Monte Carlo method,
Definition of Monte Carlo method:
A technique in which a large quantity of randomly generated numbers are studied using a probabilistic model to find an approximate solution to a numerical problem that would be difficult to solve by other methods.
Computation intensive forecasting technique applied where statistical analysis is extremely cumbersome due to the complexity of a problem (such as queuing or waiting line probabilities, or inventories involving millions of items). Used only where the problem has a chance (random) component, and is subject to unpredictable influences, it simulates (models) a situation on the basis of current and past (historical) data. In the simulation process, it computes an equation (mathematical model) thousands or millions of times, each time injecting random numbers to come up with a range of possibilities or outcomes of possible actions. Larger the number of computations, the greater the probability (according to the law of large numbers) of approximating the future events-provided the maximum-amount of known-data is incorporated into the model. Named after the Mediterranean resort of Monte Carlo in Monaco (famous for its gambling casinos) where sophisticated betters employ scientific methods to enhance their chances to win.
How to use Monte Carlo method in a sentence?
- New techniques such as the Monte Carlo method provided numerical simulations when analytical solutions were not available.
Meaning of Monte Carlo method & Monte Carlo method Definition