Chapter7

Gimulation is mathematical
nertain type of
a Simulation
mathematical andtechnique
hehaviour and structure of logical
for
conducting experiment which
To simulate is to complex realrelationships
imitate. It is one
a
world
that is essential
to
involves
It is a
multitalented tool to find outof the
the most system over extended explainthe
nroblems which are otherwise widely used period of time.
solution of operations research
a well established difficult to solve. a large varlety of operationstechnique.
an actual or practice in this area. Computer based simulation hasresearch
probable real Simulation is an act of become
occurrence (such as an life conditlon, event, or situation performing or
imitating
circumstances or factors.accident),
A
or to
forecast future
to
find cause of
effects (outcomes) of
a
past a
simulation may be
equations (a mathematical model), assumed
rehearsal, (4) game (such as performed through (1) solving set of
war
constructing physlcal (scale) model. (3) staged
a a

animated flowchart). So games), or a computer

analyzing the behaviour andsimulation is a
technique for
graphics model (such as an
assumed conditions of evaluating the performancecarrying
of
out
experiments for
Definition reality. a
proposed system under
According to Shannon,"simulation is
and
conducting experiments with thisthemodel
process of designing a model of a real
behaviour (within the limits for the systemn
of the system." imposed by a purpose of
understanding the
criterion or a set of criteria) for
the
In
general terms operation
simulation involves
and then
performs developing a model of
experiments
making problems by designing,
on
evolved. It is a method of phenomenon
the model some real

system. In simulation a constructing and manipulating a model solving decision

given system is copied and the of the real
associated with it are manipulated in the artificial
variables and constants
behaviour of the system. environment to
In the
examine the
words of Churchman
characteristics of reality in simulation is the use of
order to produce the
system model that has the
designed
So we can essence of actual
define simulation as a
numerical operation.
computerized mathematical model in order to technique which makes use of a
conditions of uncertainty for represent actual decision
and evaluating alternative courses of action
making under
assumptions. Under simulation, some type of model is based upon facts
the formulated which describes
system operation. The entire system is divided into several
interrelationship between these elements with some predictable components and the
behaviour in terms of
298
Operations Research
Probability distribution for each of the various
inputs is
studied. The result is then
possible states of the system and its
which the used in connection with real life situation for
simulated model has developed. For
wl
arways test a scale model of a new
example an aero plane manufacturer
type of aircraft in an air tunnel before
as full sized
plane. building
Simulation method is useful in queuing
random basis and
theory where customer arrival is entirely
service time variable may also be a random one. The
approach can be used to
simulation
study almost any problem that involves uncertainty.
Simulation involves
i.
Starting of
the system to some
specified situation.
ii. Generation of the inputs to the
ii. system.
Operation of the system under the specific situation and input design
to the rules laid according
down by the
iv. Observation
procedural model.
and collection of statistics on the
Process of simulation
performance of system. the
The general steps in a
simulation process are:
.Define the system and identify the problem, which is intended for simulation:
A clear statement of the
problem facilitates the of suitable model.
development
It also
provides a basis for evaluation of the simulation results.
2 Formulate the model for this
system/problem: Development of an appropriate
model is the next step. In this
stage the model mimics the important elements of
what is being simulated. The model
may be either a mathematical model or a
mental conception or both. In mathematical model
mathematical symbols or
equations are used to represent the relationship in the system.
3. Test the model;
Compare the behaviour of the model with the actual problem
and its environment.
4. Identify and collect the data needed to test the model. If
needed, decide the
randomness of the input parameter. Also select the random number
if needed. Decide number of generator,
experiments, period
of run and
methodology.
5. Run the simulation. Repeat for number of
a
experiments or, for a period of
time.
6. Analyze the simulation results, obtained
in the simulation runs. If
required,
modify the simulation model and repeat the runs. This may be needed. if same
inconsistency is observed.
7. Validate the simulation. This is needed for
increasing the chances that the
inferences and conclusions drawn about the real
system are closer to reality
and are also valid.
For all these number of preliminary works is to be
steps a
performed. The major tasks
are collection of data and selection of means
by which the simulation activity would
imitate the random behaviour of the real world.
 Simulation 299
Advantages of simulation

The major advantage of simulation is that simulations theory 1s

.
forward.
relatively stralght
2. Simulation methods are easier to apply than analytical methods.
3. Simulation methods have few restrictions, there by allow much flexibility in
representing the real system.
4 Once a model is built it can be used
repeatedly to analyze different policles
parameters or designs.
5. Often leads to a better understanding of the real system.
6. Years of experience in the real system can be compressed into seconds or minutes.
7. Simulation does not disrupt ongoing activities of the real system.
8. Simulation is far more general than mathematical models.
9 Simulation can be used
game for training experience.
as a
10. This approach is suitable to analyze large and real life complex problems that
cannot be solved by quantitative methods.
11. In simulation model additional information can be added during analysis. Most
of the quantitative techniques do not allow adding additional information at the
time of analysis.
Limitations of Simulation
1. There is no guarantee that the model will, in fact, provide good answers.
2. There is no way to prove reliability.
3. Building a simulation model can take a great deal of time.
4. Simulation may be less accurate than mathematical analysis because it is
randomly based.
5. A significant amount of computer time may be needed to run complex models.
6. The technique of simulation still lacks a standardized approach.
7. The simulation model does not produce answers by itself. The user has to provide
all the constraints for the solution that he wants to examine.
8. Can be expensive and time consuming
9. Requires good managerial input
10. Results not generalizable to other situations
11.It is a trial-and-error approach that may produce different solutions in repeated
runs.
12. Managers must generate all of the conditions and constraints for solutions

they want to examine

Some Applications of Simulation
Ambulance location and dispatching
Bus scheduling
Assembly-line balancing
Design of library operations
Parking lot and harbour design
Taxi, truck, and railroad dispatching
300 Operations Research
Distribution system design
Production facility scheduling
Scheduling aircraft
Plant layout
Labour-hiring decisions
Capital investments
Personnel scheduling
Production scheduling
Tralic-light timing
Sales forecasting
Voting patterm prediction
Inventory planning and control
Stochastic Simulation Model
In simulation probability distributions are used to quantify the outcomes. A probable
vaue is assigned to each of the possible outcomes. A random varlable assigns a
number to the possible occurrence of each outcome. When a system contains certain
decision variables that can be represented by probability distribution, the simulation
model used to study this type of system is called stochastic or probabilistic simulation
model
Methods of simulation
Mainly there are two methods.
1. Monte Carlo Simulation
2. System simulation
Monte Carlo Simulation
This technique is also called computer simulation. It has a great impact in many
different fields of computational science. This technique derives its name from the
casinos in Monte Carlo. The Monte Carlo method was coined in the 1940s by John von
Neumann, Stanislaw Ulam and Nicholas Metropolis, while they were working on nuclear
weapon projects ([Manhattan Project) in the Los Alamos National Laboratory. It was
named after the Monte Carlo Casino, a famous casino where Ulam's uncle often
gambled
away his money. A Monte Carlo simulation uses random numbers to model some sort
of a process. This technique works particularly well when the process is one where
the underlying probabilities are known but the results are more dificult to determine.
The chance element is a significant feature of Monte Carlo simulation. This
technique
uses random number. It is generally used to solve
problems requiring decision making
under uncertainty. It is mainly used where mathematical formulation is impossible. It
is a technique used to understand the impact of risk and uncertainty is financial,
project management, cost and other forecasting models. This technique involves
conducting repetitive experiments on the model of the system under study. Monte
Carlo simulation technique consists of the following steps.
1. Define the problem: First of all we want to identify the problem and the main
 Simulation 301
factors which are to be considered.
2. Formulation of suitable model: While
following points are to be considered. constructing a suitable model, the
a. For this purpose the variables and
effectiveness are to be identifieed. parameters which influence the measure of
b. Formulate an appropriate decision rule.
C.
Necessary information is to be collected.
d. Set up
probability distribution for variables to be analyzed.
a
e. Build up a cumulative
3.
probability distribution for each random variable
Define the relationship between the variables
and parameters.
4. Generate random numbers and assign a n
to represent value or
aPpropriate set of random numbers
range of values for each random variable. Now a
random numbers a r e generated by using digital days
computers.
5. Conduct simulation experiment using random
sampling
6. Repeat step 6 until the required number of simulation runs has been
generated.
7. Design and implement a course of action and maintain control.

Random number generation

Monte Carlo simulation requires generauon o Tandom numbers that is a n essential
part of this simulation model. This sequence oI random numbers helps to select
random
observations or samples from the probability distribution. Random numbers refa
a u n i f o r m r a n d o m variable. It 1s n0t easy to generate r a n d o m n u m b e r s
to

Generally random numbers are generated with the help of

computer a

These numbers are called nseudo random numbers. Random numbers lieprogramme.
in between
O and 1.
While drawing random numbers from the random number table the starting noint
We an s
can
We c start
t a r t with any n
nunmber
u m b e r iin
on the table is immaterial. any column
u m n or row a
or row
column or r o w to the next number. and
proceed the s a m e
Consistent, unvaried pattern for selecting random numbers If random
in But we want
want
numbers
to follow
to follow
are
a

than o n e
concernea varlables then diffara
to be taken for more
used.
variable
should be
cach
problems
of inventory
S i m u l a t i o n
AVTl8
simulation
Advantages of Monte Carlo deterministic, or "single-
over
provides a number of advantages
Monte Carlo simulation
point estimate" analysis: but howlikelya
1. Probabilistic Results. Results show
not only what could happen,
each outcome is.
Carlo simulation is
is easy to
2. Graphical Results. Data generated by Monte This is
and their chances of
occurrence.
outcomes
create graphs of different
findings to other stakeholders.
important for communicating deterministic analysis makes it
few cases,
3. Sensitivity Analysis. With just
a

variables impact the outcome the most. In Monte Carlo

difficult to see which
effect on bottom-line
it's to see which inputs had the biggest
simulation, easy
results.
determninistic models, it's very difficult to
model different
4. Scenario Analysis. In
difierent
of values for different inputs to see the effects of truly
combinations
Carlo simulation, analysts can see exactly which inputs
scenarios. Using Monte
invaluable
values together when certain outcomes occurred. This is
had which
for pursuing further analysis. model
of Inputs. In Monte Carlo simulation, it's possible to
5, Correlation accuracy
between input variables. It's important for
interdependent relationships
 Simulation 311

when factors goes up, others go up or down

to represent how, in reality, some

accordingly. distributions
flexible. There is virtually no limit to the analysis. Empirical
6. Very
can be handled.
extended and developed as required.
7. Can generally be easily
non-mathematicians.
8. It iseasily understood by
Limitations

1. Usually requires a computer.

mnodels.
Calculations can take much longer than analytical used to
2 depend o n the number
of repeated runs

Solutions a r e not exact, but

3. are estimates.
statistics. That is, all outputs
produce the output
System simulation Method simulate,
to imitate, o r
for using computers
simulation is a set of techniques The computer is
Systems processes.
real-world facilities
or

of various kinds of complex

the operations the purposes of describing
numerical model of reality for from
used to generate
a
The complexity of the system surges
a system.
components of the i n t e r a c t i o n s
i n t e r a c t i o n among from the rules for
nature of the events, a s a whole
stochastic
(probabilistic)
the behaviour of the systems
the to perceive
elements, and
the difficulty
of the
of time.
with the passing