…When you have a process that is too complex to model directly you…need to run hundreds or preferably…thousands of trials to estimate your results.…That means random numbers are the engine that drives a Monte Carlo simulation.…In this movie, I'll show you how to…use random numbers to calculate demand for your model.…I will use the Lookup sample file which you can…find in the chapter 4 folder of your exercise models archive.…This worksheet is almost completely filled in, we have…formulas to calculate unit cost and then…revenue production cost, disposal cost and profit.…
And also, in cells E3 through F6, there is a lookup…table, that lookup table determines demand based on a random number.…So for any number between 0 and 0.1, the demand is 2500.…Between 0.1 and 0.46 is 6000, 10,000, or 15,000, depending upon…the results.…So now we need to generate a random number…and look up the corresponding demand for that random number.…The random number field is cell C3, so I'll type…equal, rand, open and close parenthesis, and press enter.…
- Explain how to create a scenario in Excel.
- Identify the two input values that should be used to create a two variable data table.
- Recall what the Excel feature Goal Seek is used for.
- Recognize the three things that must be separated from one another to make reading a worksheet with multiple units easier.
- Describe the tools that Excel provides to manipulate data.
- Break down the steps required to recalculate a worksheet's formulas.
Skill Level Intermediate
1. Defining Scenarios and Data Tables
2. Creating Goal Seek and Solver Models
3. Creating a Configurable Model
4. Performing Monte Carlo Simulation
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