Ventana software support forum

I am doing a design of experiment with my model and need to add "pure error" ( i.e., noise) to a dependent variable. The variable is IRE Trend (∆I/∆Itp) in the attached model. Is there a prefered or recomended way to add noise to a variable?
a) Multiply by the dependent variabe by a random variabl
b) Add a randome variable to the dependent variable
c) Other methods

Is there partticular value in using the "Pink noise" function vs another randome or uniform disribution?

Thanks in advance,
john

John,

I recommend you reading Appendix B of Business Dynamics (Sterman 2000) before modeling noise. I attached a possible structure you can use to model a first-order pink noise. Roughly speaking, pink noise is used when next value is in somehow dependent on previous one, it means that there is some 'inertia' or 'memory' in the process of generating noise.

I hope it helps.

Kind Regards,

Bruno.

Thanks very much for your reply. It was very helpful!

V/r,
john