MITESD_70Jf09_lec02

MITESD_70Jf09_lec02 - MIT OpenCourseWare http:/ocw.mit.edu...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
MIT OpenCourseWare http://ocw.mit.edu ESD.70J / 1.145J Engineering Economy Module Fall 2009 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms .
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ESD.70J Engineering Economy Module - Session 2 1 ESD.70J Engineering Economy Fall 2009 Session Two Michel-Alexandre Cardin Prof. Richard de Neufville
Background image of page 2
ESD.70J Engineering Economy Module - Session 2 2 Session two – Simulation • Objectives: – Generate random numbers – Get familiar with Monte Carlo simulation – Set up simulation using Data Table – Generate statistics for simulation – Draw histogram and cumulative distribution function (CDF) • Also called “Target curve”
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ESD.70J Engineering Economy Module - Session 2 3 Questions for “Big vs. Small” From the base case spreadsheet, we’ve calculated NPVs However, we assumed deterministic demand forecasts for years 1, 2, and 3. This assumption is over-simplifying since actual demand will vary Since life in uncertain, we want to simulate a range of possible NPV outcomes, the Min, Max, distributions, and the expected NPV values!
Background image of page 4
ESD.70J Engineering Economy Module - Session 2 4 Set up random generator Open ESD70session2-1.xls
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ESD.70J Engineering Economy Module - Session 2 5 Excel’s RAND() function • Returns random number greater than or equal to 0 and less than 1, sampled from a uniform distribution • To generate a random real number between a and b, use: =RAND()*(b-a)+a • In tab “RAND”, the formula in cell C3: “=Entries!C9*((1- Entries!C25)+2*Entries!C25*RAND())” – Returns a uniformly distributed random demand for year 1 centered around 300, which may differ by plus or minus 50% • Same logic applies for cell C4 and C5
Background image of page 6
ESD.70J Engineering Economy Module - Session 2 6 Random number generator Follow the instructions, step by step 1. Go to tab “RAND” 2. Type “=Entries!C9*((1- Entries!C25)+2*Entries!C25*RAND())” in cell C3 3. Type “=Entries!C10*((1- Entries!C25)+2*Entries!C25*RAND())” in cell D3 4. Type “=Entries!C11*((1- Entries!C25)+2*Entries!C25*RAND())” in cell E3 5. Press “F9” several times to see what happens
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ESD.70J Engineering Economy Module - Session 2 7 6. Click “Chart” under “Insert” menu 7. “Chart Type” select “XY(Scatter)”, “Chart sub-
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/04/2011 for the course ESD 15.094 taught by Professor Jiesun during the Spring '04 term at MIT.

Page1 / 27

MITESD_70Jf09_lec02 - MIT OpenCourseWare http:/ocw.mit.edu...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online