If you want to check the recording of this webinar, go to: https://hubs.ly/H0chjcC0 Unknown risk can create considerable concern and worrying. However, known risk can be a secret weapon - empowering you to avoid wasteful spending and allocate resources more effectively. Monte Carlo simulation in Companion by Minitab can help you foresee the variety of outcomes likely to occur when you alter different variables. You will learn how you can: 1. Ensure products meet their intended specifications by studying the process inputs and developing a (y=f(x)) equation that describes the process. 2. Take the equation further by considering the uncertainty in the inputs - which results in a more realistic view of the response. 3. Perform Monte Carlo simulation to predict process capability, and to identify the best strategy to determine optimal process settings using parameter optimization and sensitivity analysis.

1. 1 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Seeing the
Unknown
Identifying Risk and
Quantifying Probability with
Monte Carlo Simulation
Jennifer Atlas
Global Technical Product Manager

2. 2 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Over 90% of Fortune 100 companies use Minitab to improve
the quality of their products and processes.

3. 3 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.

4. 4 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Jenn is an expert statistician with
over 20 years of experience in
the quality improvement and
also consumer goods industries.
Meet the Presenter:
Jennifer
Atlas
Minitab Global Technical Product Manager

5. 5 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Monte Carlo
• Monte Carlo represents a broad class of
computational algorithms that rely on repeated
random sampling

6. 6 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Monte Carlo Simulation
• Accounts for risk in quantitative analysis and
decision-making by providing a range of possible
outcomes based on the model inputs and
specifications.

7. 7 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Monte Carlo Simulation
• More simply, it provides expected values for a
response(s) given a set of equations.
• It considers the uncertainty in the inputs in those
equations to provide a better estimate of the true
values that can result for a response.

8. 8 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Quantifying Uncertainty in the
Inputs: probability distributions
• Normal
• Lognormal
• Uniform
• Triangular
• Exponential
• Weibull
• Poisson
• Bernoulli

9. 9 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Application: Assessing
Project Schedule Risk

10. 10 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Project Duration =
Define + Measure + Analyze + Improve + Control

11. 11 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Project Duration =
Define + Measure + Analyze + Improve + Control
5 days 10 days 10 days 5 days 3 days
Predicted Project Duration would be
33 business days

12. 12 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Project Duration =
Define + Measure + Analyze + Improve + Control
A Triangular Distribution is
defined by a lower bound,
the mode and an upper
bound
In this case: Triangular
(2,5,12)

13. 13 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Project Duration =
Define + Measure + Analyze + Improve + Control

14. 14 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Estimate what percentage of projects are
expected to go over 60 days

15. 15 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Estimate what
percentage of
projects are
expected to go
over 60 days

16. 16 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Results

17. 17 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Better Estimates
• Monte Carlo simulation can help with modeling, analyzing and
improving confidence for project schedule estimates

18. 18 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Some Applications....
• Telecommunications: Evaluate wireless network
performance
• Energy: Predict output of a wind farm
• Engineering: Predict process capability in a fuel
pump
• Consumer goods: Predict viscosity in the
manufacturing of a dish detergent
• Finance: Value a project by estimating future profits
• Healthcare: Predict claims processing times

19. 19 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Simulation
• A simulation is a fictitious representation of reality

20. 20 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Example: Roofing shingles
• Shingles are specially formulated to
provide dramatic color contrast and
dimension.
• Wind resistant to 130 mph
• Algae resistant for at least 10 years

21. 21 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Response: Granule Loss
A Fractional Factorial Design in 6 factors:
1. Press: Application Pressure (in psi)
2. Moisture: Amount of moisture on the
shingle
3. Sheet Tension (in pounds)
4. Coating Viscosity (in centipoise)
5. Percentage of Filler used in the granule
mix
6. Line Speed (in feet/minute)

22. 22 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Develop the Transfer Function

23. 23 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Minitab Model fit

24. 24 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Input Distributions
2.52.01.51.00.5
20
15
10
5
0
3224168
16
12
8
4
0
403836343230
20
15
10
5
0
28002400200016001200
20
15
10
5
0
5452504846
12
9
6
3
0
820800780760740720700
20
15
10
5
0
Moisture
Frequency
Press Sheet Tension
Viscosity Filler Line Speed
Histograms

25. 25 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Response Optimizer

26. 26 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Monte Carlo Simulation
Input
distributions
Transfer function
Visual
validation

27. 27 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Results

28. 28 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Parameter Optimization
in Companion
• Identifies settings for the controllable input
parameters that result in a higher capability for
the process using mathematical solutions and
genetic algorithms.

29. 29 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Parameter
Optimization

30. 30 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Define Parameter Search Ranges

31. 31 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Parameter
Optimization
Results

32. 32 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Sensitivity Analysis in Companion
• Allows you to see the effect of changing the standard deviation of the X’s
on the standard deviation or defect rate of Y.

33. 33 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Sensitivity Analysis

34. 34 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Easily extensible

35. 35 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Improve faster
• Minitab Statistical Software generated the
transfer function via a designed experiment
• Companion simulates and optimizes product
results to ensure they meet specifications.
• Companion makes it easy to utilize y=f(x)
equations, combined with the variability of your
inputs to predict process capability and identify
the best strategy for creating defect-free
products.

36. 36 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
What Minitab Offers
Products
Services
Powerful statistical
software everyone can use.
Analyze data and present
results with confidence.
Quality improvement. Improved.
The tools and reports you need to
guarantee process and product
excellence.
Learn to see your data.
Online learning solution
to master statistics and
Minitab® anytime, anywhere.
Fast, highly accurate
platform for data mining
and predictive analytics.
Training
Learn Minitab and Companion
first-hand by attending public or
customized trainings in your facilities
according to your requirements.
Statistical
Consulting
Get personalized help with statistical
challenges you face, including collecting
the right data, interpreting your analysis
and much more.
Support
Assistance with installation and
implementation, updating of
versions, use of software and
interpretation of results.

37. 37 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Webinar
Program
Find more Companion
webinar recordings at
minitab.com/support/
webinars/ondemand

38. 38 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Discover. Share. Harness the opportunities.
September 12 - 14 | The Scottsdale Resort at McCormick Ranch | Scottsdale, AZ
Learn more about Companion at the 3rd annual Minitab Insights Conference!
Connect with professionals and thinkers who help to shape the future with data-driven
insights at our third annual conference. Presentations from some of the brightest minds
in our field and expert advice in the Minitab Lab can help you master new skills and leave
with new strategies and greater confidence to deliver results.
Learn more and register at
info.minitab.com/insights

39. 39 Seeing the Unknown: Identifying Risk and Quantifying Probability with Monte Carlo Simulation
© 2018 Minitab, Inc.
Thank You
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