simulation
DESCRIPTION
Simulation. An Inventory Simulation. Example. Daily demand for refrigerators at Hotpoint City has a probability distribution Lead time is not fixed but has a probability distribution Customers who arrive and find Hotpoint out of stock will shop elsewhere and Hotpoint will lose the sale - PowerPoint PPT PresentationTRANSCRIPT
SimulationSimulation
An Inventory Simulation
ExampleExample• Daily demand for refrigerators at Hotpoint City has a
probability distribution• Lead time is not fixed but has a probability
distribution• Customers who arrive and find Hotpoint out of stock
will shop elsewhere and Hotpoint will lose the sale
• These conditions do not meet the restrictions of These conditions do not meet the restrictions of inventory models developed earlier inventory models developed earlier
Simulation ApproachSimulation Approach
• Simulation cannot determine the best inventory policy
• But it can compare policies
• Compare the following:– Reordering 10 when supply reaches 6 or less– Reordering 12 when supply reaches 3 or less
Hotpoint Input DataHotpoint Input Data
• Current inventory = 10• Holding costs: $2/refrigerator/day• Order costs: $50 per order• Shortage costs: $30 per occurrence (sale is
lost)Demand/dayDemand/day Prob Lead TimeLead Time Prob
0 .08 0 days .05
1 .37 1 day .55
2 .33 2 days .30
3 .17 3 days .10
4 .05
RANDOM NUMBER MAPPINGSRANDOM NUMBER MAPPINGSDAILY DEMANDDAILY DEMAND -- Use column 2
0 1 2 3 4
PROB .08 .37 .33 .17 .05
RN 00-07 08-44 45-77 78-94 95-99
LEAD TIME (DAYS)LEAD TIME (DAYS) -- Use column 14
0 1 2 3
PROB .05 .55 .30 .10
RN 00-04 05-59 60-89 90-99
SIMULATION OF Q*= 10; r* = 6SIMULATION OF Q*= 10; r* = 6 COSTS
DAY BI RN DEM EI LOST ORDER RN LT ORD HOLD SHORT
1 10 33 1 9 --- --- --- --- --- 18 ---
2 9 98 4 5 --- YES 24 1 50 10 ---
3 5 26 1 4 --- --- --- 0 --- 8 ---
4 14 91 3 11 --- --- --- --- --- 22 ---
5 11 96 4 7 --- --- --- --- --- 14 ---
6 7 48 2 5 --- YES 63 2 50 10 ---
7 5 82 3 2 --- --- --- 1 --- 4 ---
8 2 27 1 1 --- --- --- 0 --- 2 ---
9 11 96 4 7 --- --- --- --- --- 14 ---
10 7 46 2 5 --- YES 99 3 50 10 ---
150 112 0
Based on this one 10-day simulation average daily Based on this one 10-day simulation average daily cost = $26.20.cost = $26.20.
SIMULATION OF Q*= 12; r* = 3SIMULATION OF Q*= 12; r* = 3 COSTS
DAY BI RN DEM EI LOST ORDER RN LT ORD HOLD SHORT
1 10 33 1 9 --- --- --- --- --- 18 ---
2 9 98 4 5 --- --- --- --- --- 10 ---
3 5 26 1 4 --- --- --- --- --- 8 ---
4 4 91 3 1 --- YES 37 1 50 2 ---
5 1 96 4 0 3 --- --- 0 --- 0 90
6 12 48 2 10 --- --- --- --- --- 20 ---
7 10 82 3 7 --- --- --- --- --- 14 ---
8 7 27 1 6 --- --- --- --- --- 12 ---
9 6 96 4 2 --- YES 84 2 50 4 ---
10 2 46 2 0 --- --- --- --- --- 0 ---
100 88 90
Based on this one 10-day simulation average daily Based on this one 10-day simulation average daily cost = $27.80.cost = $27.80.
THE OTHER POLICY APPEARS BETTER!THE OTHER POLICY APPEARS BETTER!
ReviewReview• Simulation of Inventory Models --
Comparing 2 Possible Policies
• For Each -- Estimate System Parameters Using Pseudorandom Numbers
• Simulate Cost
• Replicate Experiment or Longer Simulation for better results