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Operations Management: Sustainability and Supply Chain Management, Twelfth Edition
book

Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

by Jay Heizer, Barry Render, Chuck Munson
February 2016
Intermediate to advanced content levelIntermediate to advanced
480 pages
219h 58m
English
Pearson
Content preview from Operations Management: Sustainability and Supply Chain Management, Twelfth Edition

Monte Carlo Simulation

When a system contains elements that exhibit chance in their behavior, the Monte Carlo method of simulation may be applied. The basis of Monte Carlo simulation is experimentation on chance (or probabilistic) elements by means of random sampling.

The technique breaks down into five simple steps:

  1. Setting up a probability distribution for important variables.

  2. Building a cumulative probability distribution for each variable.

  3. Establishing an interval of random numbers for each variable.

  4. Generating random numbers.

  5. Actually simulating a series of trials.

Let’s examine these steps in turn.

Step 1. Establishing Probability ...

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Publisher Resources

ISBN: 9780134422404