Scenario And Sensitivity Analysis Question

December 6, 2022

Scenario And Sensitivity Analysis Question

Order Number	636738393092
Type of Project	ESSAY
Writer Level	PHD VERIFIED
Format	APA
Academic Sources	10
Page Count	3-12 PAGES

Instructions/Descriptions

Scenario And Sensitivity Analysis Question

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Scenario analysis could help forecast the amount of profit or lose you make on the 8,800 units of shoes sold. The sales could be 10% higher or lower, thus it is important to know the businesses financial position at each possible outcome. For example, would the business be breaking even if the sales are only equal to the lowest figure forecast and if not, now much loss are they making. I.e., what is the best- and worst-case scenario.

The sensitivity analysis is a tool used to determine the responsiveness target variables have on a business’s financials. The idea is to test the solutions to find the optimal solution. Sensitivity reports can be generated in excel. A sensitivity report could analysis the most optimal expansion solution.

The scenario identified in the question brief we shall call the ‘base case’. This scenario results in revenue of €140,800.00.

The three alternative scenarios I have identified are as follows:

‘Better case’, this as is shown above, results in slightly better out come than the base case but not the best case. In this scenario the purchase cost is reduced to 22 and we achieve the same 8800 sales. This results in additional revenue of €158,400.00 a difference of +€17,600 compared with the ‘base case’.

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‘Best case’ this case the best possible given the variables. Purchase cost is the lowest (€20) and total sales the highest (8800 + 10% or 9,680). This scenario generates an additional €193,600.00 difference of +€52,800

‘Worse case’ this case is the worst possible case given the variables. Here we have the highest purchase cost (€24) and the lowest sales volume (8,800 – 10% or 7920) resulting in revenue of €126,720.00 this is €14080 less than the ‘base case’

The number of sales is uncontrollable because a business cannot control demand. There are many other factors outside the businesses control that affect demand.

Scenario And Sensitivity Analysis Question

RUBRIC

Excellent Quality

95-100%

Introduction

45-41 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Literature Support

91-84 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Methodology

58-53 points

With titles for each slide as well as bulleted sections to group relevant information as required, the content is well-organized. Excellent use of typeface, color, images, effects, and so on to improve readability and presenting content. The minimum length criterion of 10 slides/pages is reached.

Average Score

50-85%

40-38 points

More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.

83-76 points

There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.

52-49 points

The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.

Poor Quality

0-45%

37-1 points

The context and/or importance are lacking. There is no search history information supplied.

75-1 points

There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.

48-1 points

There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.