Supplement to Chapter 17 SIMULATION Simulation.

A descriptive technique that enables a decision maker to evaluate the behavior of a model under various conditions. Simulation enables decision makers to test their solutions on a model that reasonably duplicates a real process; simulation models enables decision makers to experiment with decision alternatives using a what if approach. Importance 1. Many situations are too complex to permit development of a mathematical solution: the degree of simplification needed would seriously affect the result. In contrast, simulation models are often able to capture the richness of a situation without sacrificing simplicity, thereby enhancing the decision process. 2. Simulation models are fairly simple to use and understand. 3. Simulation enables the decision maker to conduct experiments on a model that will help in understanding process behavior while avoiding the risks of conducting tests on the models real life counterpart. 4. Extensive computer software packages are available, making it easy to use fairly sophisticated models. 5. Simulation can be used for a wide range of situation. 6. There have been numerous successful applications of these techniques. Steps 1. 2. 3. 4. 5. 6. Identify the problem and set objectives Develop the simulation model. Test the model to be sure that it reflects the system being studied. Develop one or more experiments. Run the simulation and evaluate the results Repeat steps 4 and 5 until you are satisfied with the results.

Monte Carlo Simulation. Probabilistic simulation technique used when a process has a random component. Random means chance. Basic Steps: 1. Identify a probability distribution for each random component of the system. 2. Work out an assignment so that intervals of random numbers will correspond to the probability distribution. 3. Obtain the random numbers needed for the study. 4. Interpret the results. The random numbers used in Monte Carlo simulation can come from any source that exhibits the necessary randomness. They come from one of two sources: large studies depend on computer-generated random numbers, and small studies commonly make use of numbers from a table of random digits. Two important features of the sets of random numbers are essential to simulation. One is that the numbers are uniformly distributed. The second feature is that there are no discernible patterns in sequences of numbers to enable one to predict numbers further in the sequence. Simulation Applications Simulation is helpful in product design and testing, facilities layout, line balancing, job design, aggregate planning, testing alternative inventory policies, scheduling, and project management. Computer Simulation Such as FORTRAN, BASIC, SIMSCRIPT, GPSS, GAPS, and DYNAMO

Advantages of Simulation 1. It lends itself to problems that are difficult or impossible to solve mathematically. 2. It permits an analyst to experiment with system behavior while avoiding possible risks inherent in experimenting with the actual system. 3. It compresses time so that managers can quickly discern long-term effects. 4. It can serve as a valuable tool for training decision makers by building up their experience and understanding of system behavior under a wide range of conditions. Limitations of Simulation 1. Simulation does not produce an optimum solution; it merely indicates an approximate behavior for a given set of inputs. There are two reasons for this: a. By design, there is inherent randomness in simulation. b. Simulations are based on models, and models are only approximations of reality 2. For large-scale simulation, it can require considerable effort to develop a suitable model as well as considerable computer time to obtain simulations 3. Monte Carlo simulation is applicable only in situations with elements that can be described by random variables.