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.