Simulation and Probability Analysis Concepts

The video tutorial explores the use of simulations to answer probability questions related to forecasting and order intervals. It covers setting bounds, generating random numbers, creating distributions, and analyzing data using Excel. The tutorial also demonstrates how to calculate probabilities and perform sensitivity analysis to understand the impact of changes in demand on forecast levels.

What is the primary purpose of using simulations in probability analysis?

• To calculate standard deviation

• To create a distribution of outputs

• To set upper and lower bounds

• To generate random numbers

What is the first step in setting up a simulation?

• Generating random numbers

• Calculating probabilities

• Setting upper and lower bounds

• Creating a data table

Which parameter is NOT typically set when defining simulation bounds?

• Standard deviation

• Demand

• Lead time

• Interest rate

What is the purpose of generating multiple instances in a simulation?

• To ensure a variety of outputs

• To increase the number of random numbers

• To simplify the simulation process

• To reduce the need for data tables

How are probabilities calculated from the frequency distribution in Excel?

• By using the SUM function

• By subtracting the minimum from the maximum

• By dividing the count by the total number of samples

• By multiplying the frequency by the standard deviation

Which Excel function is used to create a distribution of outputs?

• SUM

• AVERAGE

• FREQUENCY

• VLOOKUP

What is the role of data tables in sensitivity analysis?

• To calculate standard deviation

• To visualize changes in parameters

• To create random numbers

• To set upper and lower bounds

What happens to the probability of needing a forecast level greater than 2000 as the average daily demand increases?

• It remains the same

• It becomes zero

• It decreases

• It increases

In the context of simulations, what does 'sensitivity analysis' refer to?

• Setting upper and lower bounds

• Analyzing the impact of parameter changes

• Calculating the standard deviation

• Generating random numbers

What is the significance of using a line chart in the analysis?

• To calculate the standard deviation

• To visualize the frequency distribution

• To show the trend of probabilities

• To display random numbers