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Simulation Modeling
To accompany Quantitative Analysis for Management, Eleventh Edition, by Render, Stair, and Hanna Power Point slides created by Brian Peterson
Learning Objectives
After completing this chapter, students will be able to: 1. Tackle a wide variety of problems by simulation. 2. Understand the seven steps of conducting a simulation. 3. Explain the advantages and disadvantages of simulation. 4. Develop random number intervals and use them to generate outcomes. 5. Understand alternative simulation packages available.
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Chapter Outline
14.1 14.2 14.3 14.4 14.5 14.6 14.7 Introduction Advantages and Disadvantages of Simulation Monte Carlo Simulation Simulation and Inventory Analysis Simulation of a Queuing Problem Simulation Model for a Maintenance Policy Other Simulation Issues
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Introduction
Simulation is one of the most widely used quantitative analysis tools. To simulate is to try to duplicate the features, appearance, and characteristics of a real system. We will build a mathematical model that comes as close as possible to representing the reality of the system. Physical models can also be built to test systems.
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Introduction
Using simulation, a manager should: 1. Define a problem. 2. Introduce the variables associated with the problem. 3. Construct a simulation model. 4. Set up possible courses of action for testing. 5. Run the simulation experiment. 6. Consider the results. 7. Decide what courses of action to take.
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Process of Simulation
Define Problem Introduce Important Variables Construct Simulation Model Specify Values of Variables to Be Tested Conduct the Simulation Examine the Results Figure 14.1
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PROBAILITY OF OCCURRENCE 10/200 = 0.05 20/200 = 0.10 40/200 = 0.20 60/200 = 0.30 40/200 = 0.20 30/200 = 0.15 200/200 = 1.00
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0.40
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36 35 16 15 06 05 01
0.20 0.05
0.15
Figure 14.2
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Table 14.4
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If this simulation were repeated hundreds or thousands of times it is much more likely the average simulated demand would be nearly the same as the expected demand.
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QM for Windows Output Screen for Simulation of Harrys Auto Tire Example
Program 14.1
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Program 14.2
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Program 14.2
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Program 14.3
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Program 14.4
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Table 14.6
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Table 14.7
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Figure 14.3
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Table 14.8
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Average 3 orders = = 0.3 order per day number of 10 days orders placed
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Table 14.10
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Table 14.11
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Average number of barges 39 unloadings = 2.60 unloadings = unloaded each day 15 days
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Program 14.5
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Program 14.5
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Figure 14.4
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(9) NUMBER OF HOURS MACHINE DOWN 1 2 2 2 2 3 3 2 1.5 3.5 3.5 5 5 4 4.5 44 14-54
Table 14.14
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Excel Spreadsheet Model for Three Hills Power Company Maintenance Problem
Program 14.6
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Excel Spreadsheet Model for Three Hills Power Company Maintenance Problem
Program 14.6
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Though theoretically different, computerized simulation has tended to blur the differences.
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Operational Gaming
Operational gaming refers to simulation involving two or more competing players. The best examples of this are military games and business games. These types of simulation allow the testing of skills and decision-making in a competitive environment.
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Systems Simulation
Systems simulation is similar in that allows users to test various managerial policies and decisions to evaluate their effect on the operating environment. This models the dynamics of large systems. A corporate operating system might model sales, production levels, marketing policies, investments, union contracts, utility rates, financing, and other factors. Economic simulations, often called econometric models, are used by governments, bankers, and large organizations to predict inflation rates, domestic and foreign money supplies, and unemployment levels.
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Systems Simulation
Inputs and Outputs of a Typical Economic System Simulation
Income Tax Levels Corporate Tax Rates Interest Rates Government Spending Foreign Trade Policy
Figure 14.5
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Gross National Product Inflation Rates Econometric Model (in Series of Mathematical Equations) Unemployment Rates Monetary Supplies Population Growth Rates
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Copyright
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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