Question

Conduct a MONTE CARLO SIMULATION including bounds of a 95% confidence interval, probability that the return would be zero, show at what return there will only be a 20% chance of being larger, and create the cumulative distribution graph showing actual relative to theoretical, and comment on the degree of normalcy of the data. The data is in the accompanying spread sheet

Answer 1

Rolling forecast means to give the future demand prospective as per latest estimate. It is called rolling forecast as it keeps on changing with time and is dynamic in nature.

Example: The sales team give requirements to planning team which in turn share with plant production team. The demand for next 3 months can be considered freeze. However, there are numbers for next 6 months as well to give heads up to the entire team of future plan. In case there are challenges, same can be highlighted immediately

The advantages of this procedure are:

• It helps to give visibility on how business is doing and what are the future prospects
• It helps to prepare in advance for any challenges. Example: If demand is going up, company can add up capacity to be prepared
• It helps to improve accuracy in future
• It minimizes business risk due to advance information