Methodology

Monte Carlo simulation is an ideal tool that helps the business by making it possible to see all
achievable outcomes of the decisions and assess the impact of risk, allowing for better decision making
under uncertainty. Most business activities, plans and processes are too complex for an analytical
solution but using Monte Carlo simulation in the current situation of a branch of Cebuana Lhuillier,
wherein they can build a spreadsheet model that lets the business evaluate their plan numerically they
can change numbers, ask 'what if' and see the results. But just like many business situations that
involves uncertainty in many dimensions for example, variable market demand, unknown plans of
competitors, uncertainty in costs, and many others, the situation of Cebuana Lhuillier is no exception,
that is why using the Monte Carlo method was very applicable and surprisingly effective for this type of
business. One of the easiest and most popular ways to do this is to create a spreadsheet model using
Microsoft Excel.

Monte Carlo simulation works effectively by performing risk analysis and building models of
possible results by substituting a range of values, a probability distribution for any factor that has
uncertainty. It then calculates results repeatedly, each time using a different set of random values from
the probability functions. The results obtained from Monte Carlo simulation not only reveal what could
possibly happen but also the extent of possibility for each outcome. It also treats each data point as
equally important. Due to the data generated by a Monte Carlo simulation, it becomes easier to create
graphs of various outcomes as well as their chances of occurrence. This is imperative for communicating
findings to other stakeholders. Monte Carlo simulation will play a vital role for the business and all this
factor that will be necessary and beneficial to the Cebuana Lhuillier to develop a more client-responsive
business that enhances customer loyalty and reduces drop-outs and thus increases profitability. And, to
achieve its aspiration of becoming the best and preferred micro-financial and business-to-business
solutions partner with a heart.