Monte Carlo method

Is the name of a technique that involves random sampling. It is often used in operations research in the analysis of problems that cannot easily be modeled in closed form. In a Monte Carlo simulation, values of independent variables are chosen randomly and the equations in which these variables appear are run to achieve a single result for the dependent variable. The process is repeated many times, perhaps thousands, each with a different set of independent variables and therefore a different resulting dependent variable. The set of results is then considered as representative of the range of potential outcomes. This technique can be used in conjunction with essentially any modeling approach to convert a deterministic, single-value solution into a probabilistic solution.