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Decision Models –
Lecture Wk6-1
• Instructor – Dr Qiang
Li
Winter 2024
February 12/13,
2024
Introduction to Simulation
• Motivation
• Introduction to simulation
• Computer mathematical
Presented by simulation uses a computer to imitate/replicate the
First Name Last Name
operation of an entire process or system with a mathematical model, for
example:
• risk analysis on financial processes by repeatedly imitating the evolution of the transactions
involved to generate a profile of possible outcomes
• queuing systems
• design and operation of manufacturing/distribution systems
Modelling Business Decisions
• You may also know the distribution for how many items
customers purchase and the amount spent
• Deterministic vs Probabilistic
• Is everything certain (deterministic), or is there
uncertainty (probabilistic)?
• Monte Carlo technique commonly used for probabilistic
simulation
• Static vs Dynamic
• Does time have a role in model?
Monte Carlo Simulation Process
Probability Cumulative
Distribution Distribution