The Scenario
A startup is deciding whether to launch a new product. The fixed cost is R2M. Unit price, unit cost, and demand are all uncertain. The CEO wants to know: "What is the probability we lose money?"
The Brief
Design a Monte Carlo simulation in a spreadsheet. Use RAND() to generate random draws from assumed distributions for price, cost, and demand. Run 1,000 iterations using a data table and calculate the probability of a loss.
Deliverables
- The model structure: input assumptions (distributions for price, cost, demand), the profit formula, and the simulation output area
- The exact formulas using RAND(), NORMINV (or equivalent) for generating random variables
- How you would use a one-variable Data Table to run 1,000 iterations
- The final output: probability of loss, expected profit, and a histogram description of the profit distribution
Submission Guidance
This is advanced spreadsheet work. Show that you understand why a single-point estimate is dangerous for a high-stakes decision.
Submit Your Work
Your submission is graded against the rubric on the right. If you pass, you get a public Badge URL you can share on LinkedIn. There is no draft save, so work offline first and paste your finished response here.