Topic: Monte Carlo
Some resources re Monte Carlo
Who uses Monte Carlo simulation?
Many companies use Monte Carlo simulation as an important part of their decision-making process. Here are some examples.
General Motors, Proctor and Gamble, Pfizer, Bristol-Myers Squibb, and Eli Lilly use simulation to estimate both the average return and the risk factor of new products. At GM, this information is used by the CEO to determine which products come to market.
GM uses simulation for activities such as forecasting net income for the corporation, predicting structural and purchasing costs, and determining its susceptibility to different kinds of risk (such as interest rate changes and exchange rate fluctuations).
Lilly uses simulation to determine the optimal plant capacity for each drug.
Proctor and Gamble uses simulation to model and optimally hedge foreign exchange risk.
Sears uses simulation to determine how many units of each product line should be ordered from suppliers—for example, the number of pairs of Dockers trousers that should be ordered this year.
Oil and drug companies use simulation to value "real options," such as the value of an option to expand, contract, or postpone a project.
Financial planners use Monte Carlo simulation to determine optimal investment strategies for their clients’ retirement.