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Decision Analysis for Managers by David Charlesworth

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How to Develop a Tornado Graph

To develop a tornado graph, we complete the following steps:

Make sure that each uncertainty is set to its base value (p50). Input each uncertainty’s p10 and p90, one at a time, into our deterministic model and record the resulting measure of value (usually we use NPV as our measure of value for the tornado graph).

In a similar fashion, input each discrete variable as success and failure, one at a time, into the deterministic model and record the result.

Compute the absolute value of the difference between the p90 and p10 resulting measure of value for each uncertainty.

Compute the absolute value of the difference between the success and fail cases for each discrete variable.

Rank the differences from ...

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