Service and Operations Management

Monte Carlo Simulation

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This technical note introduces the basic concepts of Monte Carlo simulation, as well as the software to run the models (Crystal Ball). The requirements to follow the note are a working knowledge of probability distributions, decision trees and expected values, as well as being familiar with Microsoft Excel spreadsheets. As Monte Carlo simulation is better understood when applied to practical problems, the concepts and techniques are introduced by analyzing a business decision in the pharmaceutical industry.
Bibliographic citation: de Santiago, Rafael, "Monte Carlo Simulation", IESE, ADN-284-E, 10/2019
Date: 02/10/2019
Author(s): de Santiago, Rafael
Document type: Technical Note
Department: Managerial Decision Sciences
Languages: English

Learning objective This technical note is meant to be an aid in teaching any case related with Monte Carlo simulation (scenario simulation).