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Decision Analysis for Managers by David Charlesworth

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Using Simulation to Develop S-curves

There are two commercially available products that can be used to run Monte Carlo (random number) simulations: @Risk and Crystal Ball. These programs use your Excel model as a calculation engine, and you specify the input distributions for each uncertainty that you want to use and then specify the measures of value that you want to examine. Once you’ve run the simulation, you can extract the data and develop a graph similar to the one in Figure 9.3. As these products have been extensively written about elsewhere,1 I’m not going to provide step-by-step instructions on how to operate the software.

The advantage of using one of the commercial programs is that you can set up the simulation much more quickly ...

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