There are three major methodologies used to build dynamic business simulation models: System Dynamics (SD), Discrete Event (DE) modeling, and Agent-Based modeling (AB). The first two were developed in the 1950s and 1960s and both employ a system-level (top-down) view of things. The agent-based approach, a more recent development, is a bottom-up approach where the modeler focuses on the behavior of the individual objects.

The system dynamics method assumes a high abstraction level and is primarily used for strategic level problems. Discrete event modeling is mainly used on operational and tactical levels. Agent-based models are used at all levels: agents can be competing companies, consumers, projects, ideas, vehicles, pedestrians, or robots.


  • If there is individual data, use an agent-based approach.
  • If there is only information about global dependencies, then use system dynamics.
  • If your system can be easily be described as a process, then use a discrete event approach.
  • And if your system is complex enough, it probably has all those aspects and you should consider combining the three methods.


Francis Tseng