LESSON

15
SIMULATION
CONTENTS
15.0 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 15.9 Aims and Objectives Introduction Advantages and Disadvantages of Simulation Monte Carlo Simulation Simulation of Demand Forecasting Problem Simulation of Queuing Problems Simulation of Inventory Problems Let us Sum Up Lesson-end Activities Keywords

15.10 Questions for Discussion 15.11 Terminal Questions 15.12 Model Answers to Questions for Discussion 15.13 Suggested Readings

15.0 AIMS AND OBJECTIVES

This is the last lesson of the QT which will discuss about the Mathematical analysis and mathematical technique simulation technique is considered as a valuable tool because wide area of applications.

15.1 INTRODUCTION
In the previous chapters, we formulated and analyzed various models on real-life problems. All the models were used with mathematical techniques to have analytical solutions. In certain cases, it might not be possible to formulate the entire problem or solve it through mathematical models. In such cases, simulation proves to be the most suitable method, which offers a near-optimal solution. Simulation is a reflection of a real system, representing the characteristics and behaviour within a given set of conditions. In simulation, the problem must be defined first. Secondly, the variables of the model are introduced with logical relationship among them. Then a suitable model is constructed. After developing a desired model, each alternative is evaluated by generating a series of values of the random variable, and the behaviour of the system is observed. Lastly, the results are examined and the best alternative is selected the whole process has been summarized and shown with the help of a flow chart in the Figure 90.

Quantitative Techniques for Management

Simulation technique is considered as a valuable tool because of its wide area of application. It can be used to solve and analyze large and complex real world problems. Simulation provides solutions to various problems in functional areas like production, marketing, finance, human resource, etc., and is useful in policy decisions through corporate planning models. Simulation experiments generate large amounts of data and information using a small sample data, which considerably reduces the amount of cost and time involved in the exercise. For example, if a study has to be carried out to determine the arrival rate of customers at a ticket booking counter, the data can be generated within a short span of time can be used with the help of a computer.
Problem Definition

Introduction of Variables

Construction of Simulation Model

Testing of variables with values

Simulate

Not Acceptable

Examination of results

Not Acceptable

Acceptable
Selection of best alternative

Figure 15.1: Simulation Process

15.2 ADVANTAGES SIMULATION

Advantages

AND

DISADVANTAGES

OF

Simulation is best suited to analyze complex and large practical problems when it is not possible to solve them through a mathematical method. Simulation is flexible, hence changes in the system variables can be made to select the best solution among the various alternatives. In simulation, the experiments are carried out with the model without disturbing the system. Policy decisions can be made much faster by knowing the options well in advance and by reducing the risk of experimenting in the real system.

Disadvantages
Simulation does not generate optimal solutions. It may take a long time to develop a good simulation model. In certain cases simulation models can be very expensive. The decision-maker must provide all information (depending on the model) about the constraints and conditions for examination, as simulation does not give the answers by itself.

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15.3 MONTE CARLO SIMULATION

In simulation, we have deterministic models and probabilistic models. Deterministic simulation models have the alternatives clearly known in advance and the choice is made by considering the various well-defined alternatives. Probabilistic simulation model is stochastic in nature and all decisions are made under uncertainty. One of the probabilistic simulation models is the Monte Carlo method. In this method, the decision variables are represented by a probabilistic distribution and random samples are drawn from probability distribution using random numbers. The simulation experiment is conducted until the required number of simulations are generated. Finally, the best course of action is selected for implementation. The significance of Monte Carlo Simulation is that decision variables may not explicitly follow any standard probability distribution such as Normal, Poisson, Exponential, etc. The distribution can be obtained by direct observation or from past records. Procedure for Monte Carlo Simulation: Step 1: Establish a probability distribution for the variables to be analyzed. Step 2: Find the cumulative probability distribution for each variable. Step 3: Set Random Number intervals for variables and generate random numbers. Step 4: Simulate the experiment by selecting random numbers from random numbers tables until the required number of simulations are generated. Step 5: Examine the results and validate the model.

Simulation

15.4 SIMULATION PROBLEM

OF

DEMAND

FORECASTING

Example 1: An ice-cream parlor's record of previous months sale of a particular variety of ice cream as follows (see Table 15.1).
Table 15.1: Simulation of Demand Problem
Demand (No. of Ice-creams) 4 5 6 7 8 No. of days 5 10 6 8 1

Simulate the demand for first 10 days of the month Solution: Find the probability distribution of demand by expressing the frequencies in terms of proportion. Divide each value by 30. The demand per day has the following distribution as shown in Table 15.2.
Table 15.2: Probability Distribution of Demand
Demand 4 5 6 7 8 Probability 0.17 0.33 0.20 0.27 0.03

Find the cumulative probability and assign a set of random number intervals to various demand levels. The probability figures are in two digits, hence we use two digit random numbers taken from a random number table. The random numbers are selected from the table from any row or column, but in a consecutive manner and random intervals are set using the cumulative probability distribution as shown in Table 15.3.

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Table 15.3: Cumulative Probability Distribution

Demand 4 5 6 7 8 Probability 0.17 0.33 0.20 0.27 0.03 Cumulative Probability 0.17 0.50 0.70 0.97 1.00 Random Number Interval 00-16 17-49 50-69 70-96 97-99

To simulate the demand for ten days, select ten random numbers from random number tables. The random numbers selected are, 17, 46, 85, 09, 50, 58, 04, 77, 69 and 74 The first random number selected, 7 lies between the random number interval 17-49 corresponding to a demand of 5 ice-creams per day. Hence, the demand for day one is 5. Similarly, the demand for the remaining days is simulated as shown in Table 15.4.
Table 15.4: Demand Simulation
Day Random Number Demand 1 17 5 2 46 5 3 85 7 4 09 4 5 50 6 6 58 6 7 04 4 8 77 7 9 69 6 10 74 7

Example 2: A dealer sells a particular model of washing machine for which the probability distribution of daily demand is as given in Table 15.5.
Table 15.5: Probability Distribution of Daily Demand
Demand/day Demand 0 0.05 1 0.25 2 0.20 3 0.25 4 0.10 5 0.15

Find the average demand of washing machines per day. Solution: Assign sets of two digit random numbers to demand levels as shown in Table 15.6.
Table 15.6: Random Numbers Assigned to Demand
Demand 0 1 2 3 4 5 Probability 0.05 0.25 0.20 0.25 0.10 0.15 Cumulative Probability 0.05 0.30 0.50 0.75 0.85 1.00 Random Number Intervals 00-04 05-29 30-49 50-74 75-84 85-99

Ten random numbers that have been selected from random number tables are 68, 47, 92, 76, 86, 46, 16, 28, 35, 54. To find the demand for ten days see the Table 15.7 below.
Table 15.7: Ten Random Numbers Selected
Trial No 1 2 3 4 5 6 7 8 9 10
498

Random Number 68 47 92 76 86 46 16 28 35 54 Total Demand

Demand / day 3 2 5 4 5 2 1 1 2 3 28

Average demand =28/10 =2.8 washing machines per day. The expected demand /day can be computed as, Expected demand per day =

Simulation

2 :
E =

E E

.......................(1)

where, pi = probability and xi = demand = (0.05 0) + (0.25 1) + (0.20 2) + (0.25 3) + (0.1 4) + (0.15 5) = 2.55 washing machines. The average demand of 2.8 washing machines using ten-day simulation differs significantly when compared to the expected daily demand. If the simulation is repeated number of times, the answer would get closer to the expected daily demand. Example 3: A farmer has 10 acres of agricultural land and is cultivating tomatoes on the entire land. Due to fluctuation in water availability, the yield per acre differs. The probability distribution yields are given below: a. The farmer is interested to know the yield for the next 12 months if the same water availability exists. Simulate the average yield using the following random numbers 50, 28, 68, 36, 90, 62, 27, 50, 18, 36, 61 and 21, given in Table 15.8.
Table 15.8: Simulation Problem
Yield of tomatoes per acre (kg) 200 220 240 260 280 Probability 0.15 0.25 0.35 0.13 0.12

b.

Due to fluctuating market price, the price per kg of tomatoes varies from Rs. 5.00 to Rs. 10.00 per kg. The probability of price variations is given in the Table 216 below. Simulate the price for next 12 months to determine the revenue per acre. Also find the average revenue per acre. Use the following random numbers 53, 74, 05, 71, 06, 49, 11, 13, 62, 69, 85 and 69.
Table 15.9: Simulation Problem
Price per kg (Rs) 5.50 6.50 7.50 8.00 10.00 Probability 0.05 0.15 0.30 0.25 0.15

Solution:
Table 15.10: Table for Random Number Interval for Yield
Yield of tomatoes per acre 200 220 240 260 280 Probability Cumulative Probability Random Number Interval 00 14 15 39 40 74 75 87 88 99
499

0.15 0.25 0.35 0.13 0.12

0.15 0.40 0.75 0.88 1.00

Quantitative Techniques for Management

Table 15.11: Table for Random Number Interval for Price

Price Per Kg 5.00 6.50 7.50 8.00 10.00 Probability 0.05 0.15 0.30 0.25 0.25 Cumulative Probability 0.05 0.20 0.50 0.75 1.00 Random Number Interval 00 04 05 19 20 49 50 74 75 99

Table 15.12: Simulation for 12 months period

Month (1) 1 2 3 4 5 6 7 8 9 10 11 12 Yield (2) 240 220 240 220 250 240 220 240 220 220 240 220 Price (3) 8.00 8.00 6.50 8.00 6.50 7.50 6.50 6.50 8.00 8.00 10.00 8.00 Revenue / Acre (4) = 2 3 (Rs)

1960 1760 1560 1760 1820 1800 1430 1560 1760 1760 2400 1760

Average revenue per acre = 21330 / 12 = Rs. 1777.50 Example 4: J.M Bakers has to supply only 200 pizzas every day to their outlet situated in city bazaar. The production of pizzas varies due to the availability of raw materials and labor for which the probability distribution of production by observation made is as follows:
Table 15.13: Simulation Problem
Production per day Probability 196 0.06 197 0.09 198 0.10 199 0.16 200 0.20 201 0.21 202 0.08 203 0.07 204 0.03

Simulate and find the average number of pizzas produced more than the requirement and the average number of shortage of pizzas supplied to the outlet. Solution: Assign two digit random numbers to the demand levels as shown in Table 15.14
Table 15.14: Random Numbers Assigned to the Demand Levels
Demand 196 197 198 199 200 201 202 203
500

Probability 0.06 0.09 0.10 0.16 0.20 0.21 0.08 0.07 0.03

Cumulative Probability 0.06 0.15 0.25 0.41 0.61 0.82 0.90 0.97 1.00

No of Pizzas shortage 00-05 06-14 15-24 25-40 41-60 61-81 82-89 90-96 97-99

204

Selecting 15 random numbers from random numbers table and simulate the production per day as shown in Table 15.15 below.
Table 15.15: Simulation of Production Per Day
Trial Number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Random Number 26 45 74 77 74 51 92 43 37 29 65 39 45 95 93 Production Per day 199 200 201 201 201 200 203 200 199 199 201 199 200 203 203 Total No of Pizzas over produced 1 1 1 3 1 3 3 12 No of pizzas shortage 1 1 1 1 4

Simulation

The average number of pizzas produced more than requirement = 12/15 = 0.8 per day The average number of shortage of pizzas supplied = 4/15 = 0.26 per day
Check Your Progress 15.1

1. 2.

Discuss the role of simulation in demand forecasting. What is Monte Carlo simulation? Write your answer in the space given below. Please go through the lesson sub-head thoroughly you will get your answers in it. This Check Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. (b) (c)

Notes: (a)

_____________________________________________________________________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____________________________________________________________________ __________________________________________________________________ _____________________________________________________________

15.5 SIMULATION OF QUEUING PROBLEMS

Example 5: Mr. Srinivasan, owner of Citizens restaurant is thinking of introducing separate coffee shop facility in his restaurant. The manager plans for one service counter for the coffee shop customers. A market study has projected the inter-arrival times at the restaurant as given in the Table 15.16. The counter can service the customers at the following rate:

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Table 15.16: Simulation of Queuing Problem

Interarrival times Time between two consecutive arrivals (minutes) 2 3 4 5 6 Probability 0.15 0.25 0.20 0.25 0.15 Service times Service time (minutes) 2 3 4 5 6 Probability 0.10 0.25 0.30 0.2 0.15

Mr. Srinivasan will implement the plan if the average waiting time of a customers in the system is less than 5 minutes. Before implementing the plan, Mr. Srinivasan would like to know the following: i. ii. iii. iv. Mean waiting time of customers, before service. Average service time. Average idle time of service. The time spent by the customer in the system.

Simulate the operation of the facility for customer arriving sample of 20 cars when the restaurant starts at 7.00 pm every day and find whether Mr. Srinivasan will go for the plan. Solution: Allot the random numbers to various inter-arrival service times as shown in Table 15.17.
Table 15.17: Random Numbers Allocated to Various Inter-Arrival Service Times
Sl. No. Random Number (Arrival) 87 37 92 52 41 05 56 70 70 07 86 74 31 71 57 85 39 41 18 38 Total Inter Arrival Time (Min) 6 3 6 4 4 2 4 5 5 2 6 5 3 5 4 6 3 4 3 3 83 Arrival Time at Service Starts at Random Number (service) 36 16 81 08 51 34 88 88 15 53 01 54 03 54 56 05 01 45 11 76 Service Time (Min) 4 3 5 2 4 3 6 6 3 4 2 4 2 4 4 2 2 4 3 5 72 Service Ends at Waiting Time Customer 7.10 7.13 7.20 7.22 7.27 7.30 7.36 7.42 7.45 7.49 7.51 7.56 7.58 8.04 8.08 8.12 8.15 8.21 8.24 8.29 1 1 2 1 2 3 4 2 1 1 1 1 20 Service (Min) 6 2 1 1 2 2 1 2 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

7.06 7.09 7.15 7.19 7.23 7.25 7.29 7.34 7.39 7.41 7.47 7.52 7.55 8.00 8.04 8.10 8.13 8.17 8.20 8.23

7.06 7.10 7.15 7.20 7.23 7.27 7.30 7.36 7.42 7.45 7.49 7.52 7.56 8.00 8.04 8.10 8.13 8.17 8.21 8.24

i. ii. iii.

Mean waiting time of customer before service = 20/20 = 1 minute Average service idle time = 17/20 = 0.85 minutes Time spent by the customer in the system = 3.6 + 1 = 4.6 minutes.

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Example 6: Dr. Strong, a dentist schedules all his patients for 30 minute appointments. Some of the patients take more or less than 30 minutes depending on the type of dental work to be done. The following Table 15.18 shows the summary of the various categories of work, their probabilities and the time actually needed to complete the work.

Table 15.18: Simulation Problem

Category Filling Crown Cleaning Extraction Check-up Time required (minutes) 45 60 15 45 15 Probability of category 0.40 0.15 0.15 0.10 0.20

Simulation

Simulate the dentists clinic for four hours and determine the average waiting time for the patients as well as the idleness of the doctor. Assume that all the patients show up at the clinic exactly at their scheduled arrival time, starting at 8.00 am. Use the following random numbers for handling the above problem: 40,82,11,34,25,66,17,79. Solution: Assign the random number intervals to the various categories of work as shown in Table 15.19.
Table 15.19: Random Number Intervals Assigned to the Various Categories
Category of work Filling Crown Cleaning Extraction Check-up Probability 0.40 0.15 0.15 0.10 0.20 Cumulative probability 0.40 0.55 0.70 0.80 1.00 Random Number Interval 00-39 40-54 55-69 70-79 80-99

Assuming the dentist clinic starts at 8.00 am, the arrival pattern and the service category are shown in Table 15.20.
Table 15.20: Arrival Pattern of the Patients
Patient Number 1 2 3 4 5 6 7 8 Scheduled Arrival Random Number Service category 8.00 8.30 9.00 9.30 10.00 10.30 11.00 11.30 40 82 11 34 25 66 17 79 Crown Check-up Filling Filling Filling Cleaning Filling Extraction Service Time 60 15 45 45 45 15 45 45

Table 15.21: The arrival, departure patterns and patients waiting time are tabulated.
Time 8.00 8.30 9.00 9.15 9.30 10.00 10.30 10.45 11.00 11.30 11.45 12.00 Event (Patient Number) 1 arrives 2 arrives 1 departure, 3 arrives 2 depart 4 arrive 3 depart, 5 arrive 6 arrive 4 depart 7 arrive 5 depart, 8 arrive 6 depart End Patient Number (Time to go) 1 (60) 1 (30) 2 (15) 3 (45) 3 (30) 4 (45) 4 (15) 5 (45) 5 (30) 6 (15) 7 (45) 7 (30) Waiting (Patient Number) 2 3 4 5 5,6 6 6,7 7,8 8 8
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The dentist was not idle during the simulation period. The waiting times for the patients are as given in Table 15.22 below.
Table 15.22: Patient's Waiting Time
Patient 1 2 3 4 5 6 7 8 Arrival Time 8.00 8.30 9.00 9.30 10.00 10.30 11.00 11.30 Service Starts 8.00 9.00 9.15 10.00 10.45 11.30 11.45 12.30 Total Waiting time (minutes) 0 30 15 30 45 60 45 60 285

The average waiting time of patients = 285/8 = 35.625 minutes.

15.6 SIMULATION OF INVENTORY PROBLEMS

A dealer of electrical appliances has a certain product for which the probability distribution of demand per day and the probability distribution of the lead-time, developed by past records are as shown in Table 15.23 and 10.24 respectively
Table 15.23: Probability distribution of lead demand
Demand (Units) Probability 2 0.05 3 0.07 4 0.09 5 0.15 6 0.20 7 0.21 8 0.10 9 0.07 10 0.06

Table 15.24: Probability distribution of lead time

Lead Time (Days) Probability 1 0.20 2 0.30 3 0.35 4 0.15

The various costs involved are, Ordering Cost = Rs. 50 per order Holding Cost = Rs.1 per unit per day Shortage Cost = Rs. 20 per unit per day The dealer is interested in having an inventory policy with two parameters, the reorder point and the order quantity, i.e., at what level of existing inventory should an order be placed and the number of units to be ordered. Evaluate a simulation plan for 35 days, which calls for a reorder quantity of 35 units and a re-order level of 20 units, with a beginning inventory balance of 45 units. Solution: Assigning of random number intervals for the demand distribution and leadtime distribution is shown in Tables 15.25 and 15.26 respectively.
Table 15.25: Random Numbers Assigned for Demand Per Day
Demand per day 2 3 4 5 6 7 8 9
504

Probability 0.05 0.07 0.09 0.15 0.20 0.21 0.10 0.07 0.06

Cumulative probability 0.05 0.12 0.21 0.36 0.56 0.77 0.87 0.94 1.00

Random Number Interval 00-04 05-11 12-20 21-35 36-55 56-76 77-86 87-93 94-99

10

Table 15.26: Random Numbers Assigned for Lead-time

Lead Time (Days) 1 2 3 4 Probability 0.20 0.30 0.35 0.15 Cumulative probability 0.20 0.50 0.85 1.00 Random Number Interval 00-19 20-49 50-84 85-99

Simulation

Table 15.27: Simulation Work-sheet for Inventory Problem (Case 1)

Reorder Quantity = 35 units, Reorder Level = 20 units, Beginning Inventory = 45 units

Day Random Number (Demand) 58 45 43 36 46 46 70 32 12 40 51 59 54 16 68 45 96 33 83 77 05 15 40 43 34 44 89 20 69 31 97 05 59 02 35 Demand Random Number (Lead Time) 73 21 45 76 96 94 Lead Time (Days) 3 2 2 3 4 4 Inventory at end of day 45 38 32 26 20 14 8 1 31 27 21 15 8 37 33 26 20 10 40 32 24 21 17 11 5 35 29 20 16 9 4 29 26 19 17 12 Qty. Received 35 35 35 35 35 Total Ordering Cost 50 50 50 50 50 50 300 Holding Cost 38 32 26 20 14 8 36 31 27 21 15 8 37 33 26 20 10 40 32 24 21 17 11 5 35 29 20 16 9 4 29 26 19 17 12 768 Shortage Cost -

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

7 6 6 6 6 6 7 5 4 6 6 7 6 4 7 6 10 5 8 8 3 4 6 6 5 6 9 4 7 5 10 3 7 2 5

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Table 15.28: Simulation Work-sheet for Inventory Problem (Case II)

Reorder Quantity = 30 units, Reorder Level = 20 units, Beginning Inventory = 45 units

Random Random Lead Inventory Number Qty. Ordering Holding Shortage Day Number Demand Time at end of (Lead Received Cost Cost Cost (Demand) (Days) day Time) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 58 45 43 36 46 46 70 32 12 40 51 59 54 16 68 45 96 33 83 77 05 15 40 43 34 44 89 20 69 31 97 05 59 02 35 7 6 6 6 6 6 7 5 4 6 6 7 6 4 7 6 10 5 8 8 3 4 6 6 5 6 9 4 7 5 10 3 7 2 5 73 21 45 76 96 94 3 2 2 3 4 4 45 38 32 26 20 14 8 31 29 25 19 13 38 32 21 21 15 5 30 22 14 11 7 31 14 20 14 5 1 24 19 9 6 0 28 23 30 30 30 30 30 Total 50 50 50 50 50 50 300 38 32 26 20 14 8 31 29 25 19 13 38 32 21 21 15 5 30 22 14 11 7 31 14 20 14 5 1 24 19 9 6 28 23 683 20 20

506

The simulation of 35 days with an inventory policy of reordering quantity of 35 units at the time of inventory level at the end of day is 20 units, as worked out in Table 10.27. The table explains the demand inventory level, quantity received, ordering cost, holding cost and shortage cost for each day.

Completing a 35 day period, the costs are Total ordering cost = (6 50) = Rs 300.00 Total holding cost = Rs. 768.00 Since the demand for each day is satisfied, there is no shortage cost. Therefore, Total cost = 300 + 768 = Rs. 1068.00 For a different set of parameters, with a re-order quantity of 30 units and the same reorder level of 20 units, if the 35-day simulation is performed, we get the total of various costs as shown in Table 10.28. Total ordering cost = 6 50 = Rs. 300.00 Total holding cost = Rs. 683.0 Total shortage cost = Rs. 20.00 Therefore, Total cost = 300 + 683 + 20 = Rs. 1003.00 If we analyze the combination of both the parameters, Case II has lesser total cost than Case I. But at the same time, it does not satisfy the demand on 33rd day, that might cause customer dissatisfaction which may lead to some cost. In this type of problems, the approach with various combinations of two parameter values is simulated a large number of times to find the total cost of each experiment, compare the total cost and select the optimum alternative, i.e., that one which incurs the lowest cost.
Check Your Progress 15.2

Simulation

1. 2. 3. 4. 5.

Explain how computer make ideal aides in simulating complex tasks. What are the two types of computer programming languages that are available to facilitate the simulation process? Why in the computer necessary in conducting a real world simulation. Do you think the application of simulation will enhance strongly in the coming 10 years. Draw a flow diagram for the simulation of electric-maintenance by the power corporation of India Ltd. Write your answer in the space given below. Please go through the lesson sub-head thoroughly you will get your answers in it. This Check Your Progress will help you to understand the lesson better. Try to write answers for them, but do not submit your answers to the university for assessment. These are for your practice only. (b) (c)

Notes: (a)

_____________________________________________________________________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _____________________________________________________________________ __________________________________________________________________ __________________________________________________________________

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15.7 LET US SUM UP

By going through this lesson it is very true and clear that simulation is a reflection of a real system representing the characteristics and behaviour within a given set of conditions. The most important point in simulation is that simulation technique is considered as a valuable tool because of its wide area of application. The most important approach to solving simulation is the Monte Carlo Simulation which can be solved with the help of probabilistic and deterministic model. The deterministic simulation mode, have the alternatives clearly known in advance where as the probabilistic model is stochastic in nature and all decisions are made under uncertainty.

15.8 LESSON-END ACTIVITIES

1. 2. Apply the Monte Carlo Simulation technique weather in forecasting. In the corporate the top Bosses use to take major decisions apply the Simulation techniques in designing and performing organisations take an industry like Reliance, Tata, Infosys to support your answer.

15.9 KEYWORDS
Simulation : A management science analysis that brings into play a construction and mathematical model that represents a realworld situation. : A number whose digits are selected completely at random. : A graphical means of representing the logic of a simulation model.

Random number Flow chart

15.10 QUESTIONS FOR DISCUSSION

1. Write True or False against each statement (a) (b) (c) (d) (e) 2. Simulations models are built for management problems and require management input. All simulation models are very expensive. Simulation is best suited to analyse complex & large practical problem Simulation-generate optimal solution. Simulation model can not be very expensive.

Fill in the blank (a) (b) (c) (d) (e) Simulation is one of the most widely used ________ analysis book. Simulation allow, for the ________ of real world complications. System ________ in similar to business gaming. Monte Carlo method used ________ number. Simulation experiments generate large amount of ________ and information.

3.

Briefly comment on the following (a) (b) The problem tackled by simulation may range from very simple to extremely complex. Simulations allows us to study the interactive effect of individual components or variables in order to determine which one is important.

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(c) (d) (e)

Simulation is the valuable technique for analysing various maintenance policies before actually implementing them, Simulations technique in considered as a valuable tool because of its wide area of application. Simulation is nothing more or less them the technique of performing sampling experiment on the model of the system.

Simulation

15.11 TERMINAL QUESTIONS

1. 2. 3. 4. 5. 6. What is simulation? Give a few areas of its application. With the help of a flow chart, briefly explain the simulation process. What are the advantages and limitations of simulation? What is Monte Carlo simulation? Explain the procedure of simulation using random numbers. Explain how simulation is useful in solving queuing and inventory problems.

Exercise Problem
1. A sweet stall observed that the demand for item Mysorpa per week in one kilogram pack is as follows:
Demand / week (per kilo pack) Frequency 5 4 10 22 15 16 20 42 25 10 30 6

Generate the demand for the next 10 weeks, and also find the average demand. 2. At a service station, cars arrive for water-wash daily. The probability of number of cars that arrive are given in the table below. Simulate the number of cars that will arrive for the next 10 days. Use the following random numbers: 87, 01, 74, 11, 46, 82, 59, 94, 25 and 34.
Cars arrival per day Probability 5 0.2 6 0.15 7 0.3 8 0.25 9 0.05 10 0.05

3.

A private bank has installed an ATM in the city bazaar area. It was found that the time between an arrival and completion of transaction varies from one minute to seven minutes. The arrival and service distribution times are given below. Simulate the ATM operations for the next 30 arrivals.
Probability Time (minutes) Arrival 1-2 2-3 3-4 4-5 5-6 6-7 0.10 0.15 0.30 0.25 0.10 0.10 Service 0.05 0.15 0.30 0.20 0.15 0.15

Use Monte-Carlo simulation technique and determine: a. b. Waiting time of the customers. Idle time of the ATM.
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4.

The materials manager of a firm wishes to determine the expected mean demand for a particular item in stock during the re-order lead time. This information is needed to determine how far in advance to re-order, before the stock level is reduced to zero. However, both the lead time, and the demand per day for the item are random variables, described by the probability distribution.
Lead time (days) 1 2 3 4 Probability 0.45 0.30 0.25 Demand / day (units) 1 2 3 4 Probability 0.15 0.25 0.40 0.20

Manually simulate the problem for 30 re-orders, to estimate the demand during lead time. 5. A company has the capacity to produce around 300 bikes per day. Daily production varies from 295 to 304 depending upon getting the clearance from the final inspection department. The probability distribution of bikes passed through final inspection per day is given below:
Production per day 295 296 297 298 299 300 301 302 303 304 Probability 0.03 0.04 0.10 0.20 0.25 0.15 0.09 0.07 0.05 0.02

The finished bikes are transported in a long trailer lorry sufficient to accommodate 300 mopeds. Simulate the process for 10 days and find: a. b. 6. The average number of bikes waiting in the factory yard. The average empty space in the lorry.

In a single pump petrol station, it was observed that the inter-arrival times and service times are as given in the table. Using the random numbers given, simulate the queue behaviour for a period of 30 minutes and estimate the probability of the pump being idle and the mean time spent by a customer waiting to fill petrol.
Inter-arrival time Minutes 1 3 5 7 9 Probability 0.10 0.17 0.35 0.23 0.15 Service time Minutes 2 4 6 8 10 Probability 0.10 0.23 0.35 0.22 0.10

Use the following random numbers: 93, 14, 72, 10, 21, 81, 87, 90, 38, 10, 29, 17, 11, 68, 10, 51, 40, 30, 52 & 71.
510

7.

A one-man TV service station receives TV sets for repair. TV sets are repaired on a first come, first served basis. The observations of the study made over a 100 day period are given below.
No. of TV sets requiring service 1 2 3 4 5 No. of TV sets serviced 1 2 3 4 5 Service Frequency of request 15 15 20 25 25 Servicing done Frequency of service 10 30 20 15 25

Simulation

Simulate a 10 day period of arrival and service pattern. 8. ABC company stocks certain products. The following data is available: a. No. of Units: 0 Probability: b. 0.1 1 0.2 2 0.4 3 0.3

The variation of lead time has the following distribution Lead time (weeks): 1 Probabilities: 0.30 2 0.40 3 0.30

The company wants to know (a) how much to order? and (b) when to order ? Assume that the inventory in hand at the start of the experiment is 20 units and 15 units are ordered closed as soon as inventory level falls to 10 units. No back orders are allowed. Simulate the situation for 25 weeks. 9. A box contains 100 balls of which 20 percent are white, 30 percent are black and the remaining are red. Simulate the process for drawing balls at random from the box, identify and note the colour and then replace. Use the following 10 random numbers to simulate: 52, 60, 02, 3379, 79, 30, 36, 58 and 43.

10. Rahul, the captain of the cricket team, has the following observations on the number of runs scored against type of ball. The bowling probability of a bowler for the type of balls bowled are given below.
Type of bowling Over pitched Short-Pitched Outside off stump Outside leg stump Bouncer Attempted Yorker Probability of hitting a boundary 0.1 0.3 0.2 0.15 0.20 0.05
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Quantitative Techniques for Management

The number of runs scored off each type of ball is shown in the table given below:
Type of bowling Over pitched Short-Pitched Outside off stump Out side leg stump Bouncer Attempted Yorker Probability of hitting a boundary 1 4 3 2 2 0

Simulate the game for 3 overs (6 balls per over) and calculate the batting average of Rahul.

15.12 MODEL DISCUSSION

1. 2. (a) True

ANSWERS
(c) True

TO

QUESTIONS
(d) False (d) Random

FOR

(b) False

(e) False (e) Data

(a) Quantitative (b) Inclusion

(c) Simulation

15.13 SUGGESTED READINGS

Ernshoff, J.R. & Sisson, R.L. Computer Simulations Models, New York Macmillan Company. Gordon G., System Simulation, Englewood cliffs N.J. Prentice Hall. Chung, K.H. Computer Simulation of Queuing System Production & Inventory Management Vol. 10. Shannon, R. I. Systems Simulation. The act & Science. Englewood Cliffs, N.J. Prentice Hall.

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