Why simulation?

With simulation we here mainly refer to what is called dynamic (or discrete events) stochastic simulation. Stochastic implies that one can take uncertainty and risk into account. Dynamic implies the ability to follow processes in detail over time. This kind of simulation often requires many runs in order that one should be able to draw conclusions.

The main reason for our belief that such computer simulation is becoming an increasingly more important method is the extremely rapid development of computer technology. This development appears to follow what is called Moore's law: For a computer of a given price, there is a doubling in speed and capacity almost every 18 months. This implies that in two decades computers have become a thousand times more powerful. One can hence afford many more runs. While simulation was often earlier regarded as a method of last resort, it is now rather the first alternative method to try.

It should also be mentioned that dynamic simulation is completely impossible in Excel, without resorting to Visual Basic. For many tasks, like cash flow forecasting, a special simulation package, like aGPSS, is necessary