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    Business Analytics

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    Business Analytics

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    aniieendyazhr
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    1 views6 pages

    Business Analytics

    Uploaded by

    aniieendyazhr

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    Forum – Business Analytics

    Name: Anindya Zahra Safitri


    Student ID: 2440104630
    Class: LB80

    A. Monte Carlo Simulation


    Monte Carlo is the process of generating random values for uncertain inputs in a model, computing
    the output variables of interest, and repeating this process for many trials to understand the
    distribution of the output results. It relies on generating values from certain distributions to vreate
    a probability distribution of output values.
    Example :
    Assume we are creating a work schedule for a research and development project. We noticed that
    there is some degree of uncertainty exists in the activity duration estimates. Then we decided to
    use the Monte Carlo Simulation to analyze the impact of risks that will affect our project. First, we
    create the work schedule & estimate the duration for each activity

    Then, we calculate the duration of each activity using PERT formula


    PERT Estimate = ( Optimistic Estimate+ 4 x Most likely Estimate + Pessimistic Estimate) / 6
    After calculating the duration, the table becomes as follows

    Total Completion Time of the project is = 5,2 +6 + 8 + 3 = 22,2 Months.


    Best Case = 4+5+7_2 = 18 months
    Worst Case = 7+7+9+4 = 27 months
    Now we run the Monte Carlo Simulation by using Excel:
    B. Monte Carlo Simulation in Excel

    To do Monte Carlo Simulation in Excel, here is several things we need to do:

    1. Develop the spreadsheet model.


    2. Determine the probability distributions that describe the uncertain inputs in your
    model.
    3. Identify the output variables that you wish to predict.
    4. Set the number of trials or repetitions for the simulation.
    5. Run the simulation.
    6. Interpret the results.

    Example:

    We are gonna do a finance forecasting problem that consist of revenue, variable and fixed
    expenses. This is the spreadsheet model

    Then, we are gonna do the revenue & expenses normal distributions using Excel formula
    We will do 1000 variations for this model.

    After this, we want to take summary of all the data


    C. Random Sampling from Probability Distributions

    The basis for generating random samples from probability distributions is the concept of
    a random number. A random number is one that is uniformly distributed between 0 and 1.
    Technically speaking, computers cannot generate truly random numbers since they must
    use a predictable algorithm. However, the algorithms are designed to generate a sequence
    of numbers that appear to be random. In Excel, we may generate a random number within
    any cell using the function RAND( ).

    Example:

    We should be aware that unless the automatic recalculation


    feature is suppressed, whenever any cell in the spreadsheet is
    modified, the values in any cell containing the RAND( )
    function will change

    D. Generating Random Variates using Excel Functions

    A value randomly generated from a specified probability distribution is called a random variate.
    We can use Analysis Toolpak Random Number Generation Tool in excel to sample from
    uniform, normal, Bernoulli, binomial, and many more distributions.

    Example:

    We want to generate outcomes from a Possion distribution with a mean of 12


    Then, Excel will create histogram automatically

    E. Dynamic Systems Simulation

    Dynamic systems simulation models allow us to draw conclusions about the behaviour of a
    real system by studying the behaviour of a system model. One example of dynamic system is
    a production simulation.

    Example:

    Lets say the planned production capacity for one component is 100 units per shift, the plant
    operates one shift per day. Demand fluctuates and is historicaly between 80-130 units/day.
    They run a second shift the next day if inventory falls to 50 or below at the end of the day.
    How many additional shifts will they need?

    Model development:

    Ending Inventory = Beginning Inventory + Production – Demand

    Using RANDBETWEEN(80,130) to model demand and IF function to determine if an


    additional shift is scheduled.
    Then the model will be like this:

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