A Differences Way of Analyzing Simulation Results


  • Richard Teach
  • Elizabeth Tipton


This paper presents the advantages of using a simulation?s results or output statements as the primary source of information for making input decisions for the ensuing periods. This methodology uses difference equations, using the changes in variables from period to period. Economists tell us to do marginal analysis to better understand the relationship between input decisions such as price, promotion, etc. and the results of these decision. Then they use differential equations to equalize the rates of change between decision inputs and the resulting outputs. However, the seen to never explain how to determine the needed functions from which to determine the derivatives! As a result the needed differential equations are impossible. Thus, difference equations are an approached of attempting to equalizing the marginal rates of return for many decision variables in business simulations.