Management deals with reality that is at once complex, dynamic, and multifaceted. It is neither possible nor desirable, to consider each and every element of reality before deciding the courses of action. It is impossible because of time available to decide the courses of action and the resources, which are limited in nature. More over in many cases, it will be impossible for a manager to conduct experiment in real environment.
Types of Models:
(a) Classification by Structure
Iconic Models: These models are scaled version of the actual object. For example a toy of a car is an iconic model of a real car.
Analogue Model:In this model one set of properties are used to represent another set of properties. Say for example, blue colour generally represents water.
Symbolic Models or Mathematical Models:In these models the variables of a problem is represented by mathematical symbols, letters etc.
(b) Classification by utility
Descriptive model:The descriptive model simply explains certain aspects of the problem or situation or a system so that the user can make use for his analysis.
Predictive model:These models basing on the data collected, can predict the approximate results of the situation under question.
Prescriptive models:We have seen that predictive models predict the approximate results. But if the predictions of these models are successful, then it can be used conveniently to prescribe the courses of action to be taken. In such case we call it as Prescriptive model.
(c) Classification by nature of environment
Deterministic Models:In this model the operations research analyst assumes complete certainty about the values of the variables and the available resources and expects that they do not change during the planning horizon.
Probabilistic or Stochastic Models:In these models, the values of variables, the pay offs of a certain course of action cannot be predicted accurately because of element of probability. It takes into consideration element of risk into consideration.
(d) Classification depending on the behavior of the problem variables
Static Models:These models assume that no changes in the values of variables given in the problem for the given planning horizon due to any change in the environment or conditions of the system.
Dynamic Models:In these models the values of given variables goes on changing with time or change in environment or change in the conditions of the given system
(e) Classification depending on the method of getting the solution
Analytical Models:The given model will have a well-defined mathematical structure and can be solved by the application of mathematical techniques.
Simulation Models:The meaning of simulation is imitation. These models have mathematical structure but cannot be solved by using mathematical techniques.
Only disadvantage of this method is that it does not have general solution method.