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Simulation Techniques

The document discusses using simulation techniques to analyze inventory management scenarios for retailers dealing with random daily demand and supply. It provides examples of probability distributions for demand, lead time, supply for different products. It discusses using simulation to evaluate total inventory costs for different reorder levels and quantities to determine optimal parameters. Simulation will be used to analyze a scenario with a reorder quantity of 40 units and reorder level of 20 units starting with 30 units of inventory.

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Pooja Gupta
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87 views2 pages

Simulation Techniques

The document discusses using simulation techniques to analyze inventory management scenarios for retailers dealing with random daily demand and supply. It provides examples of probability distributions for demand, lead time, supply for different products. It discusses using simulation to evaluate total inventory costs for different reorder levels and quantities to determine optimal parameters. Simulation will be used to analyze a scenario with a reorder quantity of 40 units and reorder level of 20 units starting with 30 units of inventory.

Uploaded by

Pooja Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Workshop : Simulation Techniques

Date: 28th Oct 2020


Course: MBA 3rd Sem (2019-21)

1. Consider a case of dealer of a certain product for which the probability distribution ofdaily demand and the
probability distribution of Consider a case of dealer of a certain product for which the probability distribution
ofdaily demand and the probability distribution of the lead time, both developed empericallyby observations
made over a long span of period, are as follows:
Units Demanded: 3 4 5 6 7 8 9 10 11 12
Probability : 0.02 0.08 0.11 0.16 0.19 0.13 0.10 0.08 0.07 0.06
Probability distribution of lead time

Lead time (days): 2 3 4 5


Probability : 0.20 0.30 0.35 0.15
The ordering cost is known to be Rs. 80 per order, the holding cost per unit per day is estimated at Rs 2,
while the unit shortage cost, representing the loss in profits is Rs 20 /unit.
The dealer is anxious to known, for specific re-order levels and re-order quantities, what would be the total
inventory costs and thereby selecting an appropriate combination of the two.
for this illustration, we shall evaluate a simulation plan which calls for a re-order quantity of 40 units and a
reorder level of 20 units, with a beginning inventory balance of 30 units.
2. lead time, both developed empericallyby observations made over a long span of period, are as follows:
Units Demanded: 3 4 5 6 7 8 9 10 11 12
Probability : 0.02 0.08 0.11 0.16 0.19 0.13 0.10 0.08 0.07 0.06
Probability distribution of lead time

Lead time (days): 2 3 4 5


Probability : 0.20 0.30 0.35 0.15
The ordering cost is known to be Rs. 80 per order, the holding cost per unit per day is estimated at Rs 2,
while the unit shortage cost, representing the loss in profits is Rs 20 /unit.
The dealer is anxious to known, for specific re-order levels and re-order quantities, what would be the total
inventory costs and thereby selecting an appropriate combination of the two.
for this illustration, we shall evaluate a simulation plan which calls for a re-order quantity of 40 units and a
reorder level of 20 units, with a beginning inventory balance of 30 units.

3. A smaller retailers dealsin a perishable commodity, the daily demand and supply of which are random
variables. The past 500 days data show the following:

Supply Demand
Available(kg) No. of Days Demand (kg) No. of Days
10 40 10 50
20 50 20 110
30 190 30 200
40 150 40 100
50 70 50 40
The retailer buys the commodity at Rs 20 /kg. if any of the commodity remains at the end of the day, it has
no resale value and is a dead loss. Moreover, the loss on any unsatisfied demand is Rs 8/kg. (755 J.K Sharma
Blue.)
4. PHILIPS India IS Engaged in manufacturing different types of equipment by various consumers. The company
has two assembly lines to produce its productthe processing time for each of the assembly lines is regarded
as a random variable and is described by the following distributions:
Processing Time(mins) Assembly X Assembly Y
40 0.10 0.20
42 0.15 0.40
44 0.40 0.20
46 0.10 0.15
48 0.25 0.05
Using the following Numbers, generate data on the processing times for 10 units of the items and compute
the expected ptocess time for the product.
4236, 7573, 4943, 1283, 2014, 3604, 9344, 5316, 7606, 0089. (17.22)pg vk

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