Monte Carlo Simulation Examples Help

Monte Carlo Simulation Examples, Illustration, Concept, Sample Help Online

 

Looking for Monte Carlo Simulation Examples, illustrations and calculations to do your assignments, homework or project then you are at the right place.
 

Understanding the concept Monte Carlo Simulation Examples

 
Simulation means to do or make something look real that is not real. Monte Carlo Simulation is a business tool to figure out the probability results of introduction of a product in the market under various market conditions. The object behind Monte Carlo Simulation is to get a feel of different results under different market condition for a newly introduced product in the market. The business undertakings use analytical mathematical tool such as Monte Carlo Simulation which includes analysis tools such as regression analysis, sensitivity analysis and if-not analysis.
 

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Monte Carlo Simulation Examples Explanation

 
Let’s take an example and understand the concept theoretically as it is based on assumption. Suppose the fixed costs are 100000 of a business undertaking and the sales units are 60000 at $10 per unit. This is what the vendor expects to make sells in the market. Now the vendor can meet these sales units under normal market conditions but if the market conditions change then the sales units may change and the unit cost may too increase or decrease. This will change the net profit of the company. Now the company needs to find out the average selling price per unit which will earn the company the expected profit.
 
Market Condition sales unit selling price per unit
Good 60000 $10
Normal 20000 $9.5
Peak 100000 $12
Average sales unit = (60000+ 20000+100000)/3= 60000 units
Average selling price= ($10+$9.5+$12)/3=$10.5
 
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