Question

Before computers were widespread, almost all risk analysis was done without simulation. Therefore, only a handful of scenarios could be formulated to understand the risk of a decision. Typically, a best-case and worst-case scenario was determined and decisions were based on these two scenarios. What are some of the drawbacks of this decision-making approach? Specifically, how does the capability to summarize 1,000s of simulated scenarios improve the approach?  

Answer 1

solution:

DRAWBCKS:

1)

Decision making need a great deal of informations in the assessment step,to acquire the

information, usually it need a long time of observation, collection and anaysis.

2)

In some cases the data is insufficient.In this condition,decision producer does not have any data which can help to make the decision.

Example:a organization needs to choose whether to introduce another item with another market,but in this market these is no similar item on sale.

• To summarize 1000s of reproduced situations we have to improve our approach.Identified risks by running reproductions to recognize the range of possible outcomes.A random sampling is performed by utilizing uncertain risk.This is normally done by setting up a numerical model and then running simulations utilizing this model to evaluate the impact of project risks.

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