A deterministic model is one that uses numbers as inputs, and produces numbers as outputs. A stochastic model includes a random component that uses a distribution as one of the inputs, and results in a distribution for the output.

What is deterministic model example?

Deterministic models

A deterministic model assumes certainty in all aspects. Examples of deterministic models are timetables, pricing structures, a linear programming model, the economic order quantity model, maps, accounting.

What is a deterministic model in economics?

In deterministic models, the output of the model is fully determined by the parameter values and the initial conditions initial conditions. • Stochastic models possess some inherent randomness. The same set of parameter values and initial conditions will lead to an ensemble of different outputs.