Beruflich Dokumente
Kultur Dokumente
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Kenji L Logie
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Kenji L Logie
The simulation is a terminating simulation. The simulation ends when the social
security office becomes bankrupt. This event occurs when the amount of cash paid
out exceeds the amount currently held by the social security office.
The following simplification assumptions were made for the purpose of the model
or imposed by restrictions of the program used to simulate the model:
The maximum number of persons the system can accommodate is 90000
persons.
There are only three levels of contributions and benefit payments.
The simulation time variables are all measured in months.
The simulations values of capital, benefits and payments all in $100,000.
Persons join the workforce at a random age between 18 and 60 and only
leave the workforce at retirement.
Persons live to a life expectancy based on their gender; 70 years for males
and 76 years for females.
The population ratio for males to females is approximately 1:1.
The input distribution was exponential and was chosen based on data provided by
the Social Security the simulation was modeled on.
Purpose of performing simulation
Page 3 of 20
Kenji L Logie
The purpose of the simulation is to calculate how long it takes for a simulation to go
bankrupt. From this initial question the rate of joining the workforce, return on
capital and the contribution period were all varied individually while holding
everything else constant to determine which variable extended the length of time it
takes to go bankrupt. An average of the time taken to go bankrupt was calculated for
all these variations to the base case.
The model in its current inception models an existing system, in a simplified version
of its worst case scenario. The variation to individual variables in the simulation
(rate of joining the workforce, contribution only periods and return on capital) also
allow recommendations to be made in extended the life of the social security even
under simplified worst case conditions.
Kenji L Logie
rate joined the social security and begin to pay contribution. Persons over the age of
60 do not receive benefits during the period of contribution only. The third part of
the program involves persons joining the workforce, paying contributing, and
paying benefits to persons age 60 or older based on their income level, until they
reach their life expectancy based on their gender. Each part was validated by using
cout statements and the data generated was observed for irregularities. Based upon
these observations all dollar amounts in the simulation are in $100,000 and the
Mersenne Twister was used instead of C++ standard rand generator.
Running Simulation
Base case conditions
Starting capital = $750,000
Persons join the social security at a rate of a 150 new persons a month
No return on capital
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Kenji L Logie
Simulation
Runtime (seconds)
5.47
8.79
26.2
1.26
3.03
5.47
9.03
13.64
5.47
9.10
11.10
13.63
15.65
Termination of Simulation
All simulations performed terminate at the point which the capital held by the social
security plus the contribution is less than the benefits paid out for a particular
month.
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Kenji L Logie
Page 7 of 20
Kenji L Logie
Table showing results of variation of the return on capital for the social security
monthly only.
450
400
350
300
250
200
150
100
50
1
6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
Graph shows the difference in the length of time the social security goes bankrupt
with a variation in the return on capital
Rate at which
persons join the lower
upper
standard
workforce limit
limit
variance error
xbar
execution time per run
50 139.988 141.452 14.0824
0.375266
140.72
1.26
100 148.114 149.606 14.6267
0.382448
148.86
3.03
150 153.752 155.208 13.9491
0.373485
154.48
5.47
200 159.505 160.795 10.9369
0.330709
160.15
9.03
250
164.16
165.36 9.47717
0.30785
164.76
13.64
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Kenji L Logie
Table showing results of variation in rate at which persons join the social security
monthly only.
200
180
160
140
120
rate 50 Month
rate 100 Month
100
80
60
40
20
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
69
73
77
81
85
89
93
97
Graph shows the difference in the length of time the social security goes bankrupt
with a variation in the rate at which persons join the social security monthly
Variation in lower
upper
standard
contribution limit
limit
variance error
60
153.752
155.208 13.9491
0.373485
120
213.556
214.564 6.68623
0.258519
150
244.58
245.342 4.04798
0.201196
180
277.196
277.944 3.68192
0.191883
xbar
execution time per run
154.48
5.47
214.06
9.10
244.95
11.10
277.57
13.63
Page 9 of 20
Kenji L Logie
309.716
310.384
2.93687
0.171373 310.15
15.65
350
300
250
contributon period
120(Months)
contribution period 60
(months)
200
100
50
1
6
11
16
21
26
31
36
41
46
51
56
61
66
71
76
81
86
91
96
Graph shows the difference in the length of time the social security goes bankrupt
with a variation in the contribution only period
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Kenji L Logie
The original question asked when creating this model was; how long would a worst
case simplified social security model take to go bankrupt. After repeating the
original simulation 10,000 times under the base case conditions the following table
contains the results of the experiment.
lower
upper
standard
limit
limit
variance error
xbar
execution time per run
154.947
155.085 12.4408
0.3502715 155.016
5.63
All data generated for results except the base 10,000 case can be found in the
appendix.
Suggestions for Improving the Simulation
An exponential death rate for persons between the age of 18 and 60 should be
developed. A death rate for persons over the age of 60 should only be
developed if a normal case was to be developed. Since a worst case model
means the social security runs out of money; it is normally due to persons
maximize their benefits by living to their life expectancy or greater.
Contributions and benefits should be determined as a percentage of a
persons income.
Persons should be allowed to leave the work force temporary or permanently
for reasons other than death.
The simplification assumptions should be removed one by one for improved
results.
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Kenji L Logie
Reference page
Arbez, Birta. Modeling and Simulation Exploring Dynamic System Behaviour . Ottawa: Springer, 2007.
Law, Averill M. and W.David Kelton. Simulation Modeling & Analysis. McGraw-Hill, 1991.
Ross, Sheldon M. Simulation. San Diego: Academic Press, 2006.
Severance, Frank L. System Modeling and Simulation An Intoduction. New York: Wiley, 2001.
Appendix
Data generated by simulation and used to create the graphs
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Kenji L Logie
Observation
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rate 50
rate 100
Observation Month
Month
1
142
2
142
3
142
4
138
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143
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139
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144
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141
9
146
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133
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rate 150
Month
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rate 200
Month
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rate 250
Month
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5 million
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1percent return
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