@RISK Modeling Tips
How to win the World Cup Office Pool:
Taking data from the rankings of over 200 national teams from FIFA spanning the past four years (2011-2014), Hernández created a model that uses @RISK to determine the probabilities of different teams winning at different stages, and PrecisionTree for mapping this information into a tree, or bracket, format. @RISK uses Monte Carlo simulation to compute thousands of different possible outcomes for the tournament automatically. The historic strengths and weaknesses of each team are accounted for in the statistical models used to represent each matchup.
After running 50,000 iterations, the model probabilistically channels each team into an eventual tournament win, and calculates its odds. Depending on certain ranking assumptions, the odds calculations may vary significantly. However, a robust approach that considers both historic and current rankings yielded the following results:
With a home advantage incorporated, Brazil has the largest probability of becoming champions with a 17% chance, with Spain coming as a runner up with 12% probability. The next six teams that comprise the top eight posts of becoming World Champions are: Switzerland (8%), Greece (8%), Germany (7%), Colombia (7%), Argentina (6%) and Uruguay (5%).
Without considering home advantage, Germany would be the most likely winner, with a 19.9% chance.
Hailing from Costa Rica, Hernández concedes that his trust in risk modeling may override national pride when it comes to placing bets on the World Cup. “I am still not sure whether I would bet on my country, Costa Rica, in the office pool. In a group with three former World Champions–Uruguay, Italy and England–it only stands a 23% chance of classifying for second round, and only one chance in 440 of becoming World Champions.”
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Palisade featured in Risk Management Monitor in "Ensuring Food Safety with Monte
The findings indicated that the possibility of passing the threshold for acute nitrite poisoning indeed existed, as well as the possibility for exceeding the allowable daily intake of nitrite. Based on the results, the Shanghai FDA proposed that businesses in the food service industry be forbidden from using nitrite, which eliminated the possibility of nitrite poisoning at its root.
Palisade's vice president, Randy Heffernan, sums up the situation in the article, "It is interesting - if not a little disconcerting - to consider the guesswork previously employed in food safety prior to technological advances such as Monte Carlo simulation. While risk can never be completely eliminated, we can at least dine with less concern when analysts are armed with solutions that dramatically lower risk."
The advantage of RISKOptimizer is in being able to handle stochastic demand. This perfectly fits the siting of ambulance, police, and fire stations where demand is uncertain to say the least. The first example in this lesson evaluates where a station should be located to minimize the distance an ambulance would have to travel. The next logical question to ask after determining the best site for an ambulance station is the number of ambulances to be assigned at the site. The final decision on the optimal number of ambulances depends on the trade-off between the cost of an extra ambulance and driver and the incremental benefit in improving the level of service.
Um Modelo de Previsão das chances de ganhar a Copa do
Insurance and Reinsurance Applications of @RISK:
Un modelo para pronosticar las probabilidades de ganar La Copa Mundial 2014, usando @RISK - en español
Business Forecasting and Simulation using
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