Model construction, Managerial Accounting

Model Construction

The success of a simulation exercise is related to the predictive quality of the underlying model, so that considerable care should be taken with model construction. Significant factors in model development are:

Object oriented: The model must be constructed with some definite reason and the model results should be directly associated to this purpose.

Critical variables and relationships: Model building is an iterative, creative procedure with the aim of recognizing those variables and relationships that should be included in the model.

Simplicity: The most excellent model is the simplest which has sufficient predictive qualities.

Management involvement: To construct good models these must be a thorough understanding of actual operations. Only management here these knowledge so that they must be involved.

Posted Date: 12/6/2012 7:44:41 AM | Location : United States







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