Simulations
Reference model
Simulation moves from a defined question to a model, to scenario runs, to a decision that is then checked in practice.
About this model
A business simulation builds a simplified model of a process or market, changes the key variables in a set of defined scenarios, and compares the modelled outcomes against a baseline and a target. It is used to test decisions before they are implemented and to see which assumptions matter most.
Originator not stated.
How to read it
- Start with the question and the baseline, then list the variables and assumptions the model depends on.
- Each scenario changes one or more variables and records the simulated outcome and its cost.
- Compare uplift against the target and weigh it against cost and confidence in the model.
- Treat the result as a guide for a pilot, and feed what you learn back into the model.
What this does
Simulations let a team test a decision on a simplified model of the business before committing money or effort. They show which option is likely to deliver the target result and how sure the team can be of that.
When to use it
Use simulations when the outcome depends on several uncertain variables and trying the options for real would be costly, slow or hard to reverse.
Not when: Do not use simulations when the answer is obvious, when you have no data to ground the assumptions, or when a quick low-cost pilot would teach you more than a model.
What happens next
Turn the best-performing scenarios into a small real-world pilot, and use the pilot results to correct the model's assumptions before a full rollout.
Golden thread
Builds on ←
- Problem statement
- Objective setting
- Scenario planning
Feeds into →
- Pilot or test
- Action plan
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Drafted with AI and reviewed by Eccellere on 04/11/2026. Guidance, not advice: apply your own judgement.