Question related to something in karlin and taylor stochastic processes one text

1. What is stochastic process with real life examples?
2. Which model is one type of stochastic model?
3. Why stochastic process is important?
4. What are weaknesses of stochastic modeling?

What is stochastic process with real life examples?

Stochastic processes are widely used as mathematical models of systems and phenomena that appear to vary in a random manner. Examples include the growth of a bacterial population, an electrical current fluctuating due to thermal noise, or the movement of a gas molecule.

Which model is one type of stochastic model?

The Monte Carlo simulation is one example of a stochastic model; it can simulate how a portfolio may perform based on the probability distributions of individual stock returns.

Why stochastic process is important?

Since stochastic processes provides a method of quantitative study through the mathematical model, it plays an important role in the modern discipline or operations research.

What are weaknesses of stochastic modeling?

Finally, stochastic models can be computationally quite complex to perform, and may require a more in-depth statistical and computational ability than some of the more simple deterministic models. This in turn can mean that the results are more difficult to communicate than some of the more simple deterministic models.