Sensitivity analysis with finite changes: An application to modified EOQ models

E. Borgonovo

European Journal of Operational Research, 2010, vol. 200, issue 1, pages 127-138

Abstract: In this work, we introduce a new method for the sensitivity analysis of model output in the presence of finite changes in one or more of the exogenous variables. We define sensitivity measures that do not rest on differentiability. We relate the sensitivity measures to classical differential and comparative statics indicators. We prove a result that allows us to obtain the sensitivity measures at the same cost of one-variable-at-a-time methods, thus making their estimation feasible also for computationally intensive models. We discuss in detail the derivation of managerial insights formulating a procedure based on the concept of "Settings". The method is applied to the sensitivity analysis of a discrete change in optimal order quantity following a jump in the exogenous variables of a non-linear programming inventory model.

Keywords: Inventory; Sensitivity; analysis; Modified; economic; order; quantity; models; Finite; change; sensitivity; indices; Comparative; statics (search for similar items in EconPapers)
Date: 2010

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VCT ... fa990c666609997c1a93
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:ejores:v:200:y:2010:i:1:p:127-138

Access Statistics for this article

European Journal of Operational Research is edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Series data maintained by Heidi Boesdal ().