There are 5 calculation types performed within the solution. Some advice strategies will use 1 method, whilst others will use a combination of calculation functions.
| Calculation type | Description |
|---|---|
| Modelling | Modelling is used to project an existing scenario forward. Alternatively, an existing input can be modified to project how this would impact a scenario. Results are not optimised. Modelling is typically used when providing General Advice. |
| Optimisation | Optimisation occurs when a range of variables are explored and a recommendation is provided as to what action generates the best result. |
| Simulation | A Monte Carlo simulation method is performed to determine the probability of reaching objectives, which aids the decision-making process. Investment returns are defined as uncertain variables, and will differ in each random trial that is explored. A minimum of 1000 trials are set per year & a normal distribution is assumed. |
| Optimisation simulation | This occurs when optimisation is applied to a range of different data sets with varying constraints. A simulation is then applied to each optimisation trial to determine which data set had the highest probability of achieving the required outcome. This is typically used when trying to determine which set of strategies have the highest probability of meeting specified objectives. |
| Simulation optimisation | Simulation optimisation is a process whereby rules are inserted into the simulation. This allows each trial to react to the different outcomes that may be presented within the simulation and observe what actions improve the probability of success. |
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