For this Monte Carlo Simulation, using Excel you will use data simulated for the cost savings decrease.
Question:
For this Monte Carlo Simulation, using Excel you will use data simulated for the cost savings decrease. A random number generator will generate the data. You will generate 100 data points and calculate the average and standard deviation of the data. In addition, you will use this as the parameters of your Monte Carlo Distribution of the savings and incremental model. When you simulate the model, run 1000 simulations and provide the results in both tabular format and as a histogram.
Four different random number pairs will be used for the modeling.
Cost Savings Data:
1. Random number pairs between 97 and 103. (What do you expect to happen?)
2. Random number pairs between 102 and 108. (What do you expect to happen?)
3. The third will be similar to the 100 given in the original problem. Random number pairs between 95 and 105. (What do you think will happen based on sensitivity analysis and previewing the video?)
4. Random number pairs between 98 and 112.
Capture the histogram for each of your results and provide a short sentence or two of the results and recommendations.