Chapter 1: Introduction to Modeling and Simulation

Systems, Models, and Simulation

A system is defined as the collection of entities that make up the facility or process of interest.
To facilitate experimentation and assessment of a system, a representation- called a model-is
constructed

A system is a simplified representation of reality. "System" is a common word, often used with
loose meaning. Whereas in the real world, a "system" may seem at times an endless series of
connected elements, we refer here to a system as (1) a series of selected, chosen elements (this is
a first simplification, and thus an implicit assumption), with (2) specified boundaries (a second
simplification and implicit assumption), and (3) pre-determined time characteristics (with a third
simplification and implicit assumption).

Types of Systems
 Physical or abstract systems.
 Open or closed systems.
 Deterministic or probabilistic systems.
 Man-made information systems.
 Physical or Abstract Systems: Physical systems are tangible entities that may be
static or dynamic in operation. Abstract systems are conceptual or non-physical entities
which may be as straightforward as formulas of relationships among sets of variables or
models – the abstract conceptualization of physical situations.
 Open or Closed Systems: An open system continually interacts with its
environments. It receives inputs from and delivers output to the outside. An
information system belongs to this category, since it must adapt to the changing
demands of the user. In contrast, a closed system is isolated from environmental
influences. In reality completely closed systems are rare.
 Deterministic or Probabilistic Systems: A deterministic system is one in which the
occurrence of all events is perfectly predictable. If we get the description of the system
state at a particular time, the next state can be easily predicted. An example of such a
system is a numerically controlled machine tool. Probabilistic system is one in which the
occurrence of events cannot be perfectly predicted. An example of such a system is a
warehouse and its contents.
 Man-made Information Systems: It is generally believed that information reduces
uncertainty about a state or event. For example, information that the wind is calm
reduces the uncertainty that a trip by boat will be enjoyable. An information system is
the basis for interaction between the user and the analyst. It determines the nature of
relationship among decision makers. In fact, it may be viewed as a decision centre for
personnel at all levels. From this basis, an information system may be defined as a set
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of devices, procedures and operating systems designed around user-based criteria to

produce information and communicate it to the user for planning, control and
performance. Many practitioners fail to recognize that a business has several
information systems; each is designed for a specific purpose.
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 A model is a computer program that describes the mechanics of the considered system. Which
enables us to focus only on components of a system, the system's structure, relationships among
components, and the modeled system's behavior, rather than on the code of the program itself.
A simulation, simply, is the execution of a model. This requires the further definition of the initial
conditions of the system under consideration, and specified values of parametersModeling and
simulation are used to study systems.

Modeling is the process of representing a model which includes its construction and working.
This model is similar to a real system, which helps the analyst predict the effect of changes to
the system. In other words, modeling is creating a model which represents a system including
their properties. It is an act of building a model.

Types of Models
 Discrete Models – Changes to the system occur at specific times
o Division of Property Management trouble calls
o Acquisition or construction business processes
o A manufacturing system with parts entering and leaving at specific times
 Continuous Models – The state of the system changes continuously over time
o A reservoir as water flows in and out
o Chilled water or steam distribution
 Mixed Models – Contains both discrete and continuous elements
o A refinery with continuously changing pressure inside vessels and discreetly occurring
shutdowns
o Chilled water distribution including plant shutdowns.
 What are probabilistic and deterministic models?
 Probabilistic models can be based on experimental distributions or distribution
models. Deterministic models can be relatively simple and can be used when random
variation is not a major influence on the situation being modeled.
A simulated model may be defined as one which depicts the working of a large scale system
of man, machines, materials and information operating over a period of time in a simulated
environment of the real world conditions.

Simulation is a numerical solution method that seeks optimal alternatives (strategies) through a
trial and error process. The simulation approach can be used too study almost any problem that
involves uncertainty, i.e., one or more decision variables can be represented a probability
distribution, like decision making under risk.

A simulation is the execution of a model, represented by a computer program that

gives information about the system being investigated. The simulation approach of
analyzing a model is opposed to the analytical approach, where the method of
analyzing the system is purely theoretical. As this approach is more reliable, the
simulation approach gives more flexibility and convenience. The activities of the
model consist of events, which are activated at certain points in time and in this way
affect the overall state of the system. The points in time that an event is activated are
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randomized, so no input from outside the system is required.

What is simulation?
 Simulation of a system is the operation of a model in terms of time or space, which helps
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analyze the performance of an existing or a proposed system. In other words, simulation is the
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 process of using a model to study the performance of a system. It is an act of using a model for
simulation.
A simulation is an imitation of the dynamics of a real-world process or system over time.
Although simulation could potentially still be done ―by hand,‖ nowadays it almost always
implicitly requires the use of a computer to create an artificial history of a system to draw
inferences about its characteristics and workings.

The behavior of the system is studied by constructing a simulation model, which usually takes
the form of a set of assumptions about the workings of the system. Once developed, a simulation
model can be used for a variety of tasks, including:

Investigate the behavior of the system under a wide array of scenarios. This is also often referred
to as ―what-if‖ analyses;
Changes to the system can be simulated before implementation to predict their impact in real-
world;
During the design stage of a system, meaning while it is being built, simulation can be used to
guide its construction.
Computer simulation has been used in a variety of domains, including manufacturing, health
care, and transport system, defense and management science, among many others.

Types of Simulation

1. DISCRETE EVENT SIMULATION.

Discrete event simulation (DES) is the process of classifying the behavior of a complex system
as an ordered sequence of well-defined events.
Common applications of DES include stress testing, evaluating potential financial investments,
and modeling procedures and processes in various industries, such as manufacturing and
healthcare.
DES is commonly used to monitor and predict the behavior of investments; the stock market is a
classic example. DES can also help administrators predict how a network will behave under
extraordinary conditions, such as the Internet during a major disaster.

2. Continues simulation.
Continuous Simulation refers to simulation approaches where a system is modeled with the
help of variables that change continuously according to a set of differential equations.
Continuous simulation is a type of simulation in which state variables change continuously with
respect to time. Following is the graphical representation of its behavior.
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Deterministic simulations contain no random variables and no degree of randomness, and

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consist mostly of equations, for example difference equations. These simulations have known
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 inputs and they result in a unique set of outputs. Contrast stochastic (probability) simulation,
which includes random variables.
Deterministic simulation models are usually designed to capture some underlying mechanism or
natural process. They are different from statistical models (for example linear regression) whose
aim is to empirically estimate the relationships between variables. The deterministic model is
viewed as a useful approximation of reality that is easier to build and interpret than a stochastic
model. However, such models can be extremely complicated with large numbers of inputs and
outputs, and therefore are often noninvertible; a fixed single set of outputs can be generated by
multiple sets of inputs. Thus taking reliable account of parameter and model uncertainty is
crucial, perhaps even more so than for standard statistical models, yet this is an area that has
received little attention from statisticians.
3. Monte Carlo simulation

What Is a Monte Carlo Simulation?

Monte Carlo simulations are used to model the probability of different outcomes in a process that
cannot easily be predicted due to the intervention of random variables. It is a technique used to
understand the impact of risk and uncertainty in prediction and forecasting models.
A Monte Carlo simulation can be used to tackle a range of problems in virtually every field such
as finance, engineering, supply chain, and science. It is also referred to as a multiple probability
simulation.
Monte Carlo simulation performs risk analysis by building models of possible results by
substituting a range of values—a probability distribution—for any factor that has inherent
uncertainty. It then calculates results over and over, each time using a different set of random
values from the probability functions. Discrete event simulation (DES) is a method used to
model real world systems that can be decomposed into a set of logically separate processes that
autonomously progress through time. Each event occurs on a specific process, and is assigned a
logical time (a timestamp).

Monte Carlo simulation is related to discrete-event simulation. Monte Carlo simulators usually
make extensive use of random number generators in order to simulate the desired system.

Scope of Simulation in different area is as follows:

1) Healthcare (Clinical) Simulators:

Medical health simulators are developed and deployed to teach healing and diagnostic
procedures. It is also used to teach medical concepts and decision making to personnel who are
involved in the professions.
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2) Computer Simulators:
Simulators have been proposed as an ideal tool for assessment of students for clinical skills.
Programmed patients and simulated clinical situations, including mock disaster drills, have been
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used extensively for education and evaluation. These "lifelike" simulations are expensive, and
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lack reproducibility. A fully functional "3Pi" simulator would be the most specific tool available
 for teaching and measurement of clinical skills. Such a simulator meets the goals of an objective
and standardized examination for clinical competence. This system is superior to examinations
that use "standard patients because it permits the quantitative measurement or competence, as
well as reproducing the same objective findings.

3) Military Simulations:
Military simulations are e models in which theories of warfare can be tested and advanced
without the need for actual hostilities. It is also known as war games. They exist in different
forms with various degree of realism.

4) Finance Simulations:
In financing computer simulation are often used for scenario planning.

5) Flight Simulators:
A flight simulator is used for the training of the pilots on the ground. A pilot gets permission by
this technique to crash his simulated "aircraft" without being hurt. Pilots are trained with the use
of flight simulators to operate aircraft in extremely dangerous situations, such as landing with no
engines, or complete electrical or hydraulic failures. High-fidelity visual systems and hydraulic
motion systems are included in most advanced simulators. The simulator is normally cheaper to
operate than a real trainer aircraft.

6) Engineering, Technology or Process Simulation:

Simulation is an important feature in engineering systems or any system that involves many
processes, For example, in electrical engineering, delay lines may be used to simulate
propagation delay and phase shift caused by an actual transmission line. Similarly, dummy loads
may be used to simulate impedance without simulating propagation, and is used in situations
where propagation is unwanted. A simulator may imitate only a few of the operations and
functions of the unit it simulates.

Phases of Simulation:
Step 1: Identify the Problem:

If an inventory system is being simulated, then the problem may concern the determination of the
size of order (number of units to be ordered) when inventory level falls up to recorder level
(point). i) Identify the Decision Variables

ii) Decide the Performance

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Step 2
Criterion (Objective) &
For example, demand (consumption rate), lead time and safety stock are identified as decision
variables in inventory problem. These variables shall be liable to measure the performance of the
system in terms of total inventory cost under the decision rule - when to order.
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 Step 3: Construct a Numerical Model:

Construct a model which is possible to be analysed on the computer. Sometimes the model is
written in a specific simulation language which is suitable for the given problem under analysis.

Step 4: Validate the Model:

It is ensuring that the model should be representing the system truly which is analysed and the
result will be reliable.

Step 5 : Design the Experiments :

Design the experiments with the, help of simulation model by listing particular values of
variables to be tested (i.e. list of courses of action for testing) at each trial (run)

Step 6: Run Simulation Model:

For obtaining the results in the form of operating characteristics run the model on the computer.

Step 7: Examine the Results in Terms of Problem Solution:

Results are examined as well as their reliability and correctness. Best course of action is selected
after completing the simulation process otherwise desired changes are done in model decision
variables parameters or design, and return to step 3.
Applications of Simulation :
The range of applications of computer simulation method is very wide, since simulation
represents an approach rather than an application of a special technique like linear programming.
Some of the business applications are as follows :
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 1) Queuing Problems:
If the distribution of inter arrival times and service times are known then the queuing theory
provides the techniques which are used to determine the measures of effectiveness such as queue
length, average waiting time, etc. The problem of establishing a balance between the costs can be
determined when these costs are assigned to waiting time of customers and idle time of the
service facility.
Sometimes it is not possible to solve various queuing problems with the use of analytical
methods. In this case simulation is the only possible method to solve these types of problems.
For solving complex simulation problem Monte Carlo simulation is the important
technique. GPSS program is basically structured for queuing simulation model.

2) Job Shop Scheduling:

Deterministic times for different operations of a given order are involved in the development of a
number of job shop simulation programmes. In spite of the absence of probabilistic elements in
such a model, the high degree of interaction between orders due to their different processing
times for similar operations and to different order operation sequences, makes it difficult to
predict the waiting time for a particular order at any given work center. Orders must be
scheduled at different work centers with an allowance for waiting time. Simulation is the best
suitable technique to make reasonable and accurate estimate of such allowances which are
required for efficient scheduling of orders. With the use of simulation technique it is possible to
forecast the manpower and machine workloads.

3) Inventory Problems:
In various inventory problem especially storage problem cannot solved analytically because the
distribution followed by demand or. supply is very complex. The solution can be obtained by
using simulation technique. With the use of past data it is possible to determine the probability
distribution of the input and output functions and the inventory system run artificially by
generating the future observations on the assumption of the same distributions. Trial and error
method is used to find the decision for the optimisation problems.
With the help of random numbers the artificial sample for the future can be generated. The
demand during lead time to provide adequate service to customers is the basis of the selection of
reorder point in inventory control. Simulation technique can be used to investigate the effect of
different inventory policies if the lead time and the demand of inventory per unit of time are
random variables.
For wider applicability as well as those for specialized use a lot of work has been done to
develop inventory simulation models. In various inventory problem queuing characteristics can
be seen. For example, a problem concerned with the optimal inventory of rental cars can be
viewed as a queuing problem where the servers are cars.

4) Network Management:
A number of network simulation models have also been developed. For example, simulation of
probabilistic activity times in PERT networks. The critical path and the project duration can be
evaluated with a randomly selected activity times for each activity. The probability distribution
of project completion time and the probability that each of given activity on the critical path can
be determined by repeating the process.
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5) Financial Management:
Financial studies involving risky investment and profit planning.
6) Marketing Management:
Marketing decisions faces uncertainties in various stages such as in new product introduction.
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Simulation methods are very important for solving marketing problems which have probabilistic
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outcomes. Generation off random numbers is used to predict the outcomes and results are
 analysed in terms of the specific decisions the management must make. Simulation is applicable
in marketing in various ways such as new product planning.

Benefits of Simulation:
1. In various cases, mathematical programming and experimentation with the actual system are
unable to solve various complex important managerial decision problems and if it is possible
then it will be costly. In simulation solution is obtained by experimentation with a model of the
system with affecting the real system.
2. Can predict the occurrence of difficulties and bottlenecks due to the introduction of new
machines, equipment or process. Thus, simulation eliminates the requirement of costly trial and
error method of trying out the new concept on real methods and equipment.
3. Operating personnel and non-technical managers can easily understand the simulation
technique because it is relatively free from mathematics. This helps in getting the propose plans
accepted and implemented.
4. Simulation models are comparatively flexible and can be changed according to the changing
environments of the real situation.
5. Computer simulation can increase the performance of a system over several years and large
calculations are done in few minutes of computer running time.
6. In comparison to mathematical model Simulation technique is easier to use and it is superior
technique to the mathematical analysis.
7. In the operations of complex plans, simulation is used for training the operating and
managerial staff. It is very important technique to train the people before putting into their
hands in the real system. Simulated exercises have been developed to teach the trainee for
gaining sufficient exercise and experience.

Limitations of Simulation:
 It does not produce optimum results.
 Quantification of the variables is another difficulty. In a number of situations it is not
possible to quantify all the variables that affect the behavior of the system.
 In very large and complex problems, the large number of variables and the inter-relationships
between makes the problem very unwieldy and hard to program. The number of variables may
be too large and may exceed the capacity of the available computer.
 Simulation is, by no means a cheap method of analysis. In a number of situations, simulation
is comparatively costlier and time consuming.
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