Simulation. Michael F. Gorman, Ph.D. MBA 691. Presentation Outline. Introduction to Simulation Tools of the trade: Tables, RAND, VLOOKUP, TABLES, NORMDIST, STDEV, Confidence Intervals Simulation of decision trees Simulation of regression curves Simulation of operations. Why Simulation?.
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Michael F. Gorman, Ph.D.
Trial and error
An algorithm for producing numbers between 0 and 1.
0 £ x < 1
These numbers are generated uniformly – an equal probability of obtaining a number in any range over the interval. (rectangular distribution)
Alternative distributions are obtained by plugging the random number into other distribution functions, for example:
For example, to get a normal distribution:
Excel: =NORMINV(RAND(), 0,1)