# RESEARCH ARTICLES | RISK + CRYSTAL BALL + ANALYTICS

## Introduction to Monte Carlo Analysis (Part 10 / 13)

In past blogs, I have waxed eloquent about two traditional methods of performing Tolerance Analysis, the Worst Case Analysis and the Root Sum Squares. With the advent of ever-more-powerful processors and the increasing importance engineering organizations place on transfer functions, the next logical step is to use these resources and predict system variation with Monte Carlo Analysis.

## Introduction to Monte Carlo Analysis (Part 10 / 13)

In past blogs, I have waxed eloquent about two traditional methods of performing Tolerance Analysis, the Worst Case Analysis and the Root Sum Squares. With the advent of ever-more-powerful processors and the increasing importance engineering organizations place on transfer functions, the next logical step is to use these resources and predict system variation with Monte Carlo Analysis.

## What is a model?

When using tools such as Excel, Crystal Ball or ModelRisk, it is very important to be able to translate a mental model to a mathematical one. Let me illustrate, when you think about your business, you often will think of abstract notions such as profit or margins. These are mental constructs because their are no physical representations of profit or margins (except a pile of cash) only mathematical ones.

• 17 February 2009
• Author: mckibbinusa
• Number of views: 2390