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Crystal Ball offers an initial  sensitivity analysis tool to measure the influence that key input variables have on the output (aka "one-at-a-time perturbation"). We recommend that after this analysis, you will however perform a second sensitivity analysis. The initial sensitivity analysis proceeds as follows to generate a Tornado Chart and Spider Plot:

 

  • Click "CBTools" >> Tornado Chart;

  • Select the forecast or formula cells to target;

  • Click "Next"

  • Select the assumptions, decision variables and precedents to analyze (performing a crude sensitivity analysis will guide you);

  • Click "Next"

  • Specify the cumulative probabilities you wish to test in the "Tornado Input" window;

 

Crystal Ball then:

  • Selects an input distribution;

  • Replaces the distribution with one of the percentiles you specified;

  • Calculates the value of the forecast, using "median" or "existing cell values" (you can specify this);

  • Selects the next cumulative percentile and calculates the forecast value again;

  • Repeats until all percentiles have been calculated, then put back the Crystal Ball distribution, and move on to the next selected input

 

Once all inputs have been treated this way, we can plot the following Spider Plot:

 

 

Often this type of plot has several horizontal lines for variables that have almost no influence on the output. It makes the graph a lot clearer to delete these.

 

Now we can very clearly see how the output mean is influenced by each input. The vertical range produced by the Sales price line shows the range of expected profits there would be if the Marketing costs was fixed somewhere between the minimum and maximum (a range of $5,000). The next largest range is for the Distribution costs ($3500), etc. The analysis helps us understand the degree of sensitivity in terms we understand rather than correlation coefficients that other sensitivity analysis techniques use.

 

The Tornado Chart Tool  can also plot a Tornado chart (also using the "Tornado Chart Tool" in Crystal Ball). The numbers on the left and right of the bars represent the most extreme percentile results.

 

 

Caveats:

 

There are several caveats of using this initial sensitivity analysis with the Tornado Chart Tool of Crystal Ball:

  1. Because the Tornado Chart Tool changes one variable at a time (independently of the other), it cannot account for multiple impacts of a variable through correlation and other dependency relationships.

  2. The results are depending on the base case used for the variables. Therefore, we recommend that you run the tool more than one time with different base cases.

 

Better ways:

 

First, Crystal Ball offers another sensitivity analysis, that provides you with the ability to rank the assumptions according to their importance to each forecast cell. At Epix Analytics, we prefer this method above the one displayed above.

 

A second and even better way is a more "advanced sensitivity", which at the moment can not yet be performed by Crystal Ball, but can be performed with software such as @RISK. The steps taken in this advanced sensitivity analysis are fairly similar to the steps taking in the initial sensitivity analysis above, but instead of calculating the forecast, the forecast values are simulated and the risk analysis can chose what statistic (e.g. the mean) will be reported. Because in this analysis the results are simulated, correlations and other dependency relationships are taken into account.

 

 


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