Monte-Carlo Simulation with Crystal BallTo run a simulation using Crystal Ball:1. Setup SpreadsheetBuild a spreadsheet that will calculate the performance measure (e.g., profit) in terms of the inputs (random or not). For random inputs, just enter any number.2. Define Assumptionsi.e., random variablesDefine which cells are random, and what distribution they should follow.3. Define Forecasti.e., output or performance measureDefine which cell(s) you are interested in forecasting (typically the performance measure, e.g., profit).4. Choose Number of TrialsSelect the number of trials. If you would later like to generate the Sensitivity Analysis chart, choose “Sensitivity Analysis” under Options in Run Preferences.5. Run SimulationRun the simulation. If you would like to change parameters and re-run the simulation, you should “reset” the simulation (click on the “Reset Simulation” button on the toolbar or in the Run menu) first.6. View ResultsThe forecast window showing the results of the simulation appears automatically after (or during) the simulation. Many different results are available (frequency chart, cumulative chart, statistics, percentiles, sensitivity analysis, and trend chart). The results can be copied into the worksheet.Crystal Ball Toolbar:DefineDefineRunStartResetForecastTrendAssumptionsForecastPreferencesSimulationSimulationWindowChartWalton Bookstore Simulation with Crystal BallRecall the Walton Bookstore example: It is August, and they must decide how many of next years nature calendars to order. Each calendar costs the bookstore $7.50 and is sold for $10. After February, all unsold calendars are returned to the publisher for a refund of $2.50 per calendar. Suppose Walton predicts demand will be somewhere between 100 and 300 (discrete uniform).Demand = d Uniform100, 300Order Quantity= Q (decision variable)Revenue= $10 * Min(Q, d)Cost= $7.50 * QRefund= $2.50 * Max(Qd, 0)Profit= Revenue Cost + RefundStep #1 (Setup Spreadsheet)Walton Bookstore Simulation with Crystal BallStep #2 (Define Assumptionsi.e., random variables)Select the cell that contains the random variable (B17) color code (blue):and click on the “Define Assumptions” button in toolbar (or in the Cell menu):Select type of distribution:Provide parameters of distributions: Walton Bookstore Simulation with Crystal BallStep #3 (Define Forecasti.e., output)Select the cell that contains the output variable to forecast (F17):click on the “Define Forecast” button in toolbar (or in the Cell menu),and fill in the Define Forecast dialogue box.Step #4 (Choose Number of Trials)Click on the “Run Preferences” button in toolbar (or in the Run menu):and select the number of trials to run.Walton Bookstore Simulation with Crystal BallStep #5 (Run Simulation)Click on the “Start Simulation” button in toolbar (or Run in the Run menu):Step #6 (View Results)The results of the simulation can be viewed in a variety of different ways (frequency chart, cumulative chart, statistics, and percentiles). Choose different options under the View menu in the forecast window.The results can be copied into a worksheet or Word document (choose Copy under the Edit menu in the simulation output window.Using Trend Charts to Find the Impact of Order Quantity on Potential ProfitDefine several forecast cells (G14:G18) for several possible order quantities (Q=100, 150, 200, 250, 300). Use the same random order quantity for each to compare them more equally (i.e., one assumption cell for demandC14with the rest set equal to C14).After running the simulation, choose “Open Trend Chart” in the Run menu. This chart gives “certainty bands” for the forecast cells. 10% of the time, the project duration will fall within the inner band (light blue), 25% of the time within the 2nd band (red), 50% of the time within the third band (green), and 90% of the time within the outside band (dark blue).Project ManagementGlobal OilGlobal Oil is planning to move their credit card operation to Des Moines, Iowa from their home office in Dallas. The move involves many different divisions within the company. Real estate must select one of three available office sites. Personnel has to determine which employees from Dallas will move, how many new employees to hire, and who will train them. The systems group and treasurers office must organize the new operating procedure and make financial arrangements. The architects will have to design the interior space, and oversee needed structural improvements. Each site is an existing building with sufficient open space, but office partitions, computer facilities, furnishings, and so on, must all be provided.A complicating factor is that there is an interdependence of activities. In other words, so