To see the sensitivity easily we can make graphs that

consists of the deviation between the product price, raw material

cost, and distribution cost that affect to value of NPV, IRR, and
Payback Period.
30.00%
25.00%
20.00%
IRR

15.00%

Product Price
Raw Material Cost

10.00%

Distribution Cost
5.00%
0.00%
-20% -10%

0%

10%

20%

Deviation

Figure 2.2. Sensitivity Chart for IRR

(Source: Reproduced from private source)

From the chart above that greatly affects the IRR is the
product price. It can be seen that the increase in the value of the
product price causes a very significant increase in the IRR. And if
raw materials and distribution cost will lead to increased salary
decreases IRR. Our plant is not profitable when the IRR is lower
than MARR which is 13.3%. Thats why we can not decrease our
selling price to $2800/ ton.

7.6
7.4
7.2
7
Payback Period

6.8

Product Price
Raw Material Cost

6.6

Distribution Cost

6.4
6.2
6
-20% -10%

0%

10%

20%

Deviation

Figure 2.3. Sensitivity Chart for Payback Period

(Source: Reproduced from private source)

From the chart above to obtain a rapid payback period

greatly affects the product is the increase in the price of
products. The higher a value of the product price will accelerate
the payback period. And other factors such as raw materials and
distribution cost to improve the salary if it will add value payback
time period.

Rp800,000,000,000
Rp600,000,000,000
Rp400,000,000,000
Rp200,000,000,000
Rp-

NPV

Rp(200,000,000,000)
Rp(400,000,000,000)

Product Price
Raw Material Cost
Distribution Cost

Rp(600,000,000,000)
Rp(800,000,000,000)
-20%-10% 0% 10% 20%
Deviation

Figure 2.4. Sensitivity Chart for NPV

(Source: Reproduced from private source)

From the graph above the product price is an important

factor, because the increasing value of the product price will
change into a higher NPV while other factors are raw materials
and distribution cost. If the salary increase will only reduce the
value of NPV.

Conclusion and Strategy

From the result of three graph above, we can see that theres 5% (for
example) differences from the entire three variable that effecting the decreasing or
increasing of the NPV. For distribution cost that being increased 5% will effecting
the decreasing of NPV even though not too significant. For 5% decreased value of
distribution cost wills effect increase although just a little. For 5% increased the
price of raw material affecting the value of NPV decreased a lot but still
profitable.
Otherwise for decreased value of raw material price 5% will effecting
value of NPV to be increased. For the selling price to increase 5% will effecting
the NPV value to increase a lot and the decrease of NPV itself will effecting NPV

value a lot decreasing until it has negative value. It also effecting the payback
period of the cash flow, actually it is affecting the cash flow of the company until
we didnt have profit until the end of our effective production year. So the result
is, the variable that effecting NPV or the NPV most sensitive of is selling price.
We conculde that the most sensitive variable or our production is selling
price and raw material cost. Selling price is very sensitive, if you decrease the
selling price 5% lower. It will make the plant will not have a big profit for 20
years. That is why, we have some strategy. If selling price decrease we can
decrease a production capacity because need a raw material and utility can
decrease too.