Sensitivity Analysis (return to DSS home)

The managers of our firm are trying to see what the price and advertising values are if the following is true.

Ø The industry average advertising is 110000 (+-5000) and the industry average price is 363(+-3).

Ø There are ten firms in the industry in quarter 20.

Ø Last quarter the demand was 3000 units while last quarter's TID was 32850 units.

Ø The manager's GOAL is to get a market share of 10.5%.

Ø So we keep everything fixed except our firm's price and advertising.

Market Share at 10.5%

Firm price range (with firm's advertising fixed at 110000)

[352.10 through 352.22]

Firm's advertising range (with firm's price fixed at 363)

[178700 through 180000]

These results are relatively extreme numbers for price and advertising, so we want to meet the firm's price and advertising in the middle to try and optimize. After many tries, the best optimization we could do was advertising at about 140000 and price at about 356.8.

The sensitivity analysis provides the managers of the firm with ranges of price and advertising that would meet their goal. However, it is very difficult to optimize this process.

(click here to go to Goal Seek Analysis)

(click here to go to Scenario Analysis)