MonteCarlo Simulation

# MonteCarlo Simulation - Whatissimulation .Agivensystemis

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What is simulation? To simulate is to imitate. Simulation involves developing a model of a real  phenomenon and then experimenting. A given system is  imitated and the variables  and constants associated with  it are manipulated in the artificial environment to examine  the behavior of the system. There are 4 phases of a simulation process- Definition of problem and statement of objective. Construction of appropriate model. Experimentation with model created Evaluation of results of simulation

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Monte Carlo Simulation Imitate the behavior of the stochastic process. Technique of solving problems through random  numbers. Used to solve a variety of problems involving  stochastic situations  (one where some or all parameters of  a problem are described by random variables) Used for solving problems involving decision  making under uncertainty
Monte Carlo Analysis Monte Carlo analysis is a technique that computes, or iterates, the project cost or project schedule many times using input values selected at random from probability distribution of possible costs or duration to calculate a distribution of possible total project cost or completion dates.

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The benefit of simulation from the viewpoint of the  analyst stems from the fact that the results of taking a  particular course of action can be estimated prior to the  implementation in the real world. Instead of using  hunches and intuition to determine what may happen,  the analyst using simulation can test and evaluate  various alternatives and select the one that gives the  best results .
Steps- From the given probability of occurrence of  events, establish cumulative probability. Assign tag nos. to events in such a way that tag  nos. represent cumulative probability. Obtain random nos. from a random no. table. Correlate random nos. with tag nos. assigned to  the events and identify the value for respective  events.

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Random numbers random number generator  (often abbreviated as  RNG is a computational or physical device designed to generate
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## This note was uploaded on 04/20/2010 for the course PD 103 taught by Professor Mc during the Spring '10 term at Jaypee University IT.

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MonteCarlo Simulation - Whatissimulation .Agivensystemis

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