Use sensitivity analysis to identify the assumptions that matter most to NPV.
A fulfillment node has base-case NPV of $620K. The suspected drivers are order volume, labor savings per order, and upfront capex. Sensitivity analysis varies one input at a time to show which assumption most changes NPV. The common trap is to present a best/base/worst scenario without saying which assumption moved. That creates drama but not insight. Step 1 Set the base case: volume 1.8M orders, labor savings $0.72 per order, capex $3.4M, NPV $620K. The base case is the anchor for every sensitivity move. Step 2 Vary volume by -15%, -10%, -5%, +5%, +10%, +15%. NPV turns negative around -9%.…
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