1. What is Sensitivity Analysis?

Discuss the importance of Sensitivity Analysis in

Linear Programming.
A sensitivity analysis is defined as a technique used to determine how different values
of an independent variable will impact a particular dependent variable. In the other words,
sensitivity analysis is an analysis that finds out how sensitive an output towards any changes
in an input while keeping other inputs constant. Basically in linear programming, the main
importance of sensitivity analysis is an aspect which help to analyse the changes in objective
function coefficients, right-hand-side values, and constraint coefficients on optimal solution
of a linear programming problem. Other than that, sensitivity analysis also help to test
sensitivity of optimal solution towards changes on profit or cost coefficients, and constraint
RHS values which can be explored graphically with two decision variables. The two variable
can be found by setting the slope of the objective function equal to the slopes of each of the
binding constraints. Furthermore, sensitivity analysis is also capable in interpreting
information on answer and sensitivity reports generated by Solver, reports used to analyse
simultaneous changes in model parameter values and determine potential impact of new
variable in model.

References :
1) Investopedia, Sensitivity Analysis,
http://www.investopedia.com/terms/s/sensitivityanalysis.asp
2) Js Besley,OR Notes http://people.brunel.ac.uk/~mastjjb/jeb/or/lpsens_solver.html
3) Dr Douglas Hawks, Sensitivity Analysis, http://study.com/academy/lesson/sensitivityanalysis-definition-uses-importance.html
4) Obaidullah Jan, 2015, Sensitivity Analysis, http://xplaind.com/167040/sensitivityanalysis
5) Sensitivity Analysis,
http://businessmanagementcourses.org/Lesson13SensitivityAnalysis.pdf