Reducing and Calibrating for Input Model Bias in Computer Simulation

Lucy E. Morgan (), Luke Rhodes-Leader () and Russell R. Barton ()
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Lucy E. Morgan: Department of Management Science, Lancaster University, Lancaster LA1 4YR, United Kingdom
Luke Rhodes-Leader: Statistics and Operational Research Centre for Doctoral Training in Partnership with Industry (STOR-i), Lancaster University, Lancaster LA1 4YR, United Kingdom
Russell R. Barton: Department of Supply Chain and Information Systems, The Pennsylvania State University, University Park, Pennsylvania 16802

INFORMS Journal on Computing, 2022, vol. 34, issue 4, 2368-2382

Abstract: Input model bias is the bias found in the output performance measures of a simulation model caused by estimating the input distributions/processes used to drive it. When the simulation response is a nonlinear function of its inputs, as is usually the case when simulating complex systems, input modelling bias is amongst the errors that arise. In this paper, we introduce a method that recalibrates the input parameters of parametric input models to reduce the bias in the simulation output. The proposed method is based on sequential quadratic programming with a closed form analytical solution at each step. An algorithm with guidance on how to practically implement the method is presented. The method is shown to be successful in reducing input modelling bias and the total mean squared error caused by input modelling error. Summary of Contribution: This paper furthers the understanding and treatment of input modelling error in computer simulation. We provide a novel method for reducing input model bias by recalibrating the input parameters used to drive a simulation model. A sequential quadratic programming approach with an explicit solution is provided to recalibrate the input parameters. The method is therefore computationally inexpensive. An algorithm outlining our proposed procedure is provided within the paper. An evaluation of the method shows the method successfully reduces input model bias and may also reduce the mean squared error caused by input modelling in the output of a simulation model.

Keywords: simulation; input modelling error; bias reduction (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orijoc:v:34:y:2022:i:4:p:2368-2382

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