Constructing the model, Managerial Accounting

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Constructing the Model

Steps:

1) Identify the objectives of the simulation (A detailed listing of the results expected will help to clarify the output variables.

2) Recognize the input variables. Differentiate among controlled and non-controlled variables.

3) Where necessary determine the probability distribution

4) Identify any parameters and status variables

5) Identify the output variables

6) Determine the logic of the model

Note:

The key questions are how the input variables changed into output results is, what formulae/decision rules are required? How will the probabilistic elements be deal with? How must the outcomes be presented?


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