Simulation optimization in the era of Industrial 4.0 and the Industrial Internet

Simulation is an established tool for predicting and evaluating the performance of complex stochastic systems that are analytically intractable. Recent research in simulation optimization and explosive growth in computing power have made it feasible to use simulations to optimize the design and operations of systems directly. Concurrently, ubiquitous sensing, pervasive computing, and unprecedented systems interconnectivity have ushered in a new era of industrialization (the so‐called Industrial 4.0/Industrial Internet). In this article, we argue that simulation optimization is a decision‐making tool that can be applied to many scenarios to tremendous effect. By capitalizing on an unprecedented integration of sensing, computing, and control, simulation optimization provides the ‘smart brain’ required to drastically improve the efficiency of industrial systems. We explore the potential of simulation optimization and discuss how simulation optimization can be applied, with an emphasis on the recent development of multi‐fidelity/multi‐scale simulation optimization.