ABSTRACT
The method often proposed for the quantification of economic risks is Monte Carlo simulation (Diekmann, 1983; Jaafari, 1988; Martins and Bezelga, 1990; Perry and Hayes, 1985; Thompson and Wilmer 1985). Simulation’s strength lies in its ability to focus on the real characteristics of the problem as opposed to simplifications required to make it analytically tractable. However, when the number of variables required for a detailed feasibility analysis is large and they are correlated, simulation is both time consuming and computationally expensive, precluding exploration of a wide range of alternatives prior to selecting the best strategy.
