What does the term what-if analysis refer to?

• A. A data cleaning technique
• B. A way to optimize supply chains
• C. Evaluating different scenarios by changing key parameters
• D. A method of time-series forecasting

Answer: (C)

What-if analysis is about testing how results change when you tweak the inputs. In risk analysis and Monte Carlo modeling, you build a model with key parameters—like demand, costs, prices, lead times, or interest rates—and examine how outputs such as profit, cash flow, or project value respond when those inputs are varied. This helps you understand sensitivities, identify critical drivers, and plan for different possibilities or uncertainties. It’s not data cleaning (which removes errors), not optimization (which seeks the best decision under constraints), and not forecasting (which predicts future values from past data). What-if analysis focuses on exploring alternative possibilities by changing the assumptions and seeing the resulting impact.