Performing Monte Carlo Simulations in Crystal Ball

Performing Monte Carlo Simulations in Crystal B
Step 1: Construct a model in words.
The question is, "What is the uncertainty distribution of the expected revenues of this new product? "
Assumptions:
1 The average price I will sell this product for will be minimally $10, most likely $12 and maximally $15.
2 Sales will be between 1,000 and 100,000 products, with most likely sales of 30,000
3 To reflex this expert knowlegde, we will use the regular Triangular distributions (see a description of the Triangular distribution i
g Monte Carlo Simulations in Crystal Ball
e expected revenues of this new product? "
ost likely $12 and maximally $15.
istributions (see a description of the Triangular distribution in Model Assist).
Performing Monte Carlo Simulations in Crystal Ba

Step 2: Write all the data in Excel and introduce probability distributions, using Crystal Ball
1 Average Price
2 Sales
3 Total revenue
$
Minimum
$10
Most likely
$12
Maximal
$15
Minimum
1,000
Most likely
30,000
Maximal
100,000
Price
Sales
30,000
12.00
Total revenue
360,000.00
Probability distributions
(we use here the Triangular distribution)
s, using Crystal Ball
Input data
obability distributions
e use here the Triangular distribution)
Step 3: Tell Crystal Ball which cell are output (click on cell E14 and then click Crystal Ball button "Define Forecast"), and run Crystal Ball
1 Average Price
2 Sales
3 Total revenue
$
Minimum
$10
Most likely
$12
Maximal
$15
Minimum
1,000
Most likely
30,000
Maximal
100,000
Price
Sales
30,000
12.00
Total revenue
360,000.00
en click Crystal Ball button "Define Forecast"), and run Crystal Ball by clicking the "Play" (Start Simulation)
Output cell

Step 4: Review the results
Forecast: Total revenue
300
250
Frequency
200
150
100
50
0
$23,802.53
$263,010.76
$502,219.00
$741,427.23
$980,635.46
Review:
1 Average expected total revenue is $536,643
2 There is a 10% probability that total revenues will be less than $220.664
3 There is a 10% probability that total revenues will be more than $906.970
nues will be less than $220.664

nues will be more than $906.970
139353458.xls.ms_office
Page 11
Page 12
$199,221.90
$215,169.12
$231,116.33
$247,063.55
$263,010.76
$278,957.98
$294,905.19
$310,852.41
$326,799.63
$342,746.84
$358,694.06
$374,641.27
$390,588.49
$406,535.70
$422,482.92
$438,430.13
$454,377.35
$470,324.56
$486,271.78
$502,219.00
$518,166.21
$534,113.43
$550,060.64
$566,007.86
$581,955.07
$597,902.29
$613,849.50
$629,796.72
$645,743.94
$661,691.15
$677,638.37
$693,585.58
$709,532.80
$725,480.01
$741,427.23
$757,374.44
Page 13
$773,321.66
$789,268.87
$805,216.09
$821,163.31
$837,110.52
$853,057.74
$869,004.95
$884,952.17
$900,899.38
$916,846.60
$932,793.81
$948,741.03
$964,688.24
$980,635.46
$996,582.68
$1,012,529.89
$1,028,477.11
$1,044,424.32
$1,060,371.54
$1,076,318.75
$1,092,265.97
$1,108,213.18
$1,124,160.40
$1,140,107.62
$1,156,054.83
$1,172,002.05
$1,187,949.26
$1,203,896.48
Page 14
Total revenue Frequency

$23,802.53
11
$39,749.75
16
$55,696.96
33
$71,644.18
48
$87,591.39
68
$103,538.61
73
$119,485.82
68
$135,433.04
89
$151,380.26
90
$167,327.47
107
$183,274.69
152
$199,221.90
128
$215,169.12
143
$231,116.33
150
$247,063.55
173
$263,010.76
185
$278,957.98
173
$294,905.19
223
$310,852.41
209
$326,799.63
248
$342,746.84
279
$358,694.06
270
$374,641.27
262
$390,588.49
264
$406,535.70
242
$422,482.92
235
$438,430.13
255
$454,377.35
260
$470,324.56
216
$486,271.78
230
$502,219.00
228
$518,166.21
207
$534,113.43
220
$550,060.64
211
$566,007.86
187
$581,955.07
206
$597,902.29
197
$613,849.50
185
$629,796.72
199
$645,743.94
180
$661,691.15
144
$677,638.37
168
$693,585.58
160
$709,532.80
148
$725,480.01
145
$741,427.23
121
$757,374.44
126
Page 15
$773,321.66
$789,268.87
$805,216.09
$821,163.31
$837,110.52
$853,057.74
$869,004.95
$884,952.17
$900,899.38
$916,846.60
$932,793.81
$948,741.03
$964,688.24
$980,635.46
$996,582.68
$1,012,529.89
$1,028,477.11
$1,044,424.32
$1,060,371.54
$1,076,318.75
$1,092,265.97
$1,108,213.18
$1,124,160.40
$1,140,107.62
$1,156,054.83
$1,172,002.05
$1,187,949.26
$1,203,896.48
125
159
124
131
106
118
119
94
105
99
71
97
76
77
67
44
65
44
31
47
41
34
31
23
18
18
10
22
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Performing Monte Carlo Simulations in Crystal B

Step 1: Construct a model in words.

g Monte Carlo Simulations in Crystal Ball

e expected revenues of this new product? "

ost likely $12 and maximally $15.

istributions (see a description of the Triangular distribution in Model Assist).