ABSTRACT
In most cases, managers or other decision-makers do not have perfect information about what the actual consequences of various pricing decisions will be like. Additionally, the properties of the various variables going into a pricing model may be hard to describe with smooth functions, and the pricing problem itself could be so complex that it is impossible to find analytical solutions. Monte Carlo simulation is all about using the computer to draw random numbers in order to replicate elements of the real world. The term Monte Carlo is used because of the similarities between many gambling devices and the process behind simulation using the computer. As Monte Carlo simulation is all about replicating elements of the reality by drawing random numbers, we simply need an efficient way of generating such random numbers with the help of the computer.
