Stochastic Model

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Definition: Stochastic Model

Stochastic model is one whose state cannot be predicted with full accuracy. The non-deterministic behaviour of stochastic model is analysed using probability theory. Stochastic modelling is in a way opposite to that of deterministic modelling where the solution to a problem will have only one right answer. Stochastic modelling technique generally is more complicated. It is a better representation of the randomness and unpredictability of the real world events and their effects.

They have numerous applications in fields such as science, engineering, economics, insurance, manufacturing etc. Manufacturing is usually considered as a stochastic process owing to the influence of unknown or random variables on the final output. Often, in a manufacturing process, we see some defective items in a sample.

These defects could be due to conditions such as work conditions, worker inefficiency, machine problem etc. To predict how these random factors affect the final output or quality of the products produced can be determined by building a stochastic model. This model can be used to predict the manufacturing error and hence will be very useful in avoiding such errors in future.

Hence, this concludes the definition of Stochastic Model along with its overview.


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