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Understanding Simulation Techniques

The document discusses simulation and Monte Carlo simulation. Simulation is a technique to model and experiment on a process over time. Monte Carlo simulation uses random numbers to generate hypothetical data for problems based on past experience. An example shows using random numbers to simulate cake demand over 10 days for a bakery.

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Lutfa Salim
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0% found this document useful (0 votes)
5 views3 pages

Understanding Simulation Techniques

The document discusses simulation and Monte Carlo simulation. Simulation is a technique to model and experiment on a process over time. Monte Carlo simulation uses random numbers to generate hypothetical data for problems based on past experience. An example shows using random numbers to simulate cake demand over 10 days for a bakery.

Uploaded by

Lutfa Salim
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

JKUCAT OR 2210 2016

Simulation
Definitions:

Simulation is a technique which describes a process by developing a model of that process, and then
performing experiments on the model to predict the behavior of the process over time.

An example of simulation is in computer games (e.g., chess, field combat war games, etc.). If the
sequence of events in such games were predetermined, the player would quickly learn the sequence
and become bored. One solution would be to have a large number of games stored in the program, but
this could take up an inordinate amount of memory space. The usual solution is for the game program
to choose its own moves at random. In most games, the total number of possible combinations of
events or moves is so astronomically large that this method results in each game being unique.

When Simulation should be used

 Actual observation of a system may be too expensive. 



 The problem is too big or intricate to handle with linear, dynamic, and standard probabilistic
models. 

 The standard sensitivity analysis is too clumsy and computationally burdensome for observing
the actual environment. 

 It is not possible to develop a mathematical model. Even though a mathematical model can be
formulated, a straight forward analytical solution may not be available. 

 It is not possible to perform validating experiments on mathematical models describing the
 system. 
 There may not be sufficient time to allow the system to operate extensively. 

Steps in Simulation process

1. Formulate the model. This step is almost the same as that for other operations research models.
For a proper formulation, comprehensive study should be made regarding components of the
problem, objective, composition of the organization, etc.

Never add too much detail in a simulation model, it will consume a lot of computer time. Always
keep your specific goal in mind.

2. Design the experiment. After building a simulation model, simulation experiments must be
designed. In this step, you must decide the starting conditions of the model, parameter settings,
time period required for each run, total number of runs, etc.

Work out the details of the experimental procedures before running the model, it will
considerably reduce the chances of making blunders. Think carefully about the model to save
your time and money
JKUCAT OR 2210 2016

3. Develop the Computer Program: Using a high-speed electronic computer, simulation


experiments can be performed. If the simulated model has a very simple structure, you can use
a standard programming language, such as FORTRAN, PL/1, or ALGOL, to develop the
computerized version. On the other hand, for a complex structure, you can use simulation
languages like SIMSCRIPT or GPSS.

Monte-Carlo Simulation

The Monte-Carlo simulation method uses random numbers for generating some data by which a
problem can be solved. These random numbers are helpful in creating a new set of hypothetical data for
a problem whose behavior is known from past experience. The random numbers are generated either
on a computer or are picked up from a table. Most computers employ what is known as
pseudorandomness. This means that the numbers are generated by a series of specific operations. Each
number is generated by performing these operations on the previous number. After picking a random
number, its value is compared with the cumulative probability distribution and the value of process
parameters is obtained.

Example 1

The Lajwaab Bakery Shop keeps stock of a popular brand of cake. Previous experience indicates the
daily demand as given below:

Daily Demand Probability


0 0.01
15 0.15
25 0.20
35 0.50
45 0.12
50 0.02

Consider the following sequence of random numbers: 21, 27, 47, 54, 60, 39, 43, 91, 25, 20

Using this sequence, simulate the demand for the next 10 days. Find out the stock situation, if the owner
of the bakery shop decides to make 30 cakes every day. Also estimate the daily average demand for the
cakes on the basis of simulated data.
JKUCAT OR 2210 2016

Solution

Daily Demand Probability Cumulative Random


Probability Numbers
0 0.01 0.01 0
15 0.15 0.16 1-15
25 0.20 0.36 16-35
35 0.50 0.86 36-85
45 0.12 0.98 86-97
50 0.02 1.00 98-99
Table 1

At the start of simulation, the first random number 21 generates a demand of 25 cakes as shown in
table 2. The demand is determined from the cumulative probability values in table 1. At the end of first
day, the closing quantity is 5 (30-25) cakes.

Similarly, we can calculate the next demand for others

Demand Random Number Next Demand Daliy Left out Daily Shortage
(Production =30 (Production =30
cakes) cakes)
1 21 25 5
2 27 25 10
3 47 35 5
4 54 35 0
5 60 35 5
6 39 35 10
7 43 35 15
8 91 45 30
9 25 25 25
10 20 25 20
Total 320 10

Total demand = 320

Average demand = Total demand/no. of days

The daily average demand for the cakes = 320/10 = 32 cakes.

Common questions

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The model formulation step involves comprehensively studying the problem's components, objectives, and organizational composition to ensure the model accurately represents the real-world system. Excessive detail can consume vast amounts of computing time, potentially delaying results and increasing costs. Hence, it's crucial to maintain focus on the specific goals and include only necessary elements to ensure the simulation is efficient and effective .

The primary stages of a simulation study include model formulation, experiment design, and computer programming. Model formulation involves creating a simplified representation that maintains essential details pertinent to the study's goals. Experiment design specifies initial conditions and parameters critical to ensure the model operates as intended during multiple trials. Computer programming executes the model on a system that can handle its complexity accurately. Each stage builds on the preceding one, ensuring that the model is both relevant and operationally efficient, ultimately leading to valid and applicable outcomes .

Cumulative probability distributions help in mapping random numbers to corresponding outcomes by defining intervals that match probabilistic events. For example, if a demand probability distribution indicates a 0-15 demand with a probability of 0.16, any random number within this interval will simulate a demand of 15. This method ensures that simulated outcomes are consistent with underlying probabilistic expectations, such as choosing a demand of 25 based on a random number 21 in a defined distribution .

Simulation for inventory management, as used by Lajwaab Bakery, effectively estimates demand fluctuations and aids in aligning production with expected sales to minimize shortages or excess inventory. By simulating demand, businesses can make informed decisions rather than relying on static forecasts. However, simulation's effectiveness hinges on accurate probability data and realistic modeling of demand scenarios, which, if flawed, can lead to suboptimal inventory decisions .

Random number generation is crucial for the Monte Carlo simulation method as it is used to generate hypothetical data that replicates the variability of a real-world problem based on known probabilities. These numbers can be generated by a computer using pseudorandomness, where numbers are produced through a series of specific operations applied to previous numbers. This ensures variety and unpredictability in the simulation outputs .

The total demand for cakes over 10 days using the given random number sequence is 320 cakes. This figure is calculated by summing the daily simulated demands derived from the random numbers and the associated probability distribution. Subsequently, the average daily demand for cakes is computed by dividing the total demand by the number of days, yielding an average of 32 cakes per day .

In the Lajwaab Bakery simulation, random numbers are utilized to simulate daily demand for cakes according to probabilities linked to specific demand levels. Each random number is associated with a cumulative probability interval, determining the demand for that day. This randomness allows the simulation to reflect realistic demand variations, as shown when the random number 47 predicted a demand of 35 cakes based on cumulative probability distributions .

Standard programming languages like FORTRAN, PL/1, or ALGOL can be used for simulation models with simple structures due to their general-purpose design. In contrast, simulation languages like SIMSCRIPT or GPSS are designed specifically for constructing complex simulations, offering specialized tools and functions that simplify representing intricate process interactions. These specialized languages often provide features for event scheduling and statistical data collection, which standard languages lack .

Simulation is used in operations research when actual observation of a system is too costly, when the problem is too complex for linear, dynamic, and standard probabilistic models, and when standard sensitivity analysis is computationally burdensome. It is also employed when it is impossible to perform validating experiments on mathematical models, develop a straightforward analytical solution, or when there is insufficient time to allow the system to operate extensively .

Predetermined sequences in games allow players to learn the sequence and eventually become disengaged due to predictability. Conversely, randomized moves keep games dynamic and engaging as the astronomical combination of events ensures each game is unique. However, purely random moves may not always provide a realistic or strategic challenge to players if not well-designed. The benefits are continued player interest, while limitations include potential lack of coherent and balanced gameplay if randomness isn't well-managed .

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