MONTE CARLO METHOD AND APPLICATION IN @RISK SIMULATION SYSTEM

Abstract

The article is an example of using the software simulation @Risk designed for simulation in Microsoft Excel spread sheet, demonstrated the possibility of its usage in order to show a universal method of solving problems. The simulation is experimenting with computer models based on the real production process in order to optimize the production processes or the system. The simulation model allows performing a number of experiments, analysing them, evaluating, optimizing and afterwards applying the results to the real system. A simulation model in general is presenting modelling system by using mathematical formulations and logical relations. In the model is possible to distinguish controlled inputs (for instance investment costs) and random outputs (for instance demand), which are by using a model transformed into outputs (for instance mean value of profit). In case of a simulation experiment at the beginning are chosen controlled inputs and random (stochastic) outputs are generated randomly. Simulations belong into quantitative tools, which can be used as a support for a decision making.

Keywords

• simulation model
• Monte Carlo method
• simulation system
• design