How do you use estimation method in the analysis of simulation output?

Explain in brief.

 To estimate means to find something close to the correct answer

 The estimate method gives the desired range of the sample variable taken
from infinite population.
 Estimation method in simulation output analysis is used for bias reduction
which can be achieved using point estimation and confidence interval.
Point Estimation
Point estimation is a statistical technique used to estimate the value of an unknown
population parameter based on a sample of data

Here are some of the most common point estimators:

 Mean: The average value of all the observations in the sample.

 Median: The middle value when the observations are arranged in order from
smallest to largest.
 Mode: The value that occurs most frequently in the sample.

 Let y1 , y2 ...yn be discrete time data with ordinary mean 𝜃, then point
estimator

 unbiased if its expected value is 𝜃 i.e. E(𝜃` )= 𝜃

 biased if E(𝜃` )≠ 𝜃 and
 Difference E(𝜃`) - 𝜃 is called bias of 𝜃` .
Confidence Interval:

 The confidence interval is the range of possible values for the parameter
based on a set of data
 confidence intervals measure the degree of uncertainty or certainty in a
sampling method
Confidence intervals are calculated using a variety of methods, depending on the
type of data and the parameter being estimated. One common method is to use the
normal distribution. If we assume that the data are normally distributed, we can use
the standard as:
Why do we perform the analysis of simulation output? Explain how you use
simulation run statistics in the output analysis.

Analysis of simulation output is a process of transforming the raw data generated

by a simulation model into meaningful information. The data is usually in the form
of a time series or a set of observations, which need to be interpreted in the context
of the simulation model

There are many reasons why we perform the analysis of simulation output. Some
of the most important reasons include:

 To validate the simulation model:

 To understand the behavior of the system
 To make decisions
 To learn about the system behavior in new situation

Simulation run statistics are often used in the output analysis. These statistics
provide information about the characteristics of the output, such as the mean,
median, standard deviation, and confidence intervals. The specific statistics that are
used will depend on the type of data and the research question.

For example, if the output is a time series, we might be interested in calculating the
mean waiting time in a queue. If the output is a set of observations, we might be
interested in calculating the proportion of observations that fall into a particular
category.

Simulation run statistics can be used to answer a variety of questions about the
simulation output. Some examples include:

 What is the average time it takes to process a customer in a queue?

 What is the proportion of customers who are satisfied with the service they
receive?
 What is the impact of a change in a system parameter on the output?
Define confidence interval and I.I.D in output analysis

I.I.D. stands for "independent and identically distributed." It is a term used in

statistics to describe a set of data that meets two conditions:

 The data points are independent of each other. This means that the value
of one data point does not affect the value of any other data points.
 The data points are identically distributed. This means that the data
points all come from the same population and have the same probability
distribution.
 A random variable is drawn from an infinite population that has a stationary
probability distribution with a finite mean μ and finite variance 𝜎 2.
 Random numbers that meet all these conditions are said to be IID
(Independently and Identically Distributed) variable for which the central
limit theorem can be applied.

How do you eliminate the effect of transient and initial bias in simulation
output?

Transient and initial bias are two common issues that can affect the accuracy of
simulation output. Transient bias occurs when the simulation model is not initially
in a steady state where as Initial bias occurs when the initial conditions of the
simulation model do not accurately reflect the state of the real system.

There are a number of ways to eliminate the effect of transient and initial bias in
simulation output. Some of the most common methods include:

 Ignore the initial bias occurred during the simulation run.

 The system should be started in a representative state than in the empty state.
Start the simulation in the empty state, then stop after initial bias and then
start again.
 Run the simulation for such a long period of time so that the initial bias has
no any significance in the output result.
Explain the replication of runs.

 Replication of run is used to obtain independent results by repeating the

simulation.
 For each replication of a small sample size, the sample mean is determined.
 The sample means of the independent runs can be further used to estimate
the variance of distribution.
 This variance can further be used in established confidence interval for (𝑝 −
1) degree of freedom.

Markov Chain
 A Markov chain or Markov process is a stochastic model describing a
sequence of possible events in which the probability of each event depends
only on the current state attained in the previous event.
 A Markov chain is a discrete-time process for which the future behavior,
given the past and the present, only depends on the present and not on the
past.
 It's like a game where you're in a specific situation, and what happens next
only depends on your current situation, not on how you got there.
 Markov chains have many applications in various fields, including
economics, biology, computer science, and more.
 A Markov chain consists of state and transition probabilities.
 Each transition probabilities is the probability of moving from one state to
another in one step.
Let's illustrate using rainy days example. The probabilities for the system might
be:
 If it rains today (R), then there is a 40% chance it will rain tomorrow
and 60% chance of no rain.
 If it doesn't rain today (N), then there is a 20% chance it will rain
tomorrow and 80% chance of no rain.