Ch13 Simulation Modeling

Monte Carlo simulation

When a system contains elements that exhibit chance in their behavior, the Monte Carlo method of simulation can be applied. The basic idea in this simulation is to generate values for the variables making up the model being studied

Simulation is useful...

When demand and lead time are probabilistic

Advantages of simulation (7)

Time compression is possible. The effect of ordering, advertising, or other policies over many months or years can be obtained by computer simulation in a short time.

The idea behind simulation is...

To imitate a real real-world situation with a mathematical model that does not affect operations.

Simulate

To try to duplicate the features, appearance, and characteristics of a real system.

If the simulation were repeated hundreds or thousands of times...

it is much more likely that the average simulated demand would be nearly the same as the expected demand

The Monte Carlo method...

Can be used with variables that are probabilistic

What are the seven steps of simulation?

1. Define problem 2. Introduce important variables 3. Construct simulation model 4. Specify values of variables to be tested 5. Conduct the simulation 6. Examine the results 7. Select best course of action

Disadvantages of simulation (4)

Cost (can be expensive) trial-and-error nature (produces different solutions in repeated runs) the need to generate answers to tests (the simulation model does not produce answers by itself) uniqueness (solutions are not usually transferable to other problems)

Verification

Is a process that involves determining that the computer model is internally consistent and follows the logic of the conceptual model

Validation

Is the process of comparing a model to the real system that it represents to make sure that it is accurate.

Advantages of simulation (4)

It allows what-if questions

Advantages of simulation (3)

It can be used to analyze large and complex real-world situations that cannot be solved by conventional quantitative analysis models. Examples: to model urban systems, hospitals, educational systems, national and state economies, and even world of food systems.

Advantages of simulation (5)

It does not interfere with the real-world system. *With simulation, experiments are done WITH the model, not ON the system itself.

Advantages of simulation (1)

It is relatively straightforward and flexible. It can be used to compare many different scenarios side-by-side

Advantages of simulation (2)

Recent advances in software make some simulation models very easy to develop

Verification...

Relates to building the model right

Validation

Relates to building the right model

Advantages of simulation (8)

Simulation allows for the inclusion of real-world complications that most quantitative analysis models cannot permit. Example: some queuing models require exponential or Poisson distributions, some inventory and network models require normality. But simulation can use any probability distribution that the user defines; it does not require any particular distribution.

Advantages of simulation (6)

Simulation allows us to study the interactive effect of the individual components or variables to determine which ones are important.

Fact: (about simulation)

Simulation is one of the most widely used quantitative analysis tools.