ITPEC FE Subject A April 2026 Question 58
ITPEC FE Subject A April 2026 — Question 58 of 60
Monte Carlo analysis — thousands of runs with inputs drawn at random from realistic ranges, producing a probability distribution of outcomes.
The two markers in the scenario are decisive: repeated random sampling, and a distribution as the result rather than one figure. That distribution is what supports contingency budgeting, since it shows how likely each cost level is.
Answer (b)
Why not others:
- (c) Scenario analysis — evaluates a handful of discrete cases such as best, expected and worst; it yields a few outcomes, not a distribution
- (d) Sensitivity analysis — varies one factor at a time to see which matters most, holding the others fixed
- (a) Linear programming — finds an optimal solution under constraints; it is an optimisation technique, not a way of modelling uncertainty
Key rule: Random sampling repeated many times means Monte Carlo. A fixed set of cases means scenario analysis; one variable moved at a time means sensitivity analysis.
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