Computer Modeling in the News

It really is amazing how important computer modeling has become.  This is where the computer really plays to its strengths.

The latest Scientific American (July, 2009) has a cover story article entitled “Grassoline at the Pump” and goes on to paint a very optimistic picture of using non-food plant material to provide 50% of our liquid fueld needs.

From page 55,” “Scientists.  have recently enjoyed an explosion of progress.  Powerful tools such as quantum-chemical computational models allow chemical engineers to build structures that can control reactions at the atomic level.” (Emphasis on models was mine).

Then there is an article I clipped from the June 24, 2009 Wall Street Journal: “Dreamliner’s Delay points to difficulties with composites.”

“Independent structural expers said Tuesday that even the most advanced computer models sometimes have difficulty accurately predicting how stress will affect the composite parts, or where they attach to aluminum or titanium.”

This was a companion article to the surprise announcement from Boeing that they were delaying the flight test for the 787 Dreamliner in order to reinforce the attaching of the wings to the fuselage.

SurvivalWare is, of course, a form of computer modeling.  It actually does two kinds: 

1) basic Financial Modeling, which allows you to do full financial statement projections – i.e. the Income Statement, Balance Sheet, and Cash Flow Statement – based on your analysis of history (conveniently stored in the same model), and assumptions about Sales, Headcount, Expenses, Capital Expenditures, Loans, etc.  Building financial models takes a special skill, and that is part of what SurvivalWare customers get to tap into:  my 30+ years developing financial models for a broad range of industries and company sizes.  An immediate use of this kind of modeling is producing the two years of cash flow projections most lenders ask for when you apply for a loan.  The recently announced ARC Loan program run by the SBA has this requirement.

2) Monte Carlo simulation – used by SurvivalWare’s Cash Planner.  Each and every cash disbursement and receipt is simulated over a 13 – 26 week period (or longer if you want.  Typcially the focus is on the short term).  Measurements are taken at various points to see how much cash is in the till. You can also include credit cards in the simulation.  You have to go to a fair amount of trouble to set up one of these simulations, but it can be a life saver when your back is against the wall, and survival at risk.