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When is a simulation better than hypothesis testing?

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a) Can you think of an example related to your work where a simulation could not be performed, (b) one where a simulation could be performed, yet a formal test would be preferred? (c) What specific (different than hiring) business decisions would a manager make using hypothesis testing?

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Solution Summary

This solution discusses business scenarios best suited to simulations versus hypothesis testing. Response is in everyday language suitable for a beginner.

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I would use a simulation if I wanted to see a range of possible outcomes. Hypothesis testing is more when you want to be sure something is true or false but not so interested in the range of possible outcomes. I don't know where you work so I will have to just pick some business examples....

a. I couldn't do a simulation if I didn't have any history to use in predicting or didn't know what ...

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