07 Monte Carlo Simulation Flashcards
1
Q
Why and for what do we use Monte Carlo Simulation?
A
Why: Can be used to model the behavior of complex systems that would be difficult to deal with analytically
What: Is used to describe or predict how a system will operate, given certain choices of the controllable inputs and randomly generated values for the prob. inputs
2
Q
What are the advantages of Monte Carlo Simulation over decision trees?
A
- Continuous as well as discrete distributions with several possible realizations
can be considered easily. - Decision problems with several uncertain parameters can easily be handled.
