How to replace estimations and guesses with a Monte Carlo simulation

Post by mateo411 » Wed, Oct 06, 2021, 4:48 PM UTC

nanis wrote: post #103

DavidPeiffer wrote: post #5

While a different application than shown here, my project management class taught me one of the biggest benefits of Monte Carlo simulation - estimating uncertainty. Traditionally, net present value calculations are done with single point estimates. For example, analyzing a rental property we want to buy, we'd estimate the vacancy rate, interest rate, property appreciation, maintenance expenses, and do all of that on…

> Monte Carlo simulation - estimating uncertainty. By definition, "uncertainty" is the thing that does not have a PDF ... You can quantify risk based on assumptions you make about underlying probability distributions from which you are drawing. Far too often, even in Monte Carlo, people decide to work with the easy distributions instead of the most appropriate distributions. The "easy" distributions tend to admit act…

Post by radicaldreamer » Wed, Oct 06, 2021, 5:09 PM UTC

dagw wrote: post #114

xyzelement wrote: post #90

Many commenters on this story believe the main purpose of estimation is to assert when something will be done. Then they say "this is impossible" and call the whole exercise a waste of time, or management abuse. I gotta tell you that unless you're working with absolute bozos, nobody is looking at estimates and saying "oh duh, I am betting the farm this will complete on that date." Benefits of estimation that are more…

I gotta tell you that unless you're working with absolute bozos, nobody is looking at estimates and saying "oh duh, I am betting the farm this will complete on that date." Happens all the time, and not just by bozos. Sometimes getting paid is entirely dependent on delivering when you said you would. I used to work at an animation studio and one year we worked on a series of Christmas themed TV spots. When we said we…

Post by mgkimsal » Wed, Oct 06, 2021, 5:10 PM UTC

Mtinie wrote: post #86

dotancohen wrote: post #56

Earlier quoted context omitted.

> The real danger is not understanding that this > "uncertainty" estimate is a function of your assumptions. The bigger danger, in my experience, is treating estimates as deadlines . Unfortunately, that seems to be the norm in almost every place that I'm familiar with.

“Don’t worry, this is _purely_ an estimate and would never be used to set the deadline. So just give us something to share with the ELT…”

Post by staplung » Wed, Oct 06, 2021, 5:36 PM UTC

lucasfcosta wrote: post #75

peter_retief wrote: post #68

Code used Rust, interesting, I have come to expect Python and just recently used the open source version of Matlab called Octave.

Author here. I thought no one was going to make comments about Rust, but I just loved using it for this post. Thanks, Peter :)

  rolls = 1_000_000
  n_sides = 6
  sevens = 0
  
  for _ in 1:rolls
      if rand(1:n_sides) + rand(1:n_sides) == 7
          sevens += 1
      end
  end
  println(sevens/rolls * 100)

Post by HWR_14 » Wed, Oct 06, 2021, 5:56 PM UTC

groby_b wrote: post #118

xyzelement wrote: post #90

Many commenters on this story believe the main purpose of estimation is to assert when something will be done. Then they say "this is impossible" and call the whole exercise a waste of time, or management abuse. I gotta tell you that unless you're working with absolute bozos, nobody is looking at estimates and saying "oh duh, I am betting the farm this will complete on that date." Benefits of estimation that are more…

> I gotta tell you that unless you're working with absolute bozos, nobody is looking at estimates and saying "oh duh, I am betting the farm this will complete on that date." Meanwhile, anybody working anywhere close to the retail space fell laughing off their chair. Thanksgiving won't move no matter how much you insult your co-workers. (This is not limited to retail. Many industries have fixed delivery dates and bet…