Question

2. As Provide three limitation of the implementation of Monte Carlo Simulation in Business Environment.

Answer 1

Let us first know what is Monte Carlo stimulation.

Basically, it's a kind of mathematical technique used by the professionals to know risk accounted for in any analysis or decision making. It is used by almost every department and its shows the different possible outcomes.

Now let us know it's limitations:

basically its limitations are mainly because of assumptions

1. If the statistical distribution are wrong then the whole result will be meaningless.

2. Input and formula distributions, needless to say that in order to get a better output the input and all formula assumptions must be accurate.

3.it is dependent on accurate interpretation

4. Also it is an approximate tech