CHAPTER

1
BASIC
SIMULATION
MODELING

Recommended sections for a first reading: 1.1 through 1.4, 1.7, 1.9

1.1 THE NATURE OF SIMULATION

This is a book about techniques for using computers to imitate, or simulate, the
operations of various kinds of real-world facilities or processes. The facility or
process of interest is usually called a system, and in order to study it
scientifically we often have to make a set of assumptions about how it works.
These assumptions, which usually take the form of mathematical or logical
relationships, constitute a model that is used to try to gain some understanding
of how the corresponding system behaves.
If the relationships that compose the model are simple enough, it may be
possible to use mathematical methods (such as algebra, calculus, or probability
theory) to obtain exact information on questions of interest ; this is called an
analytic solution . However, most real-world systems are too complex to allow
realistic models to be evaluated analytically, and these models must be studied
by means of simulation. In a simulation we use a computer to evaluate a model
numerically, and data are gathered in order to estimate the desired true
characteristics of the model.

1
2 SIMULATION MODELING AND ANALYSIS

As an example of the use of simulation, consider a manufacturing firm

that is contemplating building a large extension onto one of its plants but is not
sure if the potential gain in productivity would justify the construction cost. It
certainly would not be cost-effective to build the extension and then remove it
later if it does not work out. However, a careful simulation study could shed
some light on the question by simulating the operation of the plant as it
currently exists and as it would be if the plant were expanded.
Application areas for simulation are numerous and diverse. Below is a list
of some particular kinds of problems for which simulation has been found to be
a useful and powerful tool:

• Designing and analyzing manufacturing systems

• Evaluating hardware and software requirements for a computer system
• Evaluating a new military weapons system or tactic ;'// l
• Determining ordering policies for an inventory system
• Designing communications systems and message protocols for them
• Designing and operating transportation facilities such as freeways, airports,
subways, or ports
• Evaluating designs for service organizations such as hospitals, post offices, or
fast -food restaurants
• Analyzing financial or economic systems

As a technique, simulation is one of the most widely used in operations

research and management science. In a survey of graduates of the Department
of Operations Research at Case Western Reserve University (one of the first
departments of this type), Rasmussen and George (1978) found that among
M.S. graduates, simulation ranked fifth among some fifteen subject areas in
terms of its value after graduation (behind what they called "statistical
methods," "forecasting," "systems analysis," and "information systems," all of
which may arguably be outside the realm of operations research and manage-
ment science). Among Ph.D. graduates, simulation tied (with linear program-
ming) for second (behind "statistical methods"). Thomas and DaCosta (1979),
in a survey of a different type , asked some 137 large firms to indicate which of
fourteen techniques they used , and simulation came in second, with 84 percent
of the firms responding that they used it (what they termed "statistical
analysis" came in first in this survey, with 93 percent). The members of the
Operations Research Division of the American Institute of Industrial En-
gineers were surveyed by Shannon, Long, and Buckles (1980), who reported
that simulation ranked second in "familiarity" (just behind linear program-
ming) , but first in terms of utility and interest, among some twelve
methodologies. Forgionne (1983) and Harpell, Lane, and Mansour (1989) also
reported that simulation ranked second in utilization (again behind "statistical
analysis" only) among eight tools in a survey of large corporations. All of these
 BASIC SIMULATION MODELING 3

surveys are by now several years old , and we can ass ume that simulation's
va lue and usage have since increased, due to improvements in computing
power and in simulation software, as discussed below . . t.
There have been , however , several impedimeritf" to even wider accept-
ance and usefulness of simulation. First, models used to study large-scale
systems tend to be very complex, and writing computer programs to execute
them can be an ardaOifs task indeed. This task has been eased in recent years
by the development of excellent software products that automatically provide
many of the features needed to code a simulation model. A second problem
with simulation of complex systems is that a large amount of computer time is
often required. However, this difficulty is becoming less severe as the cost of \_'
computing continues to fall . Finally, there appears to be an unfortunate
impression that simulation is just an exercise in computer programming, albeit
a complicated one. Consequently , many simulation " studies" have been com-
posed of heuristic model building, coding, and a single run of the program to
obtain "the answer. " We fear that this attitude, which neglects the important
issue of how a properly coded model should be used to make inferences about
the system of interest , has doubtless led to erroneous conclusions being drawn
from many simulation studies. These questions of simulation methodology,
which are largely independent of the software and hardware used, form an
integral part of the latter chapters of this book.
. In the remainder of this chapter (as well as in Chap. 2) we discuss systems
and models in considerably more detail and then show how to write computer
programs to simulate systems of varying degrees of complexity.

1.2 SYSTEMS, MODELS, AND SIMULATION

A system is defined to be a collection of entities , e.g., people or machines , that
act and interact together toward the accomplishment of some logical end. [This
definition was proposed by Schmidt and Taylor (1970).] In practice, what is
meant by " the system" depends on the objecti ves of a particular study. The
collection of entities that compose a system fo r one study might be onl y a
subset of the overall system for another. For example, if one wants to study a
bank to determine the number of tellers needed to provide adequate service
for customers who want just to cash a check or make a savings deposit , the
system can be defined to be that portion of the bank consisting of the tellers
and the customers waiting in line or being served. If, on the other hand, the
loan officer and the safety deposit boxes are to be included , the definition of
the system must be expanded in an obvious way. [See also Fishman (1978 , p .
3). ] We define the state of a system to be that collection of variables necessary
to describe a system at a particular time , relative to the objectives of a study.
In a study of a bank , examples of possible state variables are the number of
busy tellers, the number of customers in the bank, and the time of arrival of
each customer in the bank.
4 SIMULATION MODELING AND ANALYSIS

We categorize systems to be of two types, discrete and· continuous . A

discrete system is one for which the state variables change instantaneously at
separated points in time . A bank is an example of a discrete system , since state
variables--e .g., the number of customers in the bank--<:hange only when a
customer arrives or when a customer finishes being served and departs . A
continuous system is one for which the state variables change continuously with
respect to time. An airplane moving through the air is an example of a
continuous system , since state variables such as position and velocity can
change continuously with respect to time . Few systems in practice are wholly
discrete or wholly continuous, but since one type of change predominates for
most systems, it will usually be possible to classify a system as being either
discrete or continuous.
At some point in the lives of most systems, there is a need to study them
to try to gain some insight into the relationships among various components, or
to predict performance under some new conditions being considered. Figure
1. 1 maps out different ways in which a system might be studied .

• Experiment with the Actual System vs . Experiment with a Model of the

System: If it is possible (and cost-effective) to alter the system physically and
then let it operate under the new conditions, it is probably desirable to do
so, for in this case there is no question about whether what we study is

Experiment Experiment
with the wilt! a model
actuaJ system of the syslCm

Physica1 Mathematical
model model

Analytical Simulation
solution

FIGURE 1.1
Ways to study a system.
 BASIC SIMULATION MODELING 5

relevant. However, it is rarely feasible to do this , because such an experi-

ment would often be too costly or too disruptive to the system. For example ,
a bank may be contemplating reducing the number of tellers to decrease
costs, but actually trying this could lead to long customer delays and
alienation. More graphically, the . "system" might not even exist , but we
nevertheless want to study it in its various proposed alternative configura-
tions to see how it should be built in the first place ; examples of this situation
might be modern flexible manufacturing facilities, or strategic nuclear
weapons systems. For these reasons, it is usually necessary to build amodel
as a representation of the system and study it as a surrogate for the actual
system. When using a model , there is always the question of whether it
accurately reflects the system for the purposes of the decisions to be made;
this question of model validity is taken up in detail in Chap. 5 .
• Physical Model vs. Mathematical Model : To most people, the word "model"
evokes images of clay cars in wind tunnels , cockpits disconnected from their
airplanes to be used in pilot training, or miniature supertankers scurrying
about in a swimming pool. These are examples of physical models (also
called iconic models) , and are not typical of the kinds of models that are
usually of interest in operations research and systems analysis. Occasionally,
however, it has been found useful to build physical models to study
engineering or management systems; examples include tabletop scale models
of material-handling systems, and in at least one case a full-scale physical
model of a fast-food restaurant inside a warehouse, complete with full-scale ,
real (and presumably hungry) humans [see Swart and Donno (1981)]. But
the vast majority of models built for such purposes are mathematical,
representing a system in terms of logical and quantitative relationships that
are then manipulated and changed to see how the model reacts, and thus
how the system would react-if the mathematical model is a valid one.
Perhaps the simplest example of a mathematical model is the familiar
relation d = rt, where r is the rate of travel , t is the time spent traveling, and
d is the distance traveled . This might provide a valid model in one instance
(e .g., a space probe to another planet after it has attained its flight velocity)
but a very poor model for other purposes (e .g., rush-hour commuting on
congested urban freeways) .
• Analytical Solution vs. Simulation: Once we have built a mathematical
model, it must then be examined to see how it can be used to answer the
questions of interest about the system it is supposed to represent. If the
model is simple enough , it may be possible to work with its relationships and
quantities to get an exact, analytical solution. In the d = rt example, if we
know the distance to be traveled and the velocity , then we can work with the
model to get t = d l r as the time that will be required. This is a very simple, ·
closed-form solution obtainable with just paper and pencil, but some analyti-
cal solutions can become extraordinarily complex , requiring vast computing
6 SIMULATION MODELING AND ANALYSIS

resources; inverting a large nonsparse matrix is a well-known example of a

situation in which there is an analytical formula known in principle, but
obtaining it numerically in a given instance is far from trivial. If an analytical
solution to a mathematical model is available and is computationally effi-
cient, it is usually desirable to study the model in this way rather than via a
simulation . However, many systems are highly complex, so that valid
mathematical models of them are themselves complex, precluding any
possibility of an analytical solution . In this case, the model must be studied
by means of simulation, i.e. , numerically exercising the model for the inputs
in question to see how they affect the output measures of performance.

While there may be an element of truth to pejorative old saws such as " method
of last resort" sometimes used to describe simulation , the fact is that we are
very quickly led to simulation in many situations, due to the sheer complexity
of the systems of interest and of the models necessary to represent them in a
valid way.
Given, then, that we have a mathematical model to be studied by means
of simulation (henceforth referred to as a simulation model), we must then
look for particular tools to do this . It is useful for this purpose to classify
simulation models along three different dimensions:

• Static vs. Dynamic Simulation Models: A static simulation model is a

representation of a system at a particular time, or one that may be used to
represent a system in which time simply plays no role; examples of static
simulations are Monte Carlo models , discussed in Sec. l.8 .3. On the other
hand, a dynamic simulation model represents a system as it evolves over
time, such as a conveyor system in a factory.
• Deterministic vs. Stochastic Simulation Models: If a simulation model does
not contain any probabilistic (i .e., random) components, it is called de-
terministic ; a complicated (and analytically intractable) system of differential
equations describing a chemical reaction might be such a model. In de-
terministic models, the output is "determined" once the set of input quan-
tities and relationships in the model have been specified, even though it
might take a lot of computer time to evaluate what it is. Many systems,
however, must be modeled as having at least some random input compo-
nents, and these give rise to stochastic simulation models. (For an example
of the danger of ignoring randomness in modeling a system, see Sec. 4.7 .)
Most queueing and inventory systems are modeled stochastically. Stochastic
simulation models produce output that is itself random , and must therefore
be treated as only an estimate of the true characteristics of the model; this is
one of the main disadvantages of simulation (see Sec. l.9) and is dealt with
in Chaps. 9 through 12 of this book.
• Continuous vs. Discrete Simulation Models: Loosely speaking, we define
discrete and continuous simulation models analogously to the way discrete
 BASIC SIMULATION MO DELING 7

and continuous systems were defined above. More precise definitions of

discrete (event) simulation and continuous simulation are given in Secs. 1.3
and 1.8, respectively. It should be mentioned that a discrete model is not
always used to model a discrete system and vice versa. The decision whether
to use a discrete or a continuous model for a particular system depends on
the specific objectives of the study. For example, a model of traffic flow on a
freeway would be discrete if the characteristics and movement of individual
cars are important. A lternatively, if the cars can be treated "in the aggre-
gate," the flow of traffic can be described by differential equations in a
continuous model. More discussion on this issue can be found in Sec. 5.2,
and in particular in Example 5.1.

The simulation models we consider in the remainder of this book , except

for those in Sec. 1.8, will be discrete, dynamic, and stochastic and will
henceforth be called discrete-event simulation models . (Since deterministic
models are a special case of stochastic models, the restriction to stochastic
models involves no loss of generality.)

1.3 DISCRETE-EVENT SIMULATION

Discrete-event simulation concerns the modeling of a system as it evolves over
time by a representation in which the state variables change instantaneously at
separate points in time. (In more mathematical terms, we might say that the
system can change at only a countable number of points in time.) These points
in time are the ones at which an event occurs, where an event is defined as an
instantaneous occurrence that may change the state of the system . Although
discrete-event simulation could conceptually be done by hand calculations , the
amount of data that must be stored and manipulated for most real-world
systems dictates that discrete-event simulations be done on a digital computer.
(In Sec. 1.4.2 we carry out a small hand simulation, merely to illustrate the
logic involved .)

Example 1.1. Consider a service facility with a single server---e.g. , a one·operator

barbershop or an information desk at an airport-for which we would like to
estimate the (expected) average delay in queue (line) of arriving customers,
where the delay in queue of a customer is the length of the time interval from the
instant of his arrival at the facility to the instant he begins being served. For the
objective of estimating the average delay of a customer, the state variables for a
discrete·event simulation model of the facility would be the status of the server ,
i. e., either idle or busy, the number of customers waiting in queue to be served (if
any), and the time of arrival of each person waiting in queue. The status of the
server is needed to determine, upon a customer's arrival , whether the customer
can be served immediately or must join the end of the queue. When the server
completes serving a customer, the number of customers in the queue is used to
determine whether the server will become idle or begin serving the first customer
in the queue. The time of arrival of a customer is needed to compute his delay in