Who uses Monte Carlo simulation?
Many companies use Monte Carlo simulation as an important tool for decision-making. Here are some examples. • General Motors, Procter and Gamble, and Eli Lilly use simulation to estimate both the average return and the riskiness of new products. At GM, this information is used by CEO Rick Waggoner to determine the products that come to market. • GM uses simulation for activities such as forecasting net income for the corporation, predicting structural costs and purchasing costs, determining its susceptibility to different kinds of risk (such as interest rate changes and exchange rate fluctuations). • Lilly uses simulation to determine the optimal plant capacity that should be built for each drug. • Wall Street firms use simulation to price complex financial derivatives and determine the Value at RISK (VAR) of their investment portfolios. • Procter and Gamble uses simulation to model and optimally hedge foreign exchange risk. • Sears uses simulation to determine how many units of each p
