What is Monte Carlo simulation and how is one conducted?

Answer: Monte Carlo simulation is a form of simulation modeling called mathematical simulation, where mathematical formulas and statistical processes are used to simulate activities, decisions, and the like. In Monte Carlo simulation, statistical sampling is used to generate outcomes for a large number of trials. The results of these trials are then used to gain insight into the system of interest.
Monte Carlo simulation is used to simulate all types of systems and many types of statistical distributions.
The modeler must map the random numbers to the outcomes of events under study, then generate a stream of numbers that can be interpreted by the mapping so that the events are interpretable. The stream of numbers could be mined from a page turner such as A Million Random Digits with 100000 Normal Deviates by the RAND Corporation or more commonly, from a computer program.