Importance of Simulation and Modelling in a Business Management Curriculum

Abstract

Business decisions are made mostly in uncertain and dynamic environment where input variables keep changing. Unfortunately students of a business management course are ill equipped to tackle such situations because most often the problems in the class are solved assuming input variables are constant over time. Mean values are used which hide the variability. This paper makes out a case for the introduction of a Spreadsheet based Simulation and Modeling course in business management curriculum to alleviate such problems. A model helps the analyst to predict the effect of changes to the system. A model should be a close approximation to the real system and incorporate most of its salient features but should be less complex. Simulation is the imitation of the operation of a real-world process or system over time that will help in drawing inferences concerning the operating characteristics of the real system. Simulations can either be done by using specialized software which are expensive; not easily available; require special expertise to operate and are applicable to a limited set of problems; or by using any spreadsheet software. This paper further endorses using Excel spreadsheet as a powerful simulation tool because it is easily available and has required features for simulation. Introduction of such a course has immensely benefited over thousand students and their recruiters at three prestigious management institutes in and around Delhi, India.