Compute 5 iterations of a Monte Carlo simulation given the following information

ID: 3147533 • Letter: C

Question

Compute 5 iterations of a Monte Carlo simulation given the following information:
n follows a uniform distribution with minimum of 1 and maximum 10
Pv follows a normal distribution with a mean of $5500 and a standard deviation of $1500
Number of bins: 10

i started working on it , please let me know if am correct or provide the correct answer. thank you

i.) the ranges for the 10 bins?

n : nmin = 1 , nmax = 10

Pv: Pvmin = $1000, Pvmax = $7,000

Ptmin = nmin * Pvmin = $1000

Ptmax = nmax * Pvmax = $70,000

Range/Bin = (70000 – 1000)/10 = 6,900

Bin 1: 1000 – 7900

Bin 2: 7901 – 14800

Bin 3: 14801 – 21700

Bin 4: 21701 – 28600

Bin 5: 28601 – 35500

Bin 6: 35501 – 42400

Bin 7: 42401 – 49300

As we've previously seen, equations describing situations often contain uncertain parameters, that is, parameters that aren't necessarily a single valuebut instead are associated with a probability distribution function. When more than one of the variables is unknown, the outcome is difficult to visualize. A common way to overcome this difficulty is to simulate the scenario many times and count the number of times different ranges of outcomes occur. One such popular simulation is called a Monte Carlo Simulation In this problem-solving exercise you will develop a program that will perform a Monte Carlo simulation on a simple profit function. Consider the following total profit function: Where Pris the total profit, n is the number of vehicles sold and Py is the profit per vehicle. PART A Compute 5 iterations of a Monte Carlo simulation given the following information: Pr=nPv n follows a uniform distribution with minimum of1 and maximum 10 Pv follows a normal distribution with a mean of $5500 and a standard deviation of $1500 Number of bins: 10 Recall that for all practical purposes we will use 3 std. deviations from the mean as the maximum value for parameters following a normal distribution. Obviously, 5 iterations are not very many In fact, typically you would simulate 10,000 iterations or so to view meaningful results but I figured that I'd give you a break . If you'd like to compute 10,000 iterations by hand for extra credit, go ahead. i What are the ranges for the 10 bins? ii.) Fill in the table below Parameter Iteration 1 Iteration teration Iteration4 teration 5000 S6500 4500 S9500 Pr Bin # Ran Fill in the fr of occurrences of each bin 4 10

Explanation / Answer