. This makes it easy to see how much a variable affects the output. However, not all of the inputs may be independent so changing inputs one at a time does not account for interaction between the inputs.