CHAPTER 2

SYSTEM SIMULATION

SIMULATION MODELING BY DESALEGN MESFIN (Capt.) 1

Simulation:- is the imitation of some real things, state of affairs or
process.
System simulation :- it is a set of techniques for using computers to
imitate for simulate the operations of varies kinds of real world
facilities or processes.
Monte Carlo simulation method
• It is a problem solving technique used to approximate the
probability of certain outcomes by running multiple trial runs,
called simulation using random variables.
• It is also a technique used to understand the impact of risk and
uncertainty in financial, project management, cost, and other
forecasting model.
• It can be applied in deterministic model using sets of random
numbers as inputs.
• Consists of experimental sampling with random numbers.
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Example: the integral of single variable over a given range corresponds to finding the area
under the graph representing the function.
a∫ f(x)
b

rejected
c accepted
f(x)

a b

If we pick points at random with in the rectangle and determine whether they lie between the
curve or not, the fraction points falling on or below the curve should be approximately the ratio
of the area under the curve to the area of the rectangle.
• If N points are used and n of them fall under the curve, then, approximately,

∫b
n = a f(x)dx
N c(b-a)
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 Distributed Lag Models
• Models that have the properties changing only at fixed
intervals of time, and of basing current values of the
variables on other current values and values that
occurred in previous intervals.
• They are used extensively in economic studies where the
uniform steps corresponds to a time interval, such as a
month or a year, over which some economic data are
collected.
• They represent a continuous system, but one in which
the data is only available at fixed points in time.
Example:-

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 Process of system simulation
Step 1. problem formulation / problem definition: statement
of the problem
Step 2. setting of objectives and over all project plan
objectives indicate the questions to be answered by
the simulation.
project plan:- a statement of the alternative system.
Step 3. model conceptualization
− It is to enrich and elaborate the model until useful
approximation results.
− It is to select and modify basic assumption that characterize
the system.
− It is to abstract the essential feature of a problem.
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Step 4. Data collection
Step 5. model transaction
− Information storage and computation
− Programming (model must be entered into a
computer recognizable format)
Step 6. Verification:- program Vs model
– “Are we building the model right”
– Is the model programmed correctly.
Step 7. Validation:- model Vs real system
– “Are we building the right model”
– Is the model an accurate representation of the real
system.
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Step 8. Production runs and analysis
− It is used to estimate measure of performance for the
system.
Step 9. More runs
Step 10. Documentation and reporting
Step 11. Implementation.