Performing what if analysis

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Performing "What if" analysis involves analyzing how different scenarios or changes in certain variables can affect the outcomes or results of a particular situation or decision. This type of analysis is often done using spreadsheets or specialized software.

To perform a "What if" analysis, follow these steps:

1. Identify the problem or decision you want to analyze: Determine the specific situation you want to evaluate. For example, this could be a financial decision, pricing strategy, inventory management, or resource allocation.

2. Define the variables: Identify the key variables that could impact the outcome. These variables could include factors such as cost, price, quantity, time, demand, or any other relevant parameter.

3. Set the baseline: Start with the current or initial values for the variables. This represents the "base" scenario or starting point for your analysis.

4. Determine the different scenarios: Establish a range of values or scenarios for each variable you want to analyze. For example, if you're analyzing the impact of price changes, you might consider different price levels or percentage changes.

5. Model the scenarios: Use spreadsheet software, such as Microsoft Excel, or specialized software like "Solver" or "Crystal Ball" to input the variables and create formulas, equations, or simulations that represent the relationships between the variables and the outcome.

6. Analyze the results: Run the analysis with each scenario and observe the resulting outputs or outcomes. Evaluate the impact of the changes in variables on the desired outcome. Look for trends, patterns, or significant differences between scenarios.

7. Draw conclusions and make decisions: Based on the analysis, interpret the results and draw conclusions about the potential impacts of different scenarios. Use this information to make informed decisions or develop strategies that align with your objectives.

By performing "What if" analysis, you can gain insights into the potential impact of different factors or variables and make more informed decisions based on the analysis of multiple scenarios.