What-If Analysis

BI In Action >> What-If Analysis


Every business has changes. Every business has what-if questions

What-if business modeling creates the opportunity to evaluate a variety of scenarios rapidly, allowing more time for analysis. It also creates more consistency and discipline in the analysis. Both of these factors result in better business decision making.

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A model may show how a number of variables change depending on changes in one or more inputs. Using a model you can reproduce or test reality without actually experiencing it.

Planners use models to address questions such as these:

  • What profits can we anticipate next year if inflation is 7 percent and we continue current pricing policies?
  • What if we were to hire 55 people in Sales, 10 in Marketing and 35 in R&D?
  • What is the impact on manufacturing and shipping if the price of oil increases 15% during Q2?
  • What would be needed for raw material and inventory if the demand of a product went up 20%?
  • By using models you will have sales projections, materials and labor requirements, and projected income statements for alternative scenarios.
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