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Analysis of profitability through with the generation of lscenarios from a hybrid method between artificial neural network and monte carlo simulation

Abstract:

Business Intelligence analyze existing data, to create knowledge about environment, in this paper, the accounting and operating information is analyzed to generate L-scenarios from hybrid method between ANN and Monte Carlo Simulation (MCS), then analyze the profitability in a Collection center of Raw milk. Every scenario is generated into analysis period, and has information about purchases, sales, cost of goods, sales price, operative cost and opportunity cost, then the cash flow, Net Present Value NPV and Modified Internal Rate of Return MIRR is calculated in order to evaluate the profitability of each scenario. The statistics (with a 95% of confidence) shows that MIRR has a confidence interval between 18,8% and applying an expected rate of return of 20% results in the average NPV is positive, so it implies the project is profitable. Furthermore, the opportunity cost analysis suggests proposes to increase the plant size.