MANAGEMENT

Detailed explanation-1: -The sensitivity analysis is based on the variables that affect valuation, which a financial model can depict using the variables’ price and EPS. The sensitivity analysis isolates these variables and then records the range of possible outcomes.

Detailed explanation-2: -The sensitivity is calculated by dividing the percentage change in output by the percentage change in input.

Detailed explanation-3: -The range of optimality for each coefficient provides the range of values over which the current solution will remain optimal. Managers should focus on those objective coefficients that have a narrow range of optimality and coefficients near the endpoints of the range.

Detailed explanation-4: -Graphically, the range of feasibility is determined by finding the values of a right hand side coefficient such that the same two lines that determined the original optimal solution continue to determine the optimal solution for the problem.