A simulation model is a computer model that imitates a real-life situation. They are useful for determining how sensitive a system is to changes in operating conditions. A benefit of computer simulations is that it enables us to answer what-if questions without actually changing a physical system. Simulation models are useful for determining how sensitive a system is to changes in operating conditions. A benefit of computer simulations is that it enables us to answer what-if questions without actually changing a physical system.
Spreadsheet simulation modeling is quite similar to other modeling applications. The main difference is that simulation models decision making scenarios where at least one input parameter is a random variable. These random processes are typically too complex to be solved by analytical methods. Among the advantages of simulation is the ability to gain insights into the model solution which may be impossible to attain through other techniques. Once the simulation has been developed, it provides a convenient experimental laboratory to perform “what if” and sensitivity analysis.
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