1 Simulation Learning Objectives Explain what is meant by the term simulation

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• Simulation

Learning Objectives

• Explain what is meant by the term simulation

• List some of the reasons for simulation’s popularity as a tool for decision making

• Explain how and why random numbers are used are used in simulation

• Outline the advantages and limitations of simulation

• Describe the alternatives that a manager would reject before choosing simulation as a decision making tool

• Solve typical problems that require simulation

Simulation

• Simulation: a descriptive technique that enables a decision maker to evaluate the behavior of a model under various conditions.

• Simulation models complex situations

• Models are simple to use and understand

• Models can play “what if” experiments

• Extensive software packages available

Simulation Process

• Identify the problem

• Develop the simulation model

• Test the model

• Develop the experiments

• Run the simulation and evaluate results

• Repeat 4 and 5 until results are satisfactory

Monte Carlo Simulation

• Monte Carlo method: Probabilistic simulation technique used when a process has a random component

• Identify a probability distribution

• Setup intervals of random numbers to match probability distribution

• Obtain the random numbers

• Interpret the results

Example S-1

Simulating Distributions

• Poisson

• Mean of distribution is required

• Normal

• Need to know the mean and standard deviation

Uniform Distribution

Negative Exponential Distribution

Computer Simulation

• Simulation languages

• SIMSCRIPT II.5
• GPSS/H
• GPSS/PC
• RESQ

Advantages of Simulation

• Solves problems that are difficult or impossible to solve mathematically

• Allows experimentation without risk to actual system

• Compresses time to show long-term effects

• Serves as training tool for decision makers

Limitations of Simulation

• Does not produce optimum solution

• Model development may be difficult

• Computer run time may be substantial

• Monte Carlo simulation only applicable to random systems