Company Model for Income Prediction

Corporate financial planning requires periodic reestimates of future revenues and costs. The Celanese Chemical Company is using a simulation model to supplement single-point estimates of net income with a range of values and their associated probabilities. This permits conservative or optimistic planning within the framework of risk. Inputs to this model include subjective estimates of each major product´s sales volume, net sales return, and cost of manufacture and raw material. The model, written in General Purpose Simulation System (GPSS), also incorporates a supply and demand material balance for evaluating the cost effects of forecasted production, feed capacities, and feed-to-product ratios.