Basic Excel Business Analytics #66: Monte Carlo Simulation for New Product, 3 Uncertain Variables

Download files: https://people.highline.edu/mgirvin/AllClasses/348/348/AllFilesBI348Analytics.htm
Learn how to create a Monte Carlo Simulation for a New Product Profitability based on three Random / Uncertain Variables. Direct Labor Cost Random Variable is based on a Relative Frequency Distribution based on past Accounting Data. The Direct Material Random Variable is based on a Uniform Distribution. The Demand Random Variable is based on a Normally Distributed Random Variable.
1) (00:13) Problem and variable introduction.
2) (04:38) Create Randomizing formula for Direct Labor Cost Random Variable is based on a Relative Frequency Distribution based on past Accounting Data. Use the RAND and LOOKUP Functions.
3) (07:50) Create Randomizing formula for Direct Material Random Variable is based on a Uniform Distribution. See the RANDBETWEEN function.
4) (08:48) Create Randomizing formula for Demand Random Variable is based on a Normally Distributed Random Variable. Use the RAND, NORM.INV, ROUND, and MAX functions.
5) (10:53) Create Profit Formula with Static and Uncertain Variables (Set and Random Variables).
6) (11:37) Create Simulation with the Data Table feature and an Empty Cell for the Column Input.
7) (13:40) Perform Analysis including creating a Relative Frequency Distribution to calculate Estimated Probabilities to aid in Decision Making.

Download Excel File Not: After clicking on link, Use Ctrl + F (Find) and search for “Highline BI 348 Class” or for the file name as seen at the beginning of the video.

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