Advantage of modeling

Can be safer and cheaper than the real world.

Able to test a product or system works before building it.
Can use it to find unexpected problems.
Able to explore 'what if…' questions.
Can speed things up or slow them down to see changes over long or short periods of time.

Limitation of Simulation
 Mistakes may be made in the programming or rules of the simulation or model.
 The cost of a simulation model can be high.
 The cost of running several different simulations may be high.
Time may be needed to make sense of the results

CHAPTER 2. GENERATION OF RANDOM VARIABLE’S

2.1. What is random number?

A random number is a number generated using a large set of numbers and which gives equal
probability to all numbers occurring in the specified distribution. Random numbers are most
commonly produced with the help of a random number generator. Random numbers have
important applications, especially in cryptography where they act as ingredients in encryption
keys
2.2. Properties of random number.

A sequence of random numbers must have two important properties:

1. Uniformity, i.e. they are equally probable every where

2. independence, i.e. the current value of a random variable has no relation with the
previous values

 Each random number is an independent sample drawn from a continuous uniform

distribution between zero and one.

Pdf

Expectation

Variance
1
Page
  Some consequences of the uniformity and independence properties
1. If the interval (0,1) is divided into n sub-intervals of equal length, the expected
number of observations in each interval is N/n where N is the total number of
observations. Note that N has to be sufficiently large to show this trend.
2. The probability of observing a value in a particular interval is independent of the
previous values drawn

2.3. Advantage of generating Random Variables

Random numbers are at the foundations of computer simulation methods, not only to the
probabilistic methods. Random Numbers are widely used in various applications like
computer programs, cryptography, casino games, mobile applications like music players,
digital games like lottery, lotto etc. The development of quantum cryptography and quantum
information processing has given a new dimension to the applications using RNG's.

What Is a Random Variable?

A random variable is a variable whose value is unknown or a function that assigns values to
each of an experiment's outcomes. Random variables are often designated by letters and can be
classified as discrete (i.e which are variables that have specific values), or continuous (i.e which
are variables that can have any values within a continuous range).It is used to quantify outcomes
of random occurrences. Risk analysts use random variables to estimate the probability of an
adverse event occurring

2.4. Application of Random Numbers

Randomness has many uses in science, art, statistics, cryptography, gaming, gambling, and other
fields. These numbers are also very useful for a variety of purposes, such as generating data
encryption keys, simulating and modeling complex phenomena and for selecting random
samples from larger data sets. They have also been used aesthetically, for example in literature
and music, and are of course ever popular for games and gambling.

When discussing single numbers, a random number is one that is drawn from a set of possible
values, each of which is equally probable, i.e., a uniform distribution. When discussing a
sequence of random numbers, each number drawn must be statistically independent of the others.

With the advent of computers, programmers recognized the need for a means of introducing
randomness into a computer program. However, surprising as it may seem, it is difficult to get a
computer to do something by chance. A computer follows its instructions blindly and is therefore
completely predictable.
2
Page