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Chapter 13 SupplementChapter 13 Supplement

Operations Management - 6thEditionOperations Management - 6thEdition

SimulationSimulation

Copyright 2009 John Wiley & Sons, IncCopyright 2009 John Wiley & Sons, Inc

Beni AsllaniBeni AsllaniUniversity of Tennessee at ChattanoogaUniversity of Tennessee at Chattanooga

o er a usse ernar . ay or,

Lecture OutlineLecture Outline

Monte Carlo Simulation

Computer Simulation with Excel

Areas of Simulation Application

Copyright 2009 John Wiley & Sons, IncCopyright 2009 John Wiley & Sons, Inc Supplement 13Supplement 13--22


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SimulationSimulation

Mathematical and computer modeling technique forreplicating real-world problem situations

Modeling approach primarily used to analyzeprobabilistic problems It does not normally provide a solution; instead it provides

information that is used to make a decision

Ph sical simulation


Space flights, wind tunnels, treadmills for tires

Mathematical-computerized simulation Computer-based replicated models

Monte Carlo SimulationMonte Carlo Simulation

probability distributionprobability distribution

Use these values to observe how aUse these values to observe how amodel performs over timemodel performs over time

Random numbers each have an e ualRandom numbers each have an e ual


likelihood of being selected at randomlikelihood of being selected at random


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Distribution of DemandDistribution of Demand

LAPTOPS DEMANDEDLAPTOPS DEMANDED FREQUENCY OFFREQUENCY OF PROBABILITY OFPROBABILITY OFPER WEEK,PER WEEK, xx DEMANDDEMAND DEMAND,DEMAND, PP((xx))

00 2020 0.200.2011 4040 0.400.4022 2020 0.200.2033 1010 0.100.10


44 1010 0.100.10

100100 1.001.00

Roulette Wheel of DemandRoulette Wheel of Demand

9090

00

8080 2020

x= 2

x= 0x= 4

x= 3


6060

x= 1


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Generating DemandGenerating Demand

from Random Numbersfrom Random Numbers

DEMAND,DEMAND, RANGES OF RANDOM NUMBERS,RANGES OF RANDOM NUMBERS,xx rr

00 00--1919

11 2020--5959 rr = 39= 39

--


33 8080--8989

44 9090--9999

Random Number TableRandom Number Table



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15 Weeks of Demand15 Weeks of Demand

WEEKWEEK rr DEMAND (DEMAND (xx)) REVENUE (S)REVENUE (S)11 3939 11 4,3004,30022 7373 22 8,6008,600

,,44 7575 22 8,6008,60055 3737 11 4,3004,30066 0202 00 0077 8787 33 12,90012,90088 9898 44 17,20017,20099 1010 00 00

1010 4747 11 4,3004,3001111 9393 44 17 20017 200


Average demandAverage demand= 31/15= 31/15

= 2.07 laptops/week= 2.07 laptops/week

1212 2121 11 4,3004,3001313 9595 44 17,20017,200

1414 9797 44 17,20017,2001515 6969 22 8,6008,600

= 31= 31 $133,300$133,300

Computing Expected DemandComputing Expected Demand

xx = . + . + .= . + . + .

+ (0.10)(3) + (0.10)(4)+ (0.10)(3) + (0.10)(4)

= 1.5 laptops per week= 1.5 laptops per week

Difference between 1.5 and 2.07 is due to smallDifference between 1.5 and 2.07 is due to small


Steady-state resultan average result that remains constant afterenough trials


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Random Numbers in ExcelRandom Numbers in Excel


Simulation in ExcelSimulation in Excel



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Simulation in Excel (cont.)Simulation in Excel (cont.)


Decision Making withDecision Making withSimulationSimulation



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Decision Making withDecision Making with

Simulation (cont.)Simulation (cont.)


Areas of Simulation ApplicationAreas of Simulation Application

Waiting Lines/ServiceWaiting Lines/Service Complex systems for which it is difficult to develop

analytical formulas Determine how many registers and servers are

needed to meet customer demand

Inventory ManagementInventory Management


customer demand is certain Simulation is widely used to analyze JIT without

having to implement it physically


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Areas of SimulationAreas of Simulation

Application (cont.)Application (cont.)

Production and Manufacturing SystemsProduction and Manufacturing Systems Examples: production scheduling, production sequencing,

assembly line balancing, plant layout, and plant locationanalysis

Machine breakdowns typically occur according to someprobability distributions

Capital Investment and BudgetingCapital Investment and Budgeting


,often resulting from many random variables

Simulation has been used to generate values of cash flows,market size, selling price, growth rate, and market share

Areas of Simulation ApplicationAreas of Simulation Application(cont.)(cont.)

LogisticsLogistics Typically include numerous random variables, such as

distance, different modes of transport, shipping rates, andschedules to analyze different distribution channels

Service OperationsService Operations Examples: police departments, fire departments, post offices,

hospitals, court systems, airports Complex operations that no technique except simulation can


be employed Environmental and Resource AnalysisEnvironmental and Resource Analysis

Examples: impact of manufacturing plants, waste-disposalfacilities, nuclear power plants, waste and populationconditions, feasibility of alternative energy sources


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Copyright 2009 John Wiley & Sons, Inc.Copyright 2009 John Wiley & Sons, Inc.

All rights reserved. Reproduction or translation of this work beyond thatAll rights reserved. Reproduction or translation of this work beyond that

permitted in section 117 of the 1976 United States Copyright Act withoutpermitted in section 117 of the 1976 United States Copyright Act without

express permission of the copyright owner is unlawful. Request for furtherexpress permission of the copyright owner is unlawful. Request for further

information should be addressed to the Permission Department, John Wiley &information should be addressed to the Permission Department, John Wiley &

Sons, Inc. The purchaser may make backSons, Inc. The purchaser may make back--up copies for his/her own use only andup copies for his/her own use only and


not for distribution or resale. The Publisher assumes no responsibility fornot for distribution or resale. The Publisher assumes no responsibility for

errors, omissions, or damages caused by the use of these programs or from theerrors, omissions, or damages caused by the use of these programs or from the

use of the information herein.use of the information herein.

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