Simulation for the masses: Spreadsheet-based Monte Carlo simulation

Spreadsheet-based Monte Carlo simulation has come into relatively widespread use as a methodology supporting studies in risk analysis for a broad range of problem types in areas such as operations management, finance, and marketing. The basic methodology is quite easily assimilated by those familiar with the fundamentals of probability, statistics, and sampling, and the practical applications of the methodology are compelling. Practitioners of discrete-event simulation can master spreadsheet-based simulation especially easily, and can expand their skill set importantly by doing so. This paper provides suggestive examples for the use of spreadsheet-based simulation and briefly explores the underlying methodology, mentioning the relevant native Excel tools and reviewing elements of one of the commercial Excel add-ins available to support use of the methodology. The presentation itself will include demonstration and discussion of the dynamics of spreadsheet-based Monte Carlo simulation.