## Discrete Simulation

Discrete simulation is a technique where the simulation is
advanced from event time to event time rather than using a continuously
advancing time clock as in continuous simulation.

Suppose we consider the example of the interaction of the principle
and interest associated with a savings account. This can be represented
by a systems thinking diagram as follows:

This diagram indicates that **Deposits** increase the **Principal**
and **Withdraws** decrease the **Principal**. Also, the
**Principal** interacts with the **Interest Rate** on some
periodic basis to create **Interest**. The **Interest**
then serves to increase the **Principal**.

If we then turn this into a 10 year simulation with the assumptions
that the **Principal** is initially $100, there are no **Deposits**
or **Withdraws**, and an **Interest Rate** of 5% is paid
once a year it might look like this in Extend.

In the above diagram the **Generator** function schedules
events, which in this particular example just happen to be once
a year. When the event happens **Interest** is computed based
on the **Principal** and the **Interest Rate** and is tacked
on as a value for the event. The event value is extracted in the
**Get Value** function and added to the **Principal**. The
event itself then exits the system.

The above graph show the result of running the model for 10
years. Note that the **Interest** is computed and added to
the **Principal** at the end of each year and the discrete
nature of the simulation is very evident.

Continuous Simulation * Dynamic Modeling
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Copyright © 2004 Gene Bellinger