MODELS

The engineer/analyst typically builds a model of the real world to understand and to improve. A model is an abstract representation of a real world system. Since models are easier to manipulate, they provide insight.

The advantages of modeling a real world business system have many advantages, including:

• Definition of business objectives, practices, structure, and constraints
• Definition and establishment of business parameters and costs
• Systematic evaluation of alternative system alternatives
• Quick response through sensitivity analysis

Despite these advantages, modeling has its difficulties, including the following:

• Requires extensive, accurate, and expensive data
• Requires specialized knowledge and software (and computer hardware)
• Long computation times are required for some design algorithms

The most basic tradeoffs in building models are

• Realism versus Solvability
• Decision Support versus Decision Making

There exists always a tradeoff between model tractability and model realism. The more realistic the model is, the more resources have to be allocated for model development and data collection, model maintenance and solving. Since all models involve some abstraction and assumptions, the results of the models should always be interpreted based on common (engineering) sense.

It is very possible to build a very complex, yet inaccurate model of the real system. If the model is kept too simple, it would not include many significant factors acting in the real system, thus fail to be a good representation.

A decision making system provides the decisions that are directly implementable, whereas a decision support system provides guidelines that can help the human decision maker. The more transactional the decisions are, better are the chances to develop decison making tools. The more strategic the decisions become, more preferred are the decision support tools.