Sensitivity values, marginal costs and included prices
One of the more useful features of the WinFeed feed formulation program is that it assists nutritionists to determine additional information relating to ingredients that have not been included in the formulation, and to ingredients that are at a lower or upper bound in the formulation. It is useful to know, for example, how much saving could be realised by reducing the lower bound of a limiting nutrient, or at what price an ingredient would have been included in the formulation, to assist in making purchasing decisions. These may be determined by running parametric analyses on nutrient bounds or on the cost of the ingredient (see Parametrics), but the sensitivity values displayed in the nutrient and ingredient windows, after formulating a feed, also give useful information in this regard.
The sensitivity values, when applied to nutrients at lower and upper bounds, and at equalities (where the lower and upper bounds are equal), indicate the cost of applying those bounds. When applied to a nutrient at a lower bound, this is coloured green, when at the upper bound it is coloured purple, and when at an equality it is coloured blue. The sensitivity value gives the effect on the cost of the feed of reducing the bound by 0.01 percent. For example, if the sensitivity values for lysine and methionine were 6.50 and 2.90 respectively, the feed price would be reduced by 6.50 if the lower bound of lysine were reduced by 0.01 percent, and this would be more than twice the reduction caused by lowering the methionine bound.
This value is sometimes referred to as the marginal cost of the nutrient. In the above example, the marginal cost of lysine (the cost of supplying an additional mg of lysine) is calculated as 650c/100 000mg lysine, or 0.0065c/mg lysine.
The sensitivity values, when applied to ingredients at lower and upper bounds, and at equalities, indicate the cost of applying those bounds. When applied to an ingredient at an upper bound, this is coloured purple, at a lower bound it is coloured green, and an equality is coloured red.
Where an ingredient is at an upper bound, the sensitivity value gives the amount by which the cost of the feed would be reduced if the bound were relaxed (raised) by 1 percent. For an ingredient at a lower bound, the cost of the feed would be reduced by the sensitivity value if the bound were reduced by 1 percent. A sensitivity value associated with an equality would indicate whether the cost of the feed would be increased by increasing the equality.
Sensitivity values are also applied to those ingredients not included in the formulation. This value indicates the amount by which the ingredient price would have to decrease before the ingredient would be included in the formulation. The value shown in the Incl. Price column is the difference between the cost of the feed and the sensitivity value, i.e. it is the maximum cost of the ingredient that would ensure that this would be included in the formulation. This value is not of great value, as it does not indicate the rate of inclusion of the ingredient in the formulation given this ‘included price’. A more useful function is offered in WinFeed for this purpose, see Parametrics on Interpreting results from ingredient objective value parametrics.