Case summary:
The company encounters uncertainty with the demand of the new product. This uncertainty can be accounted by taking the highest and lowest prediction of sales. However, this method is an improper process of accounting. Some companies make utilise Monte Carlo simulation program to model the outcomes to resolve uncertainty on the decision-making process.
The Monte Carlo simulation program can generates values for uncertain variables. This program can create a histogram chart to indicate the final results.
To discuss: The issues and benefits of Monte Carlo simulation program.
Introduction:
Simulation analysis is an extended version of sensitivity analysis that has improved the evaluation process as it considers detailed inputs. It can record the effect of changes in multiple input variables at once.
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