ACCA Performance Management (F5) Certification Practice Exam

What is a primary drawback of using simulation in decision-making?

1. It provides immediate solutions to problems

2. It cannot be used for understanding information

3. Models can become extremely complex

4. It is always accurate and reliable

The correct answer is: Models can become extremely complex

The primary drawback of using simulation in decision-making is that models can become extremely complex. In simulations, various factors and variables are often included to mimic real-life scenarios as closely as possible. However, this complexity can lead to challenges in interpreting the results accurately and can make the simulation less transparent or understandable to decision-makers. Additionally, complex models require more data, assumptions, and time to develop, which can become a barrier if resources are limited. This complexity can also raise questions about the robustness and reliability of the outcomes derived from such simulations. While simulations are valuable tools for exploring potential outcomes and uncertainties in decision-making, their complexity necessitates a careful approach to ensure that the insights they provide are valid and applicable.