Major Characteristics of Simulation
Simulation is a specialized type of modeling tool. Most models represent or abstract reality, while simulation models usually try to imitate reality. In practical terms, this means that there are fewer simplifications of reality in simulation models than in other quantitative models. Simulation models are generally complex.
Second, simulation is a technique for performing "What-If" analysis over multiple time periods or events. Therefore, simulation involves the testing of specific values of the decision or uncontrollable variables in the model and observing the impact on the output variables.
Simulation is a descriptive tool that can be used for prediction. A simulation describes and sometimes predicts the characteristics of a given system under different circumstances. Once these characteristics are known, alternative actions can be selected. The simulation process often consists of the repetition of a test or experiment many times to obtain an estimate of the overall effect of certain actions on the system.
Finally, simulation is usually needed when the problem under investigation is too complex to be evaluated using optimization models. Complexity means that the problem cannot be formulated for optimization because assumptions do not hold or because the optimization formulation is too large and complex.