DiscoverSim™ Case Studies
Case Study 1 – Basic Profit Simulation: Introduction
This is an example of DiscoverSim Monte Carlo simulation to determine probability of daily profit using a basic profit model for a small retail business. We will apply distribution fitting to historical data and specify input correlations to define the model in a way that closely matches our real world business.
The profit (Pr) requirement is Pr > 0 dollars (i.e., the lower specification limit LSL = 0)
The profit equation, or “Y = f(X) transfer function”, is calculated as follows:
Total Revenue, TR = Quantity Sold * Price
Total Cost, TC = Quantity Sold * Variable Cost + Fixed Cost
Profit, Pr = TR – TC
In this study we will use DiscoverSim to help us answer the following questions:
- What is the predicted probability of daily profit?
- What are the key X variables that influence profit Y? Can we reduce the variation in profit by reducing the variation of the important input variables?
|Summary of DiscoverSim Features Demonstrated in Case Study 1: