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ONLINE FILE W12.6
SIMULATION
FOR
DECISION MAKING
Simulation has many meanings. In general, to simulate means to assume the appearance of characteristics of reality. In DSSs, simulation generally refers to a technique
for conducting experiments (such as “what-if”) with a computer on a model of a
management system.
Because a DSS deals with semistructured or unstructured situations, it involves
complex reality, which may not be easily analyzed by optimization or other standard
models but often can be handled by simulation. Therefore, simulation is one of the
most frequently used tools for decision support. For example, simulation is increasingly part of the decision support tools used in the airline industry for short-term
decision making (Adelantado, 2004; Chong et al., 2003).
MAJOR
CHARACTERISTICS
To begin, simulation is not a regular type of model. Models in general represent
reality, whereas simulation usually imitates it closely. In practical terms, this means
that fewer simplifications of reality are needed in simulation models than in other
models.
Second, simulation is a technique for conducting experiments, especially “whatif” ones. As such, it can describe or predict the characteristics of a given system
under different circumstances. Once the characteristics’ values are computed, the
best among several alternatives can be selected. The simulation process often consists of the repetition of an experiment many, many times to obtain an estimate of
the overall effect of certain actions. It can be executed manually in some cases, but
a computer is usually needed. Simulation can be used for complex decision making,
as illustrated in an application of an automated underground freight transport system (Heijden, 2002).
Advantages of Simulation. Simulation is used for decision support because it:
• Allows for inclusion of the real-life complexities of problems. Only a few simplifications are necessary. For example, simulation may utilize the real-life probability distributions rather than approximate theoretical distributions.
• Is descriptive. This allows the manager to ask what-if type questions. Thus, managers who employ a trial-and-error approach to problem solving can do it faster
and cheaper, with less risk, using a simulated problem instead of a real one.
• Can handle an extremely wide variation in problem types, such as inventory and
staffing, as well as higher managerial-level tasks like long-range planning. Further,
the manager can experiment with different variables to determine which are
important, and with different alternatives to determine which is best.
• Can show the effect of compressing time, giving the manager in a matter of minutes some feel as to the long-term effects of various policies.
• Can be conducted from anywhere, using Web tools on the corporate portal or
extranet.
Of the various types of simulation, the most comprehensive is visual interactive simulation (see Chapter 11), which allows managers to interact with an analysis while it
is in progress, making desired changes and manipulations.
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References for Online File W12.6
Adelantado, M., “Rapid Prototyping of Airport Advanced Operational
Systems and Procedures Through Distributed Simulation,” Simulation:
Transactions of the Society for Modeling and Simulation International,
80(1), January 2004.
Chong, K. I., et al., “A Simulation-Enabled DSS for Allocating CheckIn Agents,” INFOR, 41(3), August 2003.