Monte Carlo

Most people when I mention Monte Carlo will think of the French Riviera, or casino, or France.

But it also stands for a method of predicting how well a process will operate.

Every business owner or service organization knows that the demand for its goods or services varies from one day to the next. Our ability to service this demand also varies depending on people being ill or on holiday. In more complex organizations, the ability to service the demand may be down to having the right skills on the day.

So how do you predict what you need in order to meet the demand?

The starting point is to decide how often you want to meet the demand…
100% within defined targets, 98%, 95% and so on. This is critical as to meet something 100% of the time within defined targets, will mean having under-utilised resources that need to be found something else to do some of the time.

Although on a day to day basis you can’t predict the exact demand, over time you can build up a picture or model of how demand varies. You can also build up a model that predicts the availability of people.

Then Monte Carlo steps in!

This is a technique for using data from a process to build a model that predicts how well the process will respond. It is called stochastic modelling because it takes into account the variability we see on a day to day basis.

For example, this can be used by providers of health care, call centres or other services to predict staffing requirements, short lead time or bespoke manufacturing to define stock levels.

For more information on Monte Carlo, contact Steve at