When to Use Simulation

Simulation is a decision analysis and support tool.  Simulation software allows you to evaluate, compare and optimize alternative designs, plans and policies.  As such, it provides a tool for explaining and defending decisions to various stakeholders.

Simulation should be used when the consequences of a proposed action, plan or design cannot be directly and immediately observed (i.e., the consequences are delayed in time and/or dispersed in space) and/or it is simply impractical or prohibitively expensive to test the alternatives directly. For example, when implementing a strategic plan for a company, the impacts are likely to take months (or years) to materialize.

Simulation is particularly valuable when there is significant uncertainty regarding the outcome or consequences of a particular alternative under consideration.  Probabilistic simulation allows you deal with this uncertainty in a quantifiable way. 

Perhaps most importantly, simulation should be used when the system under consideration has complex interactions and requires the input from multiple disciplines.  In this case, it is difficult for any one person to easily understand the system.  A simulation model can act as the framework to integrate the various components in order to better understand their interactions. As such, it becomes a management tool that keeps you focused on the "big picture" without getting lost in unimportant details.

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