MODULE F: SIMULATION Suggested Solutions to Selected

Questions

Summer II, 2009

Question F.8
Time Between
Arrivals
1
2
3
4

Prob. RN Interval
0.2
0.3
0.3
0.2

Service Time

Prob.

RN Interval

1
2
3

0.3
0.5
0.2

0130
3180
8100

0120
2150
5180
8100

First arrival (RN = 14) at 11:01.

Service time = 3 (RN = 88) Leaves at 11:04.
Second arrival (RN = 74) at 11:04 (3 minutes after 1st).
Service time = 2 (RN = 32). Leaves at 11:06.
Third arrival (RN = 27) at 11:06.
Service time = 2 (RN = 36). Leaves at 11:08.
Fourth arrival (RN = 03) at 11:07. Must wait 1 minute for service to start.
Service time = 1 minute (RN = 24). Leaves at 11:09.

Question F.16
(a)
Demand for
Mercedes
6
7
8
9
10
11
12

Freq. Probability
3
0.083
4
0.111
6
0.167
12
0.333
9
0.250
1
0.028
1
0.028
=36 =1.000

Cumulative Random Number

Probability
Interval*
0.083
0108
0.194
0919
0.361
2036
0.694
3769
0.944
7094
0.972
9597
1.000
9800

* Note that the cumulative probabilities have been rounded to two significant digits when used to
develop the random number intervals.
Lead
1
2
3
4

Probability Cumulative
0.44
0.44
0.33
0.77
0.16
0.93
0.07
1.00

Random No. Interval

0144
4577
7893
9400

BUS P301:01

Let us arbitrarily choose a beginning inventory of 14 cars

Time

Beg

Rand

Demand

Sold

End

Lost

Place

Rand

Lead

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

14
8
0
14
4
0
0
0
14
5
0
0
14
5
0
14
6
14
5
0
14
8
14
4

07
77
49
76
51
16
14
85
59
40
42
52
39
89
88
24
11
67
51
33
08
29
75
95

6
10
9
10
9
7
7
10
9
9
9
9
9
10
10
8
7
9
9
8
6
8
10
11
209

6
8
0
10
4
0
0
0
9
5
0
0
9
5
0
8
6
9
5
0
6
8
10
4
112

8
0
14
4
0
0
0
14
5
0
0
14
5
0
14
6
14
5
0
14
8
14
4
14
157

0
2
9
0
5
7
7
10
0
4
9
9
0
5
10
0
1
0
4
8
0
0
0
7
97

Yes
No
No
Yes
No
No
No
No
Yes
No
No
No
Yes
No
No
Yes
No
Yes
No
No
Yes
No
Yes
No

60

95

85

73

01

62

40

33

16

Some useful statistics from the simulation:

Average demand
Simulation209/24 = 8.71
Theoretical 8.75 (i.e. Average actual sales over past 36 months i.e. 315/36)
Average lead time
Simulation16/8 = 2.00
Theoretical 1.86 (i.e. Sum of delivery time x probability)
Average ending inventory = 157/24 = 6.5
Average number of lost sales = 97/24 = 4.04

(b) Total Cost, Ct

Carrying cost
+ Lost sale cost
+ Order cost

24 x 600 x 6.50 = 93,600

4,350 x 97
= 421,950
8 x 570
= 4,560
520,110

=$520,110.00 or $21,671.00 per month

BUS P301:01

Question F.17 We use the following random number intervals when simulating demand and lead
time. We then select column 1 of Table F.4 in the text to get the random numbers
for demand, and use column 2 of the same table to find the lead time whenever an
order is placed.
Demand
0
1
2
3
4

Probability
0.20
0.40
0.20
0.15
0.05

Cumulative
Probability
0.20
0.60
0.80
0.95
1.00

RN
Interval
0120
2160
6180
8195
9600

The results are:

Week
1
2
3
4
5
6
7
8
9
10

Units
Begin
Received Inventory
5
4
3
0
10
10
6
2
1
0
10
10

RN
52
37
82
69
98
96
33
50
88
90

End
Demand Inventory
1
4
1
3
3
0
2
0
4
6
4
2
1
1
1
0
3
0
3
7
Total
23

Lost
Sales
0
0
0
2
0
0
0
0
3
0
5

Order? RN

Lead
time

Yes

06

Yes

63

The total stock out cost = 5($40) = $200. The total holding cost = 23($1) = $23.
Average Weekly stock out cost = $200/10 = $20; Weekly holding cost = $23/10 =
$2.30

Question F.21 Use the following random number intervals to simulate arrival and service time.

Time Between
Arrivals
1
2
3
4
5

Probability
0.20
0.25
0.30
0.15
0.10

Random Number
Interval
0120
2145
4675
7690
9100

Service Time
1
2
3
4
5
6

Probability
0.10
0.15
0.35
0.15
0.15
0.10

Random Number
Interval
0110
1125
2660
6175
7690
9100

BUS P301:01

(a) Simulation of a one-teller drive-through:

Arrivals
Rand
Num

Service

Time Till Arrive at

Next
Time

52
37
82
69
98
96
33
50
88
90
50
27
45
81
66
74
30
59
67

3
2
4
3
5
5
2
3
4
4
3
2
2
4
3
3
2
3
3

1:03
1:05
1:09
1:12
1:17
1:22
1:24
1:27
1:31
1:35
1:38
1:40
1:42
1:46
1:49
1:52
1:54
1:57
2:00

Rand
Num

Time
Needed

Begin

End

60
60
80
53
69
37
06
63
57
02
94
52
69
33
32
30
48
88

3
3
5
3
4
3
1
4
3
1
6
3
4
3
3
3
3
5

1:03
1:06
1:09
1:14
1:17
1:22
1:25
1:27
1:31
1:35
1:38
1:44
1:47
1:51
1:54
1:57
2:00
2:03

1:06
1:09
1:14
1:17
1:21
1:25
1:26
1:31
1:34
1:36
1:44
1:47
1:51
1:54
1:57
2:00
2:03
2:08

Wait Time
(Mins)
0
1
0
2
0
0
1
0
0
0
0
4
5
5
5
5
6
6
40

Yearly waiting costs are given by:

Waiting cost = (40 min/hr)(7 hr/day)(200 days)($1/min) = $56,000.00
(b) Simulation of two one-teller drive-throughs:
Arrivals
Time

Service
Teller 1

Rand
Num

Till
Next

In At
Time

Rand
Num

Time
Needed

52
37
82
69
98
96
33
50
88
90
50
27
45
81
66
74
30
59
67

3
2
4
3
5
5
2
3
4
4
3
2
2
4
3
3
2
3
3

1:03
1:05
1:09
1:12
1:17
1:22
1:24
1:27
1:31
1:35
1:38
1:40
1:42
1:46
1:49
1:52
1:54
1:57
2:00

60
60
80
53
69
37
06
63
57
02
94
52
69
33
32
30
48
88

3
3
5
3
4
3
1
4
3
1
6
3
4
3
3
3
3
5

Beg

End

1:03

1:06

1:09

1:14

1:17
1:22

1:21
1:25

1:27
1:31
1:35
1:38

1:31
1:34
1:36
1:44

1:46
1:49
1:52

1:49
1:52
1:55

1:57

2:02

Teller 2
Beg

End

1:05

1:08

1:12

1:15

1:24

1:25

1:40
1:43

1:43
1:47

1:54

1:57

Wait Time
(Mins)
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1

Waiting cost = (1 min/hr)(7 hrs/day)(200 days)($1/min) = $1,400.00

BUS P301:01

(c) Cost alternatives:

Cost/year

Wait
Cost/year

Drive-through
Amortization/year

Labor (Teller)
Cost/year

Cost for single one-teller drive-through:

$56,000.00 + $12,000.00 + $16,000.00 = $84,000.00
Cost for two one-teller drive-throughs:
$1,400.00 + $20,000.00 +$32,000.00 = $53,400.00
Cost savings achieved by using two booths:
$84,000.00 - $53,400.00 = $30,600.00
The conclusion is to place two teller booths in use. It should be noted, however, it is
critical to replicate the above simulation for a much longer time period before one
draws any firm conclusions.

BUS P301:01