EFFECTIVENESS OF OPTIMUM STRATIFIED SAMPLING AND ESTIMATION IN MONTE-CARLO PRODUCTION SIMULATION

The paper describes a computer algorithm designed for Monte Carlo prod uction cost. The design seeks to enhance the precision of production c ost estimation at a reduced computation time of the existing approach. The techniques included are optimum stratified sampling and ratio est imate. The optimum stratification rule aims to remove any judgmental i nput and to render the stratification process entirely mechanistic. Th e estimator, provided by ratio statistics of the sample, can avoid ide ntification of the regression model and thus save computation time. He nce, the effectiveness on precision improvement is demonstrated in thi s paper.