ABSTRACT

Simulation is the use of a mathematical model that behaves in the same manner as the system under study. The purpose of a simulation model is to give management an insight into the behavior of the system and to give information about possible alternative actions. The information obtained from the simulation model can be used to study the behavior of the system without disturbing the system, or to compare various proposed solutions and actions without actually implementing those actions. In discrete simulations, multiple runs are necessary, and the mean of the average values obtained from each run serves as the point estimate for the measure of interest. Simulation languages and spreadsheets have built-in probability functions that allow the user to generate values from certain probability distributions. Simulation models can be categorized into three groups: Monte-Carlo simulations, discrete simulations, and continuous simulations.