1. What is Simulation?
Simulation is a tool that characterizes a system and provides a means for evaluating potential results depending on changes in environmental variables. It is a proven methodology that incorporates resources, business rules, workload, assumptions, and other characteristics of a process into one model.
Once the simulation of a solution has been conducted and the outcomes evaluated, decisions can be made. These decisions, based on quantitative information extracted from simulation models, involve determining and selecting a future course of action that will have the highest probability of achieving the desired result. As such, simulation tools are critical in enabling us to understand problems and are widely used in operational research as a means to identify opportunities for change and evaluate the impact of the proposed changes on key performance indicators.
2. How does Shopee use Simulation?
As an e-commerce company, Shopee is able to use real assumptions to build a simulation model that captures our customers’ online shopping behavior and patterns. Simulation is suitable for analyzing sales income dynamics, as well as other key business-oriented performance metrics. Such analyses are tremendously valuable for Shopee’s management teams as they help to inform the company’s policies and strategic plans.
3. What are some of the latest Simulation solutions in the market?
The constructive approach allows for a more detailed analysis of system statistics. The queueing formula, on the other hand, may be limited to a prediction of the mean. In a simulation model, it is possible to observe the variability of responses and the relationship between different statistics.
In my view, this is just a glimpse of the potential of Simulation. It is becoming widely regarded in the tech community that analytics and simulation should work in tandem. Simulation is able to generate detailed data that can be mined for insights using analytical tools.
The 2015 Winter Simulation Conference recognized this important connection with its theme: “Exploring Big Data through Simulation.”
Once a valid and credible model has been built, it can be used for experimentation and optimization. Many simulation tools have the capability of generating experimental results automatically. They are sometimes called scenario generators or experiments as users can specify the parameter values that are to be run and the complete set of replications can be performed automatically, with the results available in a group. The results can then be compared graphically and statistically. In some cases, the results can be exported for a more detailed analysis using statistical software. Optimization is an important use of simulation as optimizers such as OptQuest usually use heuristic approaches (e.g., Tabu search) that seem to work well when assumptions about the simulation responses are more limited.
Optimization is used when the possible scenarios are too numerous to compare directly, so an algorithm is used to search among the parameter values and obtain improved responses. Several products have the ability to perform a sensitivity analysis on a model scenario, given the uncertainty in the model parameters. This can be used to determine the parameters that the responses are most sensitive to.
The range and variety of these products continue to grow, reflecting the robustness of the products and the increasing sophistication of their users. Most of the new simulation tools provide experimental design and automated scenario-run capabilities, with some of them also providing special features, including the ability to produce animations or demonstrations that can run independent of the simulation software itself.
There are a number of technical and professional organizations and conferences devoted to the application and methodology of simulation. The INFORMS journals published by the Institute for Operations Research and the Management Sciences, regularly include articles on simulation. The INFORMS Simulation Society also sponsors simulation sessions at the national INFORMS meeting and gives out awards for both the best simulation publication and recognition of service in the field, such as the Lifetime Achievement Award for service to the area of simulation.
4. How do recent advancements in Simulation impact businesses? How can businesses benefit from them?
Businesses like Shopee seek to acquire knowledge and make informed decisions regarding real-world systems, such as Shopee’s e-commerce business. However, most of the time, it is not easy to study the system directly. We, therefore, adopt an indirect approach by creating and studying another entity - the simulation model - which is similar enough to the real-world system that we are confident what we learn from the model will also be true of the system.
Virtually all performance criteria can be examined with simulation models. Typical performance criteria for Shopee include user traffic, conversion rate, and resource utilization. Since simulation models mimic the actual process’ response to events happening over time, it is a reliable tool in depicting and forecasting a reality.
It is also apparent that a lack of simulation models contributes to the failure of business projects. This is because simulation models have the ability to evaluate the effects of design solutions before implementation, therefore minimizing mistakes and reducing costs brought about by wrong business decisions.