CMA Final · Strategic Cost Management · Simulation
In a Monte Carlo simulation of daily demand for a Pune bakery, the cumulative probabilities are: 10 loaves 0.20; 20 loaves 0.50; 30 loaves 0.80; 40 loaves 1.00. Random numbers 00-99 are mapped to cumulative ranges. The random number 47 is drawn. What demand is simulated?
The simulated demand is 20 loaves. Cumulative probabilities 0.20, 0.50, 0.80 and 1.00 give random number bands 00-19, 20-49, 50-79 and 80-99, and 47 falls within the 20-49 band assigned to 20 loaves.
- A10 loaves
- B20 loavesCorrect
- C30 loaves
- D40 loaves
Explanation
Cumulative ranges: 10 loaves = 00-19, 20 loaves = 20-49, 30 loaves = 50-79, 40 loaves = 80-99. The number 47 lies in 20-49, so demand is 20 loaves. Choosing 30 would wrongly round up to the next band.
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