In the past, without thinking much about it, I wrote macros to support the Monte Carlo method.īut I was wrong back then. Instead, a more useful method would take a probabilistic approach, supported by the Monte Carlo method.
To illustrate, if I were forecasting profits for a period, a deterministic model would use one number for my forecast of sales, another number for my forecast of operating expenses, and so on. The first article is, How to Return Random Numbers from a Normal Distribution for Your Excel Forecasts.)ĭuring more than three decades of working with spreadsheets in business, most of the spreadsheet models and forecasts I’ve seen have used what statisticians call a deterministic method. (This is the second of two articles about normal distributions.
