Research Progress Report 162
February, 1965

Farm Operation Simulator and Farm Management Decision Exercise

L. M. Eisgruber, Agricultural Economics

A.	Introduction*
1.	The Nature of Simulators and Games
Simulators are in essence mathematical models of real world situations. Since they are models, it is evident that they do not portray any real world situation in all its details. But the more significant variables will generally be included in simulators of situations.

Theoretically it is possible to construct a simulator for any situation, complex as it may be, as long as this situation can be segmented in its individual elements and as long as the interrelationships between these elements can be identified. The consideration of random variables does not pose any conceptual problems. In practice the number of elements to be considered and the multitude of interrelationships governing the behavior of the elements within the system are generally so great that the use of simulators is not feasible without the aid of electronic computers.
There is a significant difference between a simulator and a game. 1/ Operational gaming, like a simulator, utilizes a mathematical model of real world situations to study the effects of certain decisions on the system. However, in simulation the initial decision will not be modified until its effect has been traced to the final stage of the system. It is well possible that other "initial" decisions are made, but whenever such "initial" decisions are made and simulation is initiated, the simulation process is not terminated until the final stage has been reached. At this stage the desirability of the decisions or modes of action are compared. In operational gaming the simulation process is periodically interrupted for the purpose of reconsidering earlier decisions. New decisions may be made and injected into the system, and simulation may then continue through the next "decision-period." Hence, the human decision-making element which interferes during the process of simulation distinguishes between simulation and operational gaming.

* This description and documentation incorporates many suggestions received from colleagues at this University as well as other Universities, from bankers, professional managers, students, and others. These comments and suggestions are gratefully acknowledged.

1/ There is presently no generally accepted definition of the distinction between the two terms.

PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana