Lecture C1 (2021-09-09): Basic Simulation Tools and Techniques

In this lecture, we discuss more sophisticated dynamical simulation models that can be implemented within spreadsheets. We start with a review of the M/M/1 single-channel, single-server queueing node and then show how more explicit state variables can be introduced in an M/M/2 version (i.e., with two servers). We then discuss two different popular inventory management models (implemented within a spreadsheet) -- the "Order-up-to (M,N)" model as well as the "newsvendor (single-period/perishable) model". We close with some discussion of Monte Carlo methods -- which apply simulation techniques as numerical methods to solve mathematical problems that might otherwise be intractable analytically. Despite all of these examples of the power of spreadsheets, we end with a hint that much more is possible in terms of simulation of complex systems if we use specialized simulation tools. We will introduce some of those more specialized tools starting in the next lecture.