A simulation model is a mathematical model that calculates the impact of uncertain inputs and decisions we make on outcomes that we care about, such as profit and loss, investment returns, etc.
A simulation model will include:
Model inputs that are uncertain numbers/ uncertain variables
Intermediate calculations as required
Model outputs that depend on the inputs -- These are uncertain functions
Simulation is imitation of some real thing, or a process. The act of simulating something generally involves representation of certain key characteristics or behaviors of a selected physical or abstract system.
Simulation involves the use of models to represent real life situation.