Monte Carlo Simulation in Excel Without Using Add-ins

This note gives step-by-step instructions on how to build a Monte Carlo simulation model in Microsoft Excel without using spreadsheet add-ins. The note explains the difference between "random" and "uniformly distributed." The note also explains: how the Excel function RAND() works, how to use Excel functions like NORMINV() to simulate random numbers from distributions other than the uniform; how to use VLOOKUP() with tabulated data to simulate numbers from any arbitrary distribution, and how to use Data Tables to produce multiple iterations of a simulation model. The note concludes with an example that illustrates the use of all of these concepts.