Tag Archives: Monte Carlo

“The number” vs. outcomes of varying likelihood: gaining perspective

How many times have we heard a manager or executive say “Just give me the number!”? This request smacks of frustration and conveys an unrealistic expectation.  While this is slowly changing, single-point estimates are still the goal when making managerial projections at many healthcare providers today. In this post, I want to discuss an alternative approach.

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Does simulation always give me the right answer, or even a single one?

No, it does not in either case. Simulation provides a platform for the development of models. Simulation can be contrasted with “closed-form” mathematical solutions to problems, which give an exact answer — think queueing models. Because closed-form models can be very unwieldy and complex to develop and explain to non-mathematicians, we increasingly rely on software that allows us to model ideas via a graphical user interface (GUI) and then run and test our model using the underlying simulation engine.

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