Risk Reduction Techniques in Management Decision Making

Instructions: Complete a five year simulation, and answer the following questions on the actual approach you used for the simulation. You may type your answers directly on this form, but the completed document must be 2-3 pages in length (please do not change the margins). Due November 25, 11:59pm

My first objective, to view and interact with a simple scientific computer model, was most definitely accomplished over the course of this simulation. I have done so by changing parameters, observing the simulation, and analyzing the data that was brought about by the simulation. I also determined through my use of the computer model that simple changes to one population in the ecosystem created through this computer model does not change the outcome of the simulation in any major way. On the other hand, if you completely get rid of one of the populations instead of raising or lowering

Sensitivity analysis begins with the base case (or for this analysis, the “most likely case”) developed using expected values for all uncertain variables. The uncertain variables used in this analysis are procedures per day, average net revenue, and building/equipment salvage value.

Information is made from Data that is numerical which is changed and used to make it seem sense. For an example train timetable, the number of trains and how much it weights.

2. Uncertainty/sensitivity analysis: The effects of uncertainty are considered in the profitability analyses. Examples include calculating or discussing the impact of various potential revenue levels on product line profit margins, and applying the probabilities of successfully negotiating postal outlet and lottery booth contracts.

3. The use and characteristics of simulation - assessment in a simulated environment should only be used where evidence in the workplace will not be demonstrated within an

How may you apply what you learned about supply and demand from the simulation to your workplace or your understanding of a real-world product with which you are familiar?

Furthermore, a sensitivity analysis of factors such as the cost of raw materials, selling price per unit and capacity utilization demonstrates that a small change in any one of these variables could have a major impact on the project’s bottom line. In Appendix B, I examine a scenario in which the selling price per unit decreases by 1% and the cost of raw materials per unit increases by 1% at the outset of the project. In this scenario, the resulting NPV changes from a positive $5.4 million to a loss of $666,000, and the IRR falls below the discount rate to 9.15%. This, to me, reveals that the potential upside of this project is not large enough to account for discrepancies due to imprecise projections, flawed assumptions, or unforeseen risks.

The simulation is useful because it evaluates project performance using real criteria, such as the scope, schedule and

A careful analysis on the sensitivity is necessary in order to make sound business decisions.

decisions, managers usually try to keep in mind the short and long term costs that might occur in

A simulation is defined as the imitative representation of one system by another (Merriam-Webster Dictionary). More specifically, the Human Resources Management Simulation is a simulation where students portray the role of a Human Resources Director of a growing company. Its objective is to gain insight into the Human Resources department, develop the basic knowledge of its principles and test new concepts before implementing them to solve and improve the department.

Simulation is a computer process that gives a probable NPV or IRR for a project. All factors that affect the project’s returns are input. The computer then randomly selects one observation from each category. All of the observations are combined and the NPV or IRR is calculated from those figures. Simulation gives a range of outcomes as well as the probability of the outcomes. It provides the total risk level of a project.

Throughout the course of this simulation, we learned that implementing and executing a strategy is crucial in establishing and maintaining a competitive advantage. Our external analysis at the beginning of the simulation proved to be inadequate - we did not take into consideration all of the possible threats and opportunities, and as a result, were not prepared to react to the sudden changes in the simulation and did not adequately meet the needs of the consumer market.

Moreover, simulation exercises are highly useful in the society today because they help one learn a lot about human behavior, hence this enables us know how to relate and skillfully negotiate with others in the real world. I also concurred with the author that simulations do not enclose us to theory alone, but also makes and trains us to be practical beings, since we are able to put what we have learnt in class into practice. I found it intriguing and educative that the author gave an example of a case study of a simulation in a three-way war within the fictional country of Zodora to explain further and help us understand broadly how a simulation exercise is carried out following certain procedures and outcomes. Finally, I agreed with the author in terms of making the case study look more realistic rather than unrealistic, in order for it to have more value either as a teaching tool or as a means for generating