Frequently Asked Questions   (Back to main page)

 

 

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Question:

I have been adviced to trust my gut feeling more than digits and numbers. Why use this program?

Answer:

Your gut feeling is based on intuition, risk aversity and personal preferations. Quite frequently this is not enough. If the clerk in your bank says "Why should I trust your gut feeling about this project?", you may need analysis for support. Financial risk is relevant information to a clerk who is in the task of judging whether you should be given financial support or not. MonteCarlo simulation is only one among many decision tools. But for complex problems with uncertain inputs, computer supported MC simulation is often the only feasible option. For that reason it is widely used in metheorology, finance etc. to forecast scenarios that are probability distributed. YourSim provides a simple and cheap analysis tool based on broadly accepted scientific methods.
Your gut feeling is nevertheless highly relevant, though. Do your best to put sensible data into the model, or you will get crap out of it. Do research in advance to get as realistic cost estimates and demand info as possible.

 

Question:

Does YourSim contain macros or other code?

Answer:

No. It is all programmed through standard Excel97 functions, believe it or not.

 

Question:

Why are there error messages all over the sheet "Data"?

Answer:

Have you updated your license? There is something wrong with the license code in the right top corner of the window. Reenter your present code, or buy a new one that works.

 

Question:

Excel does not update its calculation automatically when I have worked with YourSim,. What is wrong and how can I get back the automatic calculation setting?

Answer:

Excel is set up by default with automatic calculation, meaning it recalculates every single formula in the spreadsheet every time you tap <Enter>. YourSim has literally tens of thousands of formulas hidden in its spreadsheets, that in turn are internally connected so that the whole workbook recalculates each time you have typed data into a cell and then tap <Enter>, if the program is set up with the default configuration. With manual calculation you may enter as much data you want to before updating or recalculating the workbook.
To exit manual calculation and get back automatic, go to the menu <Tools>, then <Alternatives>, then <Calculation>, where you select "Automatic".

 

Question:

Excel does not recalculate when I tap <Enter>. What is wrong?

Answer:

It is set up with manual calculation. Tap <F9> to calculate. If you want automatic calculation, go to the menu <Tools>, then <Alternatives>, then <Calculation>, where you select "Automatic". This is not recommended while working with YourSim though, unless you have a very fast machine. Also check the answer above.

 

Question:

Excel freezes or becomes sluggish when I have typed data into a cell and then tap <Enter>. What is wrong?

Answer:

It is set up with automatic calculation. You need manual calculation (check the answer above). Go to the menu <Tools>, then <Alternatives>, then <Calculation>, where you select "Manual". Tap <F9> each time you need to update or recalculate.

 

Question:

Parts of the sheet show grey fields. Why?

Answer:

Some rows and columns are hidden, as there is no use in showing them all. The workspace is in the upper left corner of the sheet "Data".


Question:

How do I enter a new license code?

Answer:

If you use copy and paste to enter your new code, it may be impossible to paste directly into the licence code cell.  If that is the case, either type the code into the cell, one number at a time.  You can also paste the whole code into the formula line after having clicked on the license code cell.


Question:

The program freezes, crashes or haults. What can I do to solve this?

Answer:

This is normally due to lack of memory. Close other programs that are active on your desktop and try again. YourSim performs tens of thousands of calculations on the fly and will then demand much of the available capasity from both the prosessor and the memory. Modern computers usually have no problems with this challenge, but if this is a problem to many of YourSimís users, a version with 2000 simulations will be offered (the present version has 3000).
However, using automatic calculation also may cause similar problems, check the answer above.

 

Question:

The "Data out" table tells me that the mean (average) profit differs from the one I can read from what is 50% probable according to the diagram on the sheet "Profit". Why?

Answer:

This is a common statistic issue.
The mean takes into account the total of all observations, even if some of the extreme simulated values affect the calculation of it. Also, distribution that are scewed (as they quite frequently are) may cause the mean to differ significantly to the median, which is the middle observation of the sample generated. The median (i.e. the 1500 lowest value of 3000) is the 50th percentile. Half of all the obsevations show lower values than this, and half of them show higher values. The median is resistant to extreme results, but the mean is affected. It may sometimes be more sensible to look at the median when you wonder what will be typical for your project. Still, the mean/average is usually called the "expectation" as it is the "balancing point" of the distribution, taking into account that the occurance of some extremes (here: very high or very low profits) are probable to a certain extent. See example here.

Difficult? Yes. Choosing the lower of the two in your planning is a safer approach than sticking to one of them in all situations. They both have their strengths and weaknesses in order to describe statistics.


Question:

The "Data out" table has a negative break even, which is impossible to achieve both in theory and reality.  Why?

Answer:

Sometimes the use of normal distributions in one or more of the four input (independent) variables cause strange results, like negative break even.  That is because this distribution has tails going infinitely out to each side, meaning it might contain negative values.  This in turn may put negative values into the break even calculation, which comes up with a negative value because either the divisor or the dividend becomes negative (Break even = TFC/(SPU-VCU)), that is
 -  if TFC is normally distributed, or
 -  if SPU is normally distributed, or
 -  if SPU and VCU have overlapping intervals, causing SPU sometimes to be smaller than VCU, which returns a negative value in the divisor of the break even calculation.


Question:

The numbers I get differ from time to time when I recalculate.  Why?

Answer:

Although 3,000 replications is more than sufficient to generate reliable output data from a Monte Carlo simulation, results differ slightly from time to time when you press <F9> to recalculate.  This is the way it should be, and even if the model used 100,000 replications the numbers would change each time.  That is the nature of randomness.  The consistency of the output should however be good enough to provide the user with a reliable image of the risk involved, given that the data going into the model are reliable.


Question:

A 95% confidence interval is an interval that goes 1.96 standard deviations below and 1.96 above the mean, due to statistic theory. I find this not to be the case in the table over limits of the interval on the sheet "Out" where output variables are pictured in charts. Why?

Answer:

1.96 standard deviations below and above go for normal distributions. However, YourSim also gives the user the opportunity to choose uniform and triangular distributions (as well as fixed values) for the independent variables. In these cases using percentiles are more feasible. The two-sided 95% confidencs interval (or credible interval) is between the 2.5% percentile and the 97.5% percentile, which gives an accurate estimate independent of type of distribution.

 

Question:

When is it appropriate to select one-sided confidence intervals?

Answer:

When the other side of the distribution is less important. Maybe you are more concerned about how realistic it is to lose a lot of money than to end up as a tycoon?

 

Question:

Is YourSim a guarantee against a fatal flaw and ending up in the gutter?

Answer:

No. Extreme weather is sometimes unlikely to come, yet it appears now and then despite competent forecasts saying the opposite. The fact that something is unlikely to happen, does not make it impossible. The chance of a flaw is still there, despite the program telling you that the chance is small. The chance of dropping dead today is hopefully even smaller, but it is present at any time of your life. However, a rational person will act according to what is likely to happen, and not expect what is unlikely. But would you drive your car if the chance of a crash was 25%? I would not if there were other options.
Thorough analysis is no guarantee against bankrupcy. But the more you do to get the picture right, the better off you are. View the problem from several perspectives, see it from different angles, use all analysis tools that are available to you, and noone can say you didnít do your best.



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