Sigmapedia - The Free Online Lean Six Sigma Encyclopedia

English |  Español |  Français |  Português |  Deutsch |  中文


Go Back


A stochastic model, equation or system is one that simulates the underlying process with a built-in random/probabilistic element. Given a specific set of initial conditions, such a model will produce slightly varying results, with some results being more probable than others. Such models are commonly used to represent business processes, as well as in the fields of economics and insurance. Monte Carlo methods are an example of stochastic modeling.