Simulation Modeling H

Simulation Modeling H - SimulationModelingwith...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
  1              Click to edit Master subtitle style Simulation Modeling with  Built-in Excel Tools
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  2              Announcements To download the @Risk software to your computer:  http://www.palisade.com/bookdownloads/johanns/ Computer Lab on Monday. 
Background image of page 2
  3              Simulation Model  A simulation model is a  computer model  that imitates  a real-life  situation. Like other decision models, it has  parameters  (uncontroll-able  inputs),  decision variables  (controllable inputs), and  outputs   (objective, consequences, etc.) Simulation model incorporates  uncertainty  in one or more  parameters (uncontrollable inputs)  Simulatio n Model Paramete rs Decision Variables Objective Consequ ences Determined by  decision-maker Some of them are  random inputs Probability and  statistics Spreadsheet
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  4              How Does Spreadsheet Simulation Model Work? We begin with input variables and then relate them with  appropriate Excel formulas to output variables of interest. Simulation uses random numbers, which represent uncertain  parameters, to drive the whole simulation process. Random numbers are generated with pre-specified probability  distribution functions.  Each time the spreadsheet recalculates, all of the random numbers  change, which simulates the real process once and generates one  scenario.
Background image of page 4
  5              Real Applications of Simulation Kodak, and United Airlines, to name a few) have used  simulation to determine which of several possible investment  projects they should choose. Simulation can help answer questions such as: Ø Which project is the riskiest? Ø What is the probability that an investment will yield at least  a 20% return? Ø
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
  6              Examples of Simulation Models A simulation model was used by Merck, the world’s largest  drug company, to determine whether Merck should pay $6.6  billion to acquire Medco, a mail-order drug company. A simulation model was developed to estimate the risk of  accidents involving oil tankers in the Prince William Sound  area of Alaska, the region where the Exxon Valdez ran  aground in 1989.  Simulation models have been developed to investigate various types of behavior of supply chain system. Simulation stands  the best chance of being able to cope with the huge 
Background image of page 6
  7              Advantage and Benefit of Simulation Models It shows an entire distribution of results, not simply a single  bottom-line result. Each different set of values for the uncertain inputs can be 
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/31/2011 for the course MGMT 306 taught by Professor Staff during the Fall '08 term at Purdue University.

Page1 / 54

Simulation Modeling H - SimulationModelingwith...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online