Simulation is defined as a method of simulating a real system or process that provides
management with an efficient and cost-effective way to understand and evaluate the operating
characteristics of a system.
The use of an air ambulance service by a regional medical center serves as an example of how
simulation can be included into the decision-making process. The medical facility in this case
must make decisions on the number of helicopters required, their location, the scheduling of the
flight crew, and other issues. It can be expensive to directly observe how an actual system
operates, and it can take a while to make experimental system modifications. At this point,
simulation turns into a perfect tool for using mathematical models to mimic system operation in
a virtual setting and assist management in making better decisions.
Another example is the use of simulations by investment firms to determine the best way to
distribute a portfolio in order to minimize risk and maximize returns. They may evaluate the
effects of various decisions on the portfolio without actually making investments by modeling
various market scenarios and investment methods, which boosts management's confidence in
risk management.
Reference:
James H. Macomber. Simulation - system, examples, model,
https://www.referenceforbusiness.com/management/Sc-Str/Simulation.html
type,
business.