1. 1 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SIMULATION SUPPLEMENTARY CHAPTER D DAVID A. COLLIER AND JAMES R. EVANS OM2

2. 2 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. LO1 Explain how to simulate a simple queuing application and how simulation works for fixed-time and next-event simulation models. LO2 Describe how to apply simulation to a fixed period inventory management system. LO3 Explain the importance of verification and validation of simulation models. LO4 Describe how commercial software and simulators are used for advanced simulation applications. Supplementary Chapter D. Learning Outcomes l e a r n i n g o u t c o m e s

3. 3 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. As the saying goes, “A picture is worth a thousand words.” General Mills found that an animated simulation-based analysis of its supply chain was worth millions of words and also saved millions of dollars. As Mike Geddis, director of engineering at General Mills noted, “Your ability to actually see the activity in action and plot out the results allows you to understand impacts much better while the supply chain is running. We can run six months of supply chain data in a matter of minutes.” Geddis went on to say, “What we really found to be very powerful was the actual building of the model. It forced a certain diligence in terms of saying: If we change the system here, this happens over here. We had not gone to that level of understanding the interconnections of our supply chain before… Supplementary Chapter D. Simulation

4. 4 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Can you think of similar situations in which a manager might want to make changes to a system to understand what effects it might have? What do you think? Supplementary Chapter D. Simulation

5. 5 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Computer simulation is the process of developing and analyzing a logical model of a system, process, or management decision and conducting computer-based experiments with the model to describe, explain, and predict the behavior of the system or outcomes associated with the decision. Dynamic, or system simulation models, trace the detailed logic or actions that occur in the system in a step-by-step fashion over time. Supplementary Chapter D. Simulation

6. 6 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Advantages of Simulation A simulation model provides a convenient experimental laboratory. An analyst can perform “what-if” studies, that is, change the design characteristics or operating rules to determine their impact without changing the actual system. The modeler does not have to disrupt the current process to examine alternative equipment, material and information flows, decision rules, and configurations. Supplementary Chapter D. Simulation

7. 7 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Disadvantages of Simulation Can be difficult to collect the appropriate input data Can be difficult to select the correct probability distributions to model uncertainty Accuracy of outputs is not always certain. Can be hard to design good experiments to test for statistically significant differences in various scenarios and changes in decision variables Can be hard to clearly determine cause and effect Supplementary Chapter D. Simulation

8. 8 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Fixed Time-Increment Queuing Model A simulation model that increments time in fixed intervals like this is referred to as a fixed time- increment simulation model. Supplementary Chapter D. Simulation Exhibit D.1

9. 9 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Customer Arrival Data and Random Number Assignments Supplementary Chapter D. Simulation Exhibits D.2 and D.3

10. 10 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Simulated Arrivals Supplementary Chapter D. Simulation Exhibit D.4

11. 11 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Service Times Supplementary Chapter D. Simulation Exhibit D.5

12. 12 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Simulation Logic – First Minute Supplementary Chapter D. Simulation Exhibit D.6

13. 13 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Simulation Logic – Second Minute Supplementary Chapter D. Simulation Exhibit D.7

14. 14 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Simulation Logic – Third Minute Supplementary Chapter D. Simulation Exhibit D.8

15. 15 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit D.9 Supplementary Chapter D. Simulation

16. 16 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Simulation Results Supplementary Chapter D. Simulation Exhibit D.10

17. 17 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Spreadsheet Implementation Excel function RAND( ) generates random numbers between 0 and 1. Exhibit D.11

18. 18 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Random Number Intervals for Service Times Supplementary Chapter D. Simulation Exhibit D.12

19. 19 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Spreadsheet Model Supplementary Chapter D. Simulation Exhibit D.13

20. 20 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Simulated Results – Number Waiting Exhibit D.14

21. 21 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Next Event Simulation Models Simulation models that increment time by the occurrence of the next event (time of next arrival, time of next service, and so on) are referred to as next-event simulation models. An event is any action that changes the system. Supplementary Chapter D. Simulation

22. 22 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Arrival and Service Times Supplementary Chapter D. Simulation Exhibit D.15

23. 23 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit D.16 Supplementary Chapter D. Simulation

24. 24 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Exhibit D.17

25. 25 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Inventory Simulation Model Demand uncertainty Lead time uncertainty Order cost = $40 Carrying cost = $0.20/unit/day Shortage cost = $100/unit Find the order quantity and reorder point that minimizes total cost

26. 26 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Inventory Simulation Logic (1 of 2) Exhibit D.18

27. 27 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Inventory Simulation Logic (2 of 2) Exhibit D.19

28. 28 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Demand and Lead Time Distributions Exhibit D.20

29. 29 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Spreadsheet Model Exhibit D.21

30. 30 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Simulated Results Exhibit D.22

31. 31 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Verification and Validation Verification refers to the process of determining if a simulation program performs as intended. Validation is concerned with determining whether the conceptual model is an accurate representation of the real system under investigation.

32. 32 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Verifying Models Develop a logical flowchart carefully Conceptualize the problem in smaller pieces, or modules, and write the computer code in modules that can be linked together Check code by someone other than the programmer Study outputs from the model for reasonableness.

33. 33 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Validating Models 1.Develop a model with high face validity – the model should be reasonable to someone who understands the real system 2.Validate model assumptions – compare input probability distributions with real data 3. Validate model output – compare model output with data from the real system using same or similar inputs

34. 34 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Supplementary Chapter D. Simulation Simulators A simulator is a simulation model that has been programmed for a specific problem or repetitive situation, such as a job-shop manufacturing process or a call center operation. Often developed for management training User-friendly, with graphical models and animation

35. 35 OM2, Supplementary Ch. D Simulation ©2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Daniel’s Auto Parts Case Study The company would like to determine the best reorder point and reorder level for this situation using simulationanalysis. (Hint: Modify the Sound Systems spreadsheet model.) Supplementary Chapter D. Simulation