Though many analytics practitioners are little aware of its importance, stochastic simulation has increasingly become a critical tool in the modern statistical toolchest. Perhaps you know of SS techniques as Monte Carlo simulation instead. While there are subtle differences between the two, the terms are often used interchangeably.

The words stochastic and simulation together are needed to describe this method of problem-solving. Simulation denotes a "representation of the operation or features of one process or system through the use of another.” A simulation is thus a model used to produce outputs that in turn facilitates learning about a process of interest.

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