Subject category:
Case Method and Specialist Management Disciplines
Published by:
Darden Business Publishing
Version: 31 August 2005
Revision date: 25-Jul-2023
Length: 14 pages
Data source: Published sources
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https://casecent.re/p/67130
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Abstract
This note introduces simulation as a tool to analyze uncertainty in business decisions. It first observes the limitations of single point or simple range estimates of key uncertainties, thereby motivating the need to create a risk profile for any alternative that characterizes the full range of possible outcomes and their relative likelihoods. A simple example involving both a discrete and a continuous (triangle) distribution is used. The note is simulation software independent, although output from Crystal Ball is displayed.
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Abstract
This note introduces simulation as a tool to analyze uncertainty in business decisions. It first observes the limitations of single point or simple range estimates of key uncertainties, thereby motivating the need to create a risk profile for any alternative that characterizes the full range of possible outcomes and their relative likelihoods. A simple example involving both a discrete and a continuous (triangle) distribution is used. The note is simulation software independent, although output from Crystal Ball is displayed.