This is Howard C. Park's blog. Interests: live music, simulations and modeling, languages, iPod, social and business networking, systems thinking, history of science, management, BBQ, trivia, good coffee, organizational learning, traveling, personal histories.
Sunday, April 03, 2005
playing cards with James Bond / dancing the forbidden dance
I recently finished a project that involved the use of Monte Carlo simulation. In a nutshell, it allowed me to express revenue projections not as a single number, but with a "% probability of reaching" specific goals. So instead of saying that the revenue will be "$x", the analysis showed that there was a 75% chance of reaching $y and a 95% chance of reaching $z. It's much superior than the standard sensitivity analysis, which is often used more as a CYA than to add insight to a problem.
The underlying system dynamic model was built in PowerSim. The on-line documentation recommends an alternate and competing analysis called "Latin Hypercube". This painted a "The Far Side" - like cartoon in my mind where a room of statisticians are divided along two camps. One side has the Monte Carlo-ists, dressed in their tuxedos and ready to play a mean game of baccarat; the other side has the Latin Hypercubists, decked in their suave South-American attire ready to do the forbidden dance. I felt like a hapless model-builder who happened to pass through a wrong set of doors.