On‐line macro‐simulation in systems for logistics decision making

Macro‐simulation has three types of application: 1. Computer experimentation with simplified models of complex systems to explore the systems' sensitivity to variation in environmental parameters or changes in controllable decision variables. This use of macro‐simulation facilitates analysis of the realism of the various models as well as determination of optimal strategies. 2. Pilot testing of complex decision systems against a detailed quantitative description of the real operating environment as observed in the past. 3. Continuing on‐line simulation of a system over a future planning period to determine optimal levels or settings for current decision variables or to provide measures of effectiveness for feedback and control. While the first two applications are most familiar and are most frequent, the third application may have increasing importance in the future. The reasons for this will be discussed with illustrations from work at Stanford Research Institute on stock level policy and on air logistics. All three applications of macro‐simulation techniques have proved important in this work.