What is the benefit?

It is very difficult to assess the financial benefit of a simulation in the run-up as the optimisation potential and possible planning errors are only known after a simulation study. A simulation is some kind of insurance, which pays itself off in case of planning errors or discovered optimisation potentials by dint of cost saving or a higher degree of utilisation of the examined system.

• In guideline 3633 the Association of German Engineers (Verein Deutscher Ingenieure - VDI) quantifies the simulation expenditure with 0.5-1% and the benefit with 2 to 4% of the relevant amount invested. The cost-benefit ratio lies between 1:6 and 1:10.

These data result from the experiences gained in representative simulation studies.  In many cases the benefit of the simulation was many times higher. A cost-benefit ratio of 1:10 to 1:100 is not uncommon in very expensive system elements such as automated guided vehicles. However, it is possible that in individual cases the benefit of a simulation study does not outweigh the costs. Therefore the cost-benefit ratio quoted by the VDI should be considered rather as a "rule of thumb".

Of course, the price for a simulation service results from the calculated or actual expenditure and not directly from the relevant amount invested. The connection between the amount invested and costs for the simulation is made as in most cases the complexity of the system increases with rising amount invested and thus the expenditure for the simulation study increases as well.

A market study on the use of modern information technologies, carried out by the consultancy McKinsey & Company, Inc., showed that successful companies use simulation more often than average (see figure 1).

Figure 1: Use of simulation in production and logistics

Following these theoretical deliberations, now several concrete decisions have to be made when it comes to finding the right introduction to simulation.