Simulation (Operations)

Validation: Validation of a simulation model should be carried on throughout the study or if for training at least periodically. Conversations with experts and decision makers, observations of the system, and simple common sense about how the components of a system operate will help in developing a model with high validity. The assumptions of the model should also be tested empirically. For example, if a theoretical probability distribution is a fit for a random variable, such as repair time, then statistical tests can be used to determine the adequacy of the fit. Under some assumptions, the results for system performance can be derived analytically or by manual computation. These results can then be checked against the simulation results. Sensitivity analysis will help in identifying the sensitivity of the output to changes in the values of various inputs. These changes should make qualitative sense; the direction of the change and its magnitude should be within a hypothesized range.

Finally, the output of the simulation can be compared with the observed output of the real system. The prediction of the model should be tested against the actual performance of the system.

Good documentation of the assumptions, the model, and the computer program is essential for the continued use of a simulation program. Good documentation permits the use of the simulation by different people in the organization, and it makes it easy to use the simulation model, with appropriate modifications, for other similar applications.

Finally, the intended purpose of the simulation is achieved only if the results are implemented. In some situations, simulation results provide insights for decision making and are not directly implement able. A subjective assessment of the decision makers as to whether they found the simulation results useful should be sought. Fortunately, simulation results have been used in numerous applications, and organizations have indeed found this technique quite useful.

Simulation has been used for a wide variety of applications in production and operations that range from assembly line scheduling to factory design. The various uses of simulation can be grouped into three broad categories:

1. Design
2. Diagnosis
3. Training

A large number of simulation studies fall into the design category, in which alternative system designs (or policies) are evaluated with respect to a specified measure of system performance. Examples include the evaluation of inventory policies, bank teller scheduling, distribution system design, and ambulance location and dispatching.

In some situations, simulation is used to study the behavior of systems under alternative conditions. The intent is not to evaluate alternative policies but merely to diagnose the potential problems that may arise. The diagnostic use of simulation is, particularly important for newly installed systems where little experience has been gathered. Simulation can provide managers with insights into the workings of the system that might otherwise require several years to develop. In addition, potential problems that might arise under some specified future conditions can be identified.

Finally, simulation can be used as a tool for training users to perform their tasks effectively. Flight simulators for training pilots have been available for a long time. Recently, “decision simulators” have been developed that provide an interactive visual stimulation of an actual decision-making scenario. The decision maker or user can test the implications of his or her decisions by experimenting with the decision simulator. Immediate feedback accelerates the learning process, and a user can be trained in a short period of time to make decisions that enhance corporate profitability that might otherwise take years of on the job experience. Lembersky and Chi (1984) developed a decision simulator that allows operators to test different cross-cutting and log-allocating decisions for economic value. This decision simulator was implemented at the Weyerhaeuser Company in 1977, and it continues to yield multimillion-dollar annual profit increases to the company.