Suppose you are a marketing manager for Microsoft and are trying to determine how to price Word and Excel. Families tend to value Word more than Excel while businesses tend to value Excel more than Word. Some groups may want to purchase both Word and Excel. Simulating a New Product. When a company develops a new product, the profitability of the product is highly uncertain.
Simulation is an excellent tool to estimate the average profitability and riskiness of new products.
Simulating Development of a New Drug. The pharmaceutical business deals with a very high degree of uncertainty. Using Simulation to Model An Acquisition. Suppose we are considering purchasing a firm. The cash flows from the firm are highly uncertain.