Using Spatial Relationships to Estimate Demand in Business Simulations

Abstract

This paper presents an additional, approach to modeling and simulation that combines the economic factors with a set of physical, product characteristics factors to determine the allocation of demand to the competing firms. The product characteristics are modeled using a growth flow model,. A market segment is defined which desires an ideal, or best product based on the characteristics of the product. Although all products are purchased, the amount demanded is a function of the difference between each actual product and the ideal, product. This paper then expands the concept from a single market, multi- firm-single product model, to a multiple market segment mode’ in which each firm has the capability to produce several, different products.