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15
C H A P T E R
Simulation Modeling
TEACHING SUGGESTIONS
Teaching Suggestion 15.1: There Are Many Kinds of Simulations.
This chapter teaches the concepts of Monte Carlo simulation, but
it also notes that there are many physical kinds of simulation mod-
els as well. The idea of simulation is analogous whether we are
conducting a wind tunnel simulation or a math simulation. Ask
students to describe a series of real-world business applications in
which a math model would be much better than playing with the
actual operation of the rm.
Teaching Suggestion 15.2: Examples of Advantages
of Simulation.
Section 15-2 lists advantages of simulation. Have students provide
an example of numbers 2, 5, 6, 7, 8, and 9 in order to be sure these
points are made. Hospitals are especially good cases for number
6do not interfere with the real-world system.
Teaching Suggestion 15.3: Use of the Cumulative Probability
Distribution in Setting Random Number Intervals.
Some instructors go directly from probability distribution to ran-
dom number intervals; others use Figure 15.2 as an intermediate
step.
Teaching Suggestion 15.4: Starting the Random Number
Intervals at 01 or 00.
Either of these is okay, but the text starts at 01 so that the top of
each range is the cumulative probability.
Teaching Suggestion 15.5: Another Way to Generate
Random Numbers.
Excel and other spreadsheets make simulation a quick and rela-
tively painless process compared to other methods.
Teaching Suggestion 15.6: Use of Computers for
Speedy Simulations.
You can never point out enough how important computers are in
the simulation process. Instead of conducting a simulation once or
twice, with computers we can run it hundreds or thousands of
times. This also ties in with the issue of time compression men-
tioned earlier in the chapter.
Teaching Suggestion 15.7: Relating Simulation Back to the
Inventory Chapter.
Students should start to see the relationship between simulation
and most of the other techniques in the book. Because of all the
EOQ limiting assumptions, simulation is an important tool.
Teaching Suggestion 15.8: Gaming in Business Courses.
One type of simulation that students have probably heard of is
business gaming (often taught in a policy course). You can now tie
the concept of random numbers into how those games operate.
Teaching Suggestion 15.9: Outside Research Articles.
This is a good chapter for students to nd down-to-earth published
articles on a wide variety of applications. Ask each student to visit
the library and nd a simulation application to share with the
class.
ALTERNATIVE EXAMPLES
Alternative Example 15.1: The number of cars arriving at a
self-service gasoline station during the last 50 hours of operation
are as follows:
Number of Cars Arriving Frequency
6 10
7 12
8 20
9 8
The following random numbers have been generated: 44, 30, 26,
09, 49, 13, 33, 89, 13, 37. Simulate 10 hours of arrivals at this sta-
tion. What is the average number of arrivals during this period?
SOLUTION:
Number of Cars RN
6 0120
7 2144
8 4584
9 8500
Arrivals: 7,7,7,6,8,6,7,9,6,7. Average  7 cars.
Alternative Example 15.2: Average daily sales of a product are
8 units. The actual number of sales each day is either 7, 8, or 9
with probabilities 0.3, 0.4, and 0.3, respectively. The lead time for
delivery averages 4 days, although the time may be 3, 4, or 5 days
with probabilities 0.2, 0.6, and 0.2. The company plans to place an
order when the inventory level drops to 32 units (based on the av-
erage demand and average lead time).
227
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228 CHAPTER 15 SIMULATION MODELING

The following random numbers have been generated: SOLUTIONS TO DISCUSSION QUESTIONS
60, 87, 46, 63 (set 1) AND PROBLEMS
52, 78, 13, 06, 99, 98, 80, 09, 67, 89, 45 (set 2)
15-1. Advantages of simulation: (1) relatively straightforward;
Use set 1 of these to generate lead times and use set 2 to simulate (2) can solve large, complex problems; (3) allows what if ques-
daily demand. Simulate 2 ordering periods with this and determine tions; (4) does not interfere with real-world systems; (5) allows
how often the company runs out of stock before the shipment arrives. study of interactive variables; (6) allows time compression; (7) al-
SOLUTION: lows inclusion of real-world complications. Disadvantages;
(1) cost; (2) no optimal solutions; (3) managers must generate con-
Sales RN Lead Time RN ditions to test; (4) each model is unique.
7 0130 3 0120 15-2. a. Inventory ordering policy: May require simulation if
8 3170 4 2180 lead time and daily demand are not constant. Also useful if data do
9 7100 5 8100
not follow traditional probability distribution.
b. Ship docking in port to unload: If arrivals and unload-
First order: RN  60 so lead time  4 days.
ings do not follow Poisson/exponential distributions common to
Demand day 1 8 (RN  52) queuing problems, or if other queuing model assumptions are vio-
day 2 9 (RN  78) lated (for example, FIFO not observed).
day 3 7 (RN  13) c. Bank teller service windows: If arrivals or service
day 4 7 (RN  06) times do not follow standard distributions, or if several waiting
Total demand during lead time  31. Since the reorder point is 32, lines exist, may be easier to use simulation.
there is no stockout. d. U.S. economy: Because mathematical equations and
Alternative Example 15.3: The time between arrivals at a relationships are too complex to solve mathematically and because
drive-through window of a fast-food restaurant follows the distrib- an optimal solution may not exist.
ution given below. The service time distribution is also given in 15-3. Problems with conditions of certainty can be solved more
that table in the right column. Use the random numbers provided easily by other QA techniques. Problems that require quick an-
to simulate the activity of the rst ve arrivals. Assume that the swers that cannot wait for a simulation model to be built are a sec-
window opens at 11:00 A.M. and the rst arrival is after this, based ond category.
on the rst interarrival time generated. 15-4. Major steps are: (1) dene problem, (2) introduce impor-
tant variables, (3) construct model, specify values to test, (4) con-
Time
Between Service duct simulation, (5) examine results, (6) select best plan.
Arrivals Probability Time Probability 15-5. Monte Carlo steps: (1) set up probability distribution(s),
1 0.2 1 0.3 (2) set up cumulative probabilities, (3) establish random number
2 0.3 2 0.5 intervals, (4) generate random numbers, (5) simulate trials.
3 0.3 3 0.2 15-6. Random numbers can be generated by: (1) computer pro-
4 0.2 grams such as Excel, (2) spinning a dial on a uniform wheel,
(3) pulling numbers from an urn, (4) using a random number table,
Random numbers for arrivals: 14, 74, 27, 03 and (5) creating an algorithm such as the midsquare method.
Random numbers for service times: 88, 32, 36, 24
15-7. Validation is the process of comparing a model to the real
What time does the fourth customer leave the system? system that it represents. Verication is the process of determining
SOLUTION: that a model is internally consistent and follows the logic of the
conceptual model.
Time
15-8. A next event time increment model should be used when
Between Service
it is necessary to record information each time the system status
Arrivals Prob. RN Time Prob. RN
changes. For example, if we wish to determine the average time a
1 0.2 0120 1 0.3 0130 customer waits in line, it is necessary to know precisely what time
2 0.3 2150 2 0.5 3180 that person enters the line and the time that person leaves the line.
3 0.3 5180 3 0.2 8100
This cannot be accomplished with a xed time increment model.
4 0.2 8100
15-9. The results would very likely change, and perhaps signif-
First arrival (RN  14) at 11:01. Service time  3 (RN  88). icantly, if a longer period was simulated. The 10-day simulation is
Leaves at 11:04. valid only to illustrate the features of the system. It would not be
safe to forecast based on that short a span.
Second arrival (RN  74) at 11:04 (3 minutes after rst).
15-10. A computer is necessary for three reasons: (1) it can do
Service time  2 (RN  32). Leaves at 11:06.
time periods or trials in a matter of seconds or minutes, (2) it can
Third arrival (RN  27) at 11:06. Service time  2 (RN  36). quickly examine and allow change in the complex interrelation-
Leaves at 11:08. ships being studied, and (3) it can internally (through a subroutine
Fourth arrival (RN  03) at 11:07. Must wait 1 minute for service or function statement) generate random numbers by the thousands
to start. Service time  1 minute (RN  24). Leaves at 11:09. or millions.
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CHAPTER 15 SIMULATION MODELING 229

15-11. Operational gaming is a simulation involving competing 15-15. a, b. Lundbergs car wash:
players. Systems simulation tests the operating environment of a
large system such as a corporation, government, or hospital. Random
Number of Cumulative Number
15-12. Simulation may very well increase in use for several reasons:
Cars Probability Probability Interval
(1) computers are in all types and sizes of businesses; (2) simulation
languages may be rened and made easier for noncomputer man- 3 or less 0 0.00
agers to use, especially with the advent of spreadsheet approaches; 4 0.10 0.10 0110
(3) the mass of graduates educated in QA entering the corporate 5 0.15 0.25 1125
6 0.25 0.50 2650
world is growing, decreasing resistance to sophisticated techniques;
7 0.30 0.80 5180
and (4) complex problems will not become fewer in nature. 8 0.20 1.00 8100
15-13. C is a common, popular language. Learning a special- 9 or more 0.00 1.00
ized simulation language can be time consuming and difcult. For 1.00
regular simulation, regular languages may sufce. They may take a
few extra seconds of computer CPU time (GPSS and SIMSCRIPT c.
are very efcient), but computer time is often a xed cost.
Random Simulated
15-14.
Hour Number Arrivals
Random
1 52 7
Number of Number
2 37 6
Failures Interval
3 82 8
0 0106 4 69 7
1 0719 5 98 8
2 2044 6 96 8
3 4572 7 33 6
4 7392 8 50 6
5 9399 9 88 8
6 00 10 90 8
11 50 6
Number of A.C. 12 27 6
Simulated Random Compressors Simulated 13 45 6
Period Number to Fail This Year 14 81 8
15 66 107
1 50 3 105
2 28 2
3 68 3 105
4 36 2 Average number arrivals per hour 7.00 cars
15
5 90 4
6 62 3 15-16. Using the probability distribution developed in Problem
7 27 2 15-15, the expected value is E(X) 4(0.10) 5(0.15) 6(0.25)
8 50 3 7(0.30) 8(0.20) 6.35. The average number of arrivals in
9 18 1 Problem 15-15 was 7. If another simulation were performed, the
10 36 2 average number would not be 7 but would be some other number.
11 61 3 If enough simulations were performed, the average number com-
12 21 2 puted in the sample would approach the expected value computed
13 46 3
with the formula.
14 01 0
15 14 1 15-17. Higgins plumbing:
16 81 4
17 87 4 Random
18 72 3 Number
19 80 4 Heater Sales Probability Intervals
20 46 3 3 0.02 0102
4 0.09 0311
No, its not common to nd three or more years in a row with two 5 0.10 1221
or less compressor failures. 6 0.15 2236
7 0.25 3761
8 0.12 6273
9 0.12 7485
10 0.10 8695
11 0.05 9600
1.00
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230 CHAPTER 15 SIMULATION MODELING

a. 15-18. a.

Random Simulated
New
Week Number Sales
Random Number
1 10 4 Unloading Rate Interval
2 24 6
1 0103
3 03 4
2 0415
4 32 6
3 1655
5 23 6
4 5683
6 59 7
5 8495
7 95 10
6 9600
8 34 6
9 34 6
10 51 7
11 08 4 6
b. Average number delayed 0.40
12 48 7 15
13 66 8 31
14 97 11 Average number of arrivals 2.07
15
15 03 4
16 96 11 31
Average number unloaded 2.07
17 46 7 15
18 74 9
The short span simulated (15 days) introduces volatility in the
19 77 9
20 44 137
daily arrival rate (from 2.73 arrivals/day in Table 15.12 to only
139 2.07 in the above simulation). This, coupled with a speedier un-
loading rate, produces a much lower average delay rate (from
1.33/day down to only 0.40/day).
With a supply of 8 heaters, Higgins will stock out 5 times during
the 20-week period (in weeks 7, 14, 16, 18, and 19).

b. Average sales by simulation  total sales/20 weeks 

139
6.95 per week . Other simulations by students will yield
20
slightly different results.
c. Using expected values, E(sales)  (0.02)(3)  (0.09)(4) 
(0.10)(5)  (0.15)(6)  (0.25)(7)  (0.12)(8)  (0.12)(9) 
(0.10)(10)  (0.05)(11)  7.16 heaters. In a longer time simulation,
these two approaches will lead to even closer values.

Table for Problem 15-18

Number Random Daily Total to Be Random Number
Day Delayed Number Arrivals Unloaded Number Unloaded
1 37 2 2 69 2
2 0 77 4 4 84 4
3 0 13 0 0 12 0
4 0 10 0 0 94 0
5 0 02 0 0 51 0
6 0 18 1 1 36 1
7 0 31 2 2 17 2
8 0 19 1 1 02 1
9 0 32 2 2 15 2
10 0 85 4 4 29 3
11 1 31 2 3 16 3
12 0 94 5 5 52 3
13 2 81 4 6 56 4
14 2 43 2 4 43 3
15 1 31 32 3 26 33
Totals 6 31 31
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CHAPTER 15 SIMULATION MODELING 231

15-19. a 15-20. a. Using column 4 of Table 15.5 we have

Interval Demand RN
X P(X) Cum. Prob. of RN Day RN (100s) Probability Interval Weather Day RN Weather
23 0.15 0.15 115 1 7 23 0.8 180 Good 1 88 Bad
24 0.22 0.37 1637 2 60 25 0.2 8100 Bad 2 2 Good
25 0.24 0.61 3861 3 77 26 3 28 Good
26 0.21 0.82 6282 4 49 25 4 49 Good
27 0.18 1.00 8300 5 76 26 5 36 Good
6 95 27 6 87 Bad
7 51 25 7 21 Good
8 16 24 8 95 Bad
9 14 23 9 50 Good
10 85 27 10 24 Good

b. If 25 hundred programs are printed, the maximum

number sold will be 2,500. Thus, the prots are $2 per b.
program sold less the cost of printing 2,500.
Interval
Day RN Demand Profit P(X) Cum. Prob. of RN Sales Day RN Demand
1 7 23 $2,600 0.25 0.25 125 12 1 53 14
2 60 25 $3,000 0.24 0.49 2649 13 2 74 15
3 77 26 $3,000 0.19 0.68 5068 14 3 5 12
4 49 25 $3,000 0.17 0.85 6985 15 4 71 15
5 76 26 $3,000 0.15 1.00 8600 16 5 6 12
6 95 27 $3,000 6 49 13
7 51 25 $3,000 7 11 12
8 16 24 $2,800 8 13 12
9 14 23 $2,600 9 62 14
10 85 27 $3,000 10 69 15
Total $29,000

The average prots would be 29,000/10 $2,900 per

game.
c. If 26 hundred were printed, the prots are $2 per pro-
gram sold less the cost of printing 2,600.

Day RN Demand Profit

1 7 23 $2,520
2 60 25 $2,920
3 77 26 $3,120
4 49 25 $2,920
5 76 26 $3,120
6 95 27 $3,120
7 51 25 $2,920
8 16 24 $2,720
9 14 23 $2,520
10 85 27 $3,120
Total $29,000

The average prots would be $2,900 per game.

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232 CHAPTER 15 SIMULATION MODELING

c.

Start

Generate random number

for weather

Weather good? No Use distribution for poor weather

Yes

Use distribution for good weather

Generate random number

for demand

Demand > number available? No

Yes

Sales = number available Sales = demand

No Enough days simulated?

Yes

End

d. There are several ways that this simulation can be per-

formed. We rst simulate the weather, and we will use the
results from part b to get this. We will then use the random
number intervals from Problem 1519a and part b of this
problem. We will select column 1 to get the random num-
bers for the demand, although you could use any column.
The results are shown in the table below. Notice that we
look up the random number in two different places de-
pending on the weather for that particular game.

Game Weather RN for demand Demand Profit

1 Bad 52 14 800
2 Good 37 24 2800
3 Good 82 26 3000
4 Good 69 26 3000
5 Good 98 27 3000
6 Bad 96 16 1200
7 Good 33 24 2800
8 Bad 50 14 800
9 Good 88 27 3000
10 Good 90 27 3000
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CHAPTER 15 SIMULATION MODELING 233

15-21. We will use the following random number intervals when

simulating demand and lead time. We will select column 1 to get
the random numbers for demand, while we will use column 2 to
nd the lead time whenever an order is placed.

Cumulative RN
Probability Probability Interval Demand
0.20 0.20 120 0
0.40 0.60 2160 1
0.20 0.80 6180 2
0.15 0.95 8195 3
0.05 1.00 9600 4

Cumulative RN Lead
Probability Probability Interval Time
0.15 0.15 115 1
0.35 0.50 1650 2
0.50 1.00 5100 3

The results are:

Units Begin Lost Lead

received Inv. RN Demand End Inv. Sales Order? RN time
5 52 1 4 0
4 37 1 3 0
3 82 3 0 0 Yes 6 1
0 69 2 0 2
10 10 98 4 6 0
6 96 4 2 0 Yes 63 3
2 33 1 1 0
1 50 1 0 0
0 88 3 0 3
10 10 90 3 7 0
Total 23 5

The total stock out cost 5($40) $200.

The total holding cost 23($1) $23.

15-22. If the reorder point Problem 1521 is changed to 4 units,

we have:
Units Begin Lost Lead
received Inv. RN Demand End Inv. Sales Order? RN time
5 52 1 4 0 Yes 6 1
4 37 1 3 0
10 13 82 3 10 0
10 69 2 8 0
8 98 4 4 0 Yes 63 3
4 96 4 0 0
0 33 1 0 1
0 50 1 0 1
10 10 88 3 7 0
7 90 3 4 0 Yes 57 3
Total 40 2

The total stock out cost 2($40) $80.

The total holding cost 40($1) $40.
The total cost is $120 with a reorder point of 4 and $223 with a re-
order point of 2.
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234 CHAPTER 15 SIMULATION MODELING

15-23. Q  12 drills; reorder point  6 drills

Lead
Units Beginning Random End Lost Random Time
Day Received Inventory Number Demand Inventory Sales Order? Number (Days)
1 12 07 1 11 0 No
2 0 11 60 3 8 0 No
3 0 8 77 4 4 0 Yes 49 2
4 0 4 76 4 0 0 No
5 0 0 95 5 0 5 No
6 12 12 51 3 9 0 No
7 0 9 16 2 7 0 No
8 0 7 14 1 6 0 Yes 85 3
9 0 6 59 3 3 0 No
10 0 3 85 4 40 1 No
Totals 48 6

Random numbers will differ from student to student. Ours were 15-24. Flow diagram for Port of New Orleans simulation:
selected from the right-hand column of Table 15.5.
Daily order cost  ($10)(0.2 order/day) Begin Day
of Simulation
 $2.00
Daily holding cost  ($.50/unit/year)(4.8 units/day)
 $2.40 Select Random
Number to Generate
Daily stockout cost  ($8/lost sale)(0.6 lost sales/day) Overnight Arrivals
 $4.80
Total daily cost  $9.20 Add New Arrivals
This cost is greater than the Q  10, ROP  5 policy. However, to Number Delayed from
the short period simulated does not really permit a valid analysis Previous Day to Find
Total to Be Unloaded
and comparison.

Select Random
Number to Generate
Daily Unloadings

Is Total to
Be Unloaded No
> Todays Number Delayed = 0
Unloading
Rate?

Yes

Compute Number Delayed Record Number

to Next Day = Total to Be Unloaded
Unloaded Minus the
Unloading Rate

Have
No Enough
Days Been
Simulated?

Yes

Compute Appropriate
Averages and Costs
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CHAPTER 15 SIMULATION MODELING 235

15-25. a. Repair time required with two-person crews:

Repair Time Random

Required Cumulative Number
(Hours) Probability Probability Interval
12 0.28 0.28 0128
1 0.52 0.80 2980
1
1
2
0.20 1.00 8100
1.00

Time
Time Repair-
Between Person Repair
Break- Break- Time of is Free Time Time No. Hours
down Random down Break- to Begin Random Required Repair Machine
Number Number (Hours) down This Repair Number (Hours) Ends Down
1
1 69 22
02:30 02:30 37 1 03:30 1
2 84 3 05:30 05:30 77 1 06:30 1
1
3 12 12
07:00 07:00 13 12 07:30 12
4 94 3 10:00 10:00 10 12 10:30 12
5 51 2 12:00 12:00 02 12 12:30 12
6 36 2 14:00 14:00 18 12 14:30 12
1
7 17 1
2
15:30 15:30 31 1 16:30 1
8 02 12 16:00 16:30 19 12 17:00 1
1
9 15 1 2
17:30 17:30 32 1 18:30 1
1 1
10 29 2 19:30 19:30 85 12
21:00 12
1
11 16 12
21:00 21:00 31 1 22:00 1
1 1
12 52 2 23:00 23:00 94 12
00:30 12
1 1
13 56 2 01:00 01:00 81 12
02:30 12
14 43 2 03:00 03:00 43 1 04:00 1
1
15 26 12
04:30 04:30 31 1 05:30 11
1
Total 14
2

Cost of labor hours  29 12 hours Hours Between Random

00:00 hours on day 1 to Failures if Four Cumulative Number
Pens Replaced Probability Probability Interval
05:30 hours on day 2
100 0.15 0.15 0115
 $60/hour
110 0.25 0.40 1640
 $1,770.00 120 0.35 0.75 4175
1 130 0.20 0.95 7695
Cost of machine downtime 14 hours $75 / hour
2 140 0.05 1.00 9600
 $1,087.50
Total cost  $2,857.50
b. It is cheaper to hire the second worker each shift.
Total cost with only one repairperson was $4,320.
15-26. a. In this problem the student must select his or her own
random numbers and must decide how long a period to simulate.
We have selected 10 breakdowns for our sample simulations.

Hours Between Random

Failures if One Cumulative Number
Pen Replaced Probability Probability Interval
10 0.05 0.05 0105
20 0.15 0.20 0620
30 0.15 0.35 2135
40 0.20 0.55 3655
50 0.20 0.75 5675
60 0.15 0.90 7690
70 0.10 1.00 9100
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236 CHAPTER 15 SIMULATION MODELING

ONE PEN REPLACED ALL FOUR PENS REPLACED Cost per

$8 per pen $50 per hour $58
8
Random Random
downtime
Number Hours Number Hours Cost per hour $58 / 42 $1.38 per hour
(Column 8 Between (Column 9 Between Expected number of hours between failures if four pens
of Table) Failures of Table) Failures
replaced
47 40 99 140
03 10 29 110
100(0.15) 110(0.25) 120(0.35)
11 20 27 110 130(0.2) 140(0.05)
10 20 75 120 15 27.5 42 26 7
67 50 89 130
117.5
23 30 78 130
89 60 68 120 Cost per
62 50 64 120 breakdown $32 $100 $132
a a
56 50 62 120
74 50 30 110 4 $8 per $50 per 2
Totals 380 1,210
hours hours pens pen hour hours
total total
simul- simul- Cost per hour $132/117.5 $1.12 per hour
ated ated Compare to simulation results of $1.53 per hour and $1.09 per hour.
Total cost  10 pens  $8 Total cost  40 pens  $8 15-27.
a

 10 repairs at  10 repairs at
 $50/per hour  $50/per hour
(1 hour per (2 hours per Random
repair) repair) Arrival Cumulative Number
 $80  $500  $320  $1,000 Distribution Probability Probability Interval
 $580  $1,320 20 minutes early 0.20 0.20 0120
Cost/hour  $580/380 hours Cost/hour  $1,320/1,210 10 minutes early 0.10 0.30 2130
hours On time 0.40 0.70 3170
 $1.53 per hour  $1.09 per hour 10 minutes late 0.25 0.95 7195
20 minutes late 0.05 1.00 9600
b. Analytical approach to Brennan Aircraft problem:
Expected number of hours between failures if one pen
Random
replaced Exam Time Cumulative Number
 10(0.05)  20(0.15)  30(0.15) Distribution Probability Probability Interval
 40(0.20)  50(0.20)  60(0.15) 20% faster than expected 0.15 0.15 0115
 70(0.10) In expected time 0.50 0.65 1665
20% later than expected 0.25 0.90 6690
 42 40% later than expected 0.10 1.00 9100

Table for 15-27.

Arrival Exam Time Time
Random Time Random Length In Patient
Patient Number (A.M.) Number (Minutes) (A.M.) Leaves
A 60 9:30 80 18 9:30 9:48
B 08 9:25 45 20 9:48 10:08
C 19 9:55 86 18 10:08 10:26
D 29 10:20 99 14 10:26 10:40
E 36 10:45 02 24 10:45 11:09
F 72 11:25 34 15 11:25 11:40
G 30 11:20 87 24 11:40 12:04 P.M.
H 27 11:35 08 12 12:04 P.M. 12:16 P.M.
a a
fifth row fourth row
from from
bottom bottom

Dr. Greenberg is only 1 minute late, so hell probably make his

ight. But you must repeat this simulation several times and take
the average schedule.
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CHAPTER 15 SIMULATION MODELING 237

15-28. Actual distribution:

Random
Order Cumulative Number
(Sq. Ft.) Probability Probability Interval
8,000 0.45 0.45 0145
11,000 0.55 1.00 4600

Demand distribution:

Steel per Random

Week Cumulative Number
(Sq. Ft.) Probability Probability Interval
6,000 0.05 0.05 0105
7,000 0.15 0.20 0620
8,000 0.20 0.40 2140
9,000 0.30 0.70 4170
10,000 0.20 0.90 7190
11,000 0.10 1.00 9100

Sample Pelnor simulation for 20 weeks:

Size of Inventory End of
Random Arriving at Start Random Week
Week Number Shipment of Week Number Demand Inventory
1 84 11,000 11,000 00 11,000 0
2 55 11,000 11,000 59 9,000 2,000
3 25 8,000 10,000 09 7,000 3,000
4 71 11,000 14,000 97 11,000 3,000
5 34 8,000 11,000 69 9,000 2,000
6 57 11,000 13,000 98 11,000 2,000
7 50 11,000 13,000 93 11,000 2,000
8 44 8,000 10,000 49 9,000 1,000
9 95 11,000 12,000 51 9,000 3,000
10 64 11,000 14,000 92 11,000 3,000
11 16 8,000 11,000 92 11,000 0
12 46 11,000 11,000 16 7,000 4,000
13 54 11,000 15,000 84 10,000 5,000
14 64 11,000 16,000 27 8,000 8,000
15 61 11,000 19,000 64 9,000 10,000
16 23 8,000 18,000 94 11,000 7,000
17 01 8,000 15,000 17 7,000 8,000
18 79 11,000 19,000 71 10,000 9,000
19 19 8,000 17,000 94 11,000 6,000
20 50 11,000 17,000 30 8,000 9,000
a a
from third column from right from fourth column from right
in random number table in random number table

Pelnor should add more storage capacity if the current policy will
be maintained. However, students should recognize that a buildup
will continue innitely. The expected supply is  0.45(8,000) 
0.55(11,000)  9,650 sq ft. The expected demand  8,750 sq ft.
Over the long run, the on-hand supply will grow and grow to an
innite level.
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238 CHAPTER 15 SIMULATION MODELING

15-29. a. Random number intervals must be set for each from- 15-30.
to combination:
Time Random
From-To Random Number Between Number
Combination Interval Arrivals Probability Interval

From initial exam 1 0.20 0120

To x-ray 0145 2 0.25 2145
To operating room 4660 3 0.30 4675
To observation 6170 4 0.15 7690
To out processing 7100 5 0.10 9100
From x-ray
To operating 0110
To cast 1135 Random
To observation 3670 Service Number
To out processing 7100 Time Probability Interval
From operating room 1 0.10 0110
To cast 0125 2 0.15 1125
To observation 2695 3 0.35 2660
To out processing 9600 4 0.15 6175
From cast fitting 5 0.15 7690
To observation 0155 6 0.10 9100
To x-ray 5660
To out processing 6100
From observation
To operating 0115
To x-ray 1630
To out processing 3100

Sample simulation using random numbers from Table 15.5,

column 1:

Random
Person Number From To
1 52 Initial exam Operating room
37 Operating room Observation
82 Observation Out processing
2 69 Initial exam Observation
98 Observation Out processing
3 96 Initial exam Out processing
4 33 Initial exam X-ray
50 X-ray Observation
88 Observation Out processing
5 90 Initial exam Out processing
6 50 Initial exam Operating room
27 Operating room Observation
45 Observation Out processing
7 81 Initial exam Out processing
8 66 Initial exam Observation
74 Observation Out processing
9 30 Initial exam X-ray
59 X-ray Observation
67 Observation Out processing
10 60 Initial exam Operating room
60 Operating room Observation
80 Observation Out processing

b. Using this very small simulation, no one goes to

x-ray twice. It is very possible for this situation to occur,
however.
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CHAPTER 15 SIMULATION MODELING 239

a. Simulation of one teller drive-through:

Time Time Wait

Random Between Actual Service Random Service Service Time
Number Arrivals Time Begins Number Time Complete (Minutes)
52 3 1:03 1:03 60 3 1:06 0
37 2 1:05 1:06 60 3 1:09 1
82 4 1:09 1:09 80 5 1:14 0
69 3 1:12 1:14 53 3 1:17 2
98 5 1:17 1:17 69 4 1:21 0
96 5 1:22 1:22 37 3 1:25 0
33 2 1:24 1:25 06 1 1:26 1
50 3 1:27 1:27 63 4 1:31 0
88 4 1:31 1:31 57 3 1:34 0
90 4 1:35 1:35 02 1 1:36 0
50 3 1:38 1:38 94 6 1:44 0
27 2 1:40 1:44 52 3 1:47 4
45 2 1:42 1:47 69 4 1:51 5
81 4 1:46 1:51 33 3 1:54 5
66 3 1:49 1:54 32 3 1:57 5
74 3 1:52 1:57 30 3 2:00 5
30 2 1:54 2:00 48 3 2:03 6
59 3 1:57 2:03 88 5 2:08 46
67 3 2:00 Total 40

Yearly waiting costs imputed  (40 minutes/hour)

(7 hours/day)(200 days)($1/minute)  $56,000
b. Simulation of two drive-through windows:

Service Service Service Service

Starts Ends Starts Ends
Time At At At At Wait
Random Between Actual Random Service Window Window Window Window Time
Number Arrivals Time Number Time 1 1 2 2 (Minutes)
52 3 1:03 60 3 1:03 1:06 0
37 2 1:05 60 3 1:05 1:08 0
82 4 1:09 80 5 1:09 1:14 0
69 3 1:12 53 3 1:12 1:15 0
98 5 1:17 69 4 1:17 1:21 0
96 5 1:22 37 3 1:22 1:25 0
33 2 1:24 06 1 1:24 1:25 0
50 3 1:27 63 4 1:27 1:31 0
88 4 1:31 57 3 1:31 1:34 0
90 4 1:35 02 1 1:35 1:36 0
50 3 1:38 94 6 1:38 1:44 0
27 2 1:40 52 3 1:40 1:43 0
45 2 1:42 69 4 1:43 1:47 1
81 4 1:46 33 3 1:46 1:49 0
66 3 1:49 32 3 1:49 1:52 0
74 3 1:52 30 3 1:52 1:55 0
30 2 1:54 48 3 1:54 1:57 0
59 3 1:57 88 5 1:57 2:02 0
67 3 2:00 0
1
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240 CHAPTER 15 SIMULATION MODELING

Yearly waiting costs imputed  (1 minute)

(7 hours)(200 days)($1)  $1,400.
c. Cost alternatives:
Cost/year  wait cost/year
 drive through amortization/year
 labor (teller) cost/year
Cost for one teller drive-through  $56,000 
$12,000  $16,000
 $84,000
Cost for two drive-throughs  $1,400  $20,000
 $32,000
 $53,400
Cost savings if two tellers used  $84,000  $53,400
 $30,600
The conclusion is to place two teller booths in use. It is critical to
replicate the simulation for a much longer time period before
drawing any rm conclusions, however.

SOLUTIONS TO INTERNET HOMEWORK PROBLEMS

15-31. a. Prot  (amount produced)(sales price)
 (ingredient 1 cost)(ingredient 1 units)
 (ingredient 2 cost)(ingredient 2 units)
 30(sales price)  $50(25 units)
 (ingredient 2 cost)(36 units)
 30(sales price)  $1,250
 36(ingredient 2 cost)
where sales price and ingredient 2 cost are probabilistic.
b. Expected sales price  0.2($300)  0.5($350)
 0.3($400)
 $355
Expected ingredient 2 cost  0.1($35)  0.6($40)
 0.3($45)
 $41
Expected prot  30($355)  $1,250  36($41)
 $7,924/day
c.

Daily
Random Sales Gross Random Ingred. 2 Ingred. 2 Ingred.
Day Number Price Sales Number Cost/Unit Cost Total 1 Cost Profit
1 52 $350 10,500 37 $40 $1,440 $1,250 $7,810
2 06 300 9,000 66 40 1,440 1,250 6,310
3 50 350 10,500 91 45 1,620 1,250 7,630
4 88 400 12,000 35 40 1,440 1,250 9,310
5 53 350 10,500 32 40 1,440 1,250 7,810
6 30 350 10,500 00 45 1,620 1,250 7,630
7 10 300 9,000 84 45 1,620 1,250 6,130
8 47 350 10,500 57 40 1,440 1,250 7,810
9 99 400 12,000 07 35 1,260 1,250 9,490

Random number intervals for sales price: Random number intervals for cost 2:
0120  $300 0110  $35
2170  $350 1170  $40
7100  $400 7100  $45
d. Expected prot from simulation  $7,770/day
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CHAPTER 15 SIMULATION MODELING 241

15-32. Useful statistics from the simulation:

Average demand:
Demand Random*
For Fre- Cumulative Number
Simulation 209/24  8.71
Mercedes quency Probability Probability Interval Theoretical  8.75
6 3 0.083 0.083 0108 Average lead time:
7 4 0.111 0.194 0919 Simulation 16/8  2.00
8 6 0.167 0.361 2036
9 12 0.333 0.694 3769 Theoretical  1.86
10 9 0.250 0.944 7094 Average ending inventory:
11 1 0.028 0.972 9597 45/24  1.875
12 31 0.028 1.000 9800
  36   1.000 Average number of lost sales:
*Note that the cumulative probabilities have been rounded to two signi-
97/24  4.04
cant digits when used to develop the random number intervals. 15-33. Ct  carrying cost  24(600)(1.875)  27,000
 lost sale cost  4,350(97)  421,950
Random  order cost  8(570)  454,560
Lead Time Cumulative Number
(Months) Probability Probability Interval
453,510
 $453,510, or $18,896 per month
1 0.44 0.44 0144
2 0.33 0.77 4577
3 0.16 0.93 7893
4 0.07 1.00 9400

We have arbitrarily chosen a beginning inventory of 14 cars.

Table for Problem 15-32.

Time Beginning Random End Lost Place Random Lead

Period Inventory Number* Demand Sold Inventory Sale Order Number Time
1 14 07 6 6 8 0 Yes 60 2
2 8 77 10 8 0 2 No
3 0 49 9 0 0 9 No
4 14 76 10 10 4 0 Yes 95 4
5 4 51 9 4 0 5 No
6 0 16 7 0 0 7 No
7 0 14 7 0 0 7 No
8 0 85 10 0 0 10 No
9 14 59 9 9 5 0 Yes 85 3
10 5 40 9 5 0 4 No
11 0 42 9 0 0 9 No
12 0 52 9 0 0 9 No
13 14 39 9 9 5 0 Yes 73 2
14 5 89 10 5 0 5 No
15 0 88 10 0 0 10 No
16 14 24 8 8 6 0 Yes 01 1
17 6 11 7 6 0 1 No
18 14 67 9 9 5 0 Yes 62 2
19 5 51 9 5 0 4 No
20 0 33 8 0 0 8 No
21 14 08 6 6 8 0 Yes 40 1
22 8 29 8 8 0 0 No
23 14 75 10 10 4 0 Yes 33 1
24 4 95 211 114 50 97 No
209 112 45 97 16

*Random numbers taken from column 18 of Table 15.5, reading top to bottom, then from column 17, reading bottom to top.
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242 CHAPTER 15 SIMULATION MODELING

15-34. As in Problem 15-32, we have arbitrarily chosen a begin-

ning inventory of 14 cars.

Time Beginning Random End Lost Place Random Lead

Period Inventory Number* Demand Sold Inventory Sale Order Number Time
1 14 07 6 6 8 0 Yes 60 2
2 8 77 10 8 0 2 No
3 0 49 9 0 0 9 No
4 21 76 10 10 11 0 No
5 11 95 9 9 2 0 Yes 51 2
6 2 16 7 2 0 5 No
7 0 14 7 0 0 7 No
8 21 85 10 10 11 0 No
9 11 59 9 9 2 0 Yes 85 3
10 2 40 9 2 0 7 No
11 0 42 9 0 0 9 No
12 0 52 9 0 0 9 No
13 21 39 9 9 12 0 No
14 12 73 10 10 2 0 Yes 89 3
15 2 88 10 2 0 8 No
16 0 24 8 0 0 8 No
17 0 01 6 0 0 6 No
18 21 11 7 7 14 0 No
19 14 67 9 9 5 0 Yes 62 2
20 5 51 9 5 0 4 No
21 0 33 6 0 0 6 No
22 21 08 6 6 15 0 No
23 15 40 9 9 6 0 Yes 29 1
24 6 29 208 116 80 82 No
Totals 201 119 88 82 13

*Random numbers taken from column 18 of Table 15.5, reading top to bottom, then from column 17, reading bottom to top.

Useful statistics from the simulation: 15-35.

Average demand: Maruggis Solution
Simulation X?Z\xv  8.38
Cumul. Random
Theoretical  8.75
Maruggis Proba- Proba- Number
Average lead time: Income bility bility Interval
Simulation ZC\n  2.17 $350 0.40 0.40 0140
Theoretical  1.86 400 0.20 0.60 4160
450 0.30 0.90 6190
Average ending inventory: 500 0.10 1.00 9100
<<\xv  3.67
Average number of lost sales: Cumul. Random
<X\xv  3.41 Maruggis Proba- Proba- Number
Expenses bility bility Interval
Ct  carrying cost  24(600)(3.67)  52,848
$300 0.10 0.10 0110
 lost sale cost  4,350(82)  356,700 400 0.45 0.55 1155
 order cost  6(570)  363,420 500 0.30 0.85 5685
600 0.15 1.00 8600
360,120
Order quantity  14, reorder point  14 In this problem, students may select their own random numbers. If
$453,510 or $18,896/month the instructor prefers, he or she may assign rows 1 and 2 as we
Order quantity  21, reorder point  10 have used on the following page.
$360,120 or $15,005/month
It would appear the inventory policy of ordering in quantities of 21
using a reorder point of 10 is to be preferred.
Students should be cautioned that the single 24-month period
simulation of each condition does not provide sufcient informa-
tion upon which to base any rm conclusion.
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CHAPTER 15 SIMULATION MODELING 243

Beginning Random Random Ending

Month Balance Number Income Number Expense Balance
1 $600 52 $400 37 $400 $600
2 600 06 350 63 500 450
3 450 50 400 28 400 450
4 450 88 450 02 300 600
5 600 53 400 74 500 500
6 500 30 350 35 400 450
7 450 10 350 24 400 400
8 400 47 400 03 300 500
9 500 99 500 29 400 600
10 600 37 350 60 500 450
11 450 66 450 74 500 400
12 400 91 500 85 500 400
a a
row 1 row 2

Maruggis balance never drops below $400 and he should be able A spreadsheet model for the scenario should be constructed
to balance his account. consisting of the following items:

Arrival Interval Distribution

SOLUTION TO ALABAMA AIRLINES CASE Random Number Range
Lower Upper Arrival
This case describes a single-server queuing scenario that is to be
Probability Limit Limit Gap (Minutes)
investigated by simulation. The basic premise can be applied to
various queuing scenarios (e.g., bank, post ofce, cinema box of- 0.11 0 10 1
ce, among others) and is not restricted to the Alabama Airlines 0.21 11 31 2
reservation scenario. The purpose of the case is to introduce stu- 0.22 32 53 3
0.20 54 73 4
dents to simulation as a powerful decision-making aid.
0.16 74 89 5
When presenting simulation modeling techniques in the 0.10 90 99 6
classroom, one is faced with the following dilemma: the trade-off
between the benets of the modeling and decision-making process
versus the complexity and the tedium of the required calculations. Service Time Distribution
Spreadsheets that have a random number generator provide a
Random Number Range
means whereby the principles and methodology of simulation can Lower Upper Service
be introduced and illustrated by investigating the decision-making Probability Limit Limit Time (Minutes)
process for meaningful size problems without making the associ-
0.20 0 19 1
ated calculation requirements too burdensome. A spreadsheet such
0.19 20 38 2
as Excel is envisaged as the vehicle for this simulation. 0.18 39 56 3
In the assignment the students consider themselves to be 0.17 57 73 4
quantitative analysts investigating the particular scenario for their 0.13 74 86 5
client(s). The assignments are presented in the form of a report to 0.10 87 96 6
their clients. For each scenario, an executive summary is re- 0.03 97 99 7
quired stating the main results and recommendations. The body of
the report then supports these recommendations with precise ex-
The two tables above are used for the random number generation
planations, relevant data, and models. Students are encouraged to
of arrival and service times to the given distributions. (Random
be concise and to the point.
number lower limits could have started at 01, with upper limits set
at 00.)
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244 CHAPTER 15 SIMULATION MODELING

One Sample Trial

TIME TIME TIME
CUSTOMER RANDOM ARRIVAL RANDOM SERVICE ARRIVAL SERVICE SERVICE IN ON SERVER PERCENT
NUMBER NUMBER GAP NUMBER TIME TIME START END SYSTEM HOLD IDLE UTILIZATION
Summary for This Trial Run (averages): 15.5 12.0 0.15 95.9
(maximums): 34.0 32.0 2.00
0 0
1 27 2 82 5 2 2 7 5 0 2
2 8 1 60 4 3 7 11 8 4 0
3 93 6 25 2 9 11 13 4 2 0
4 93 6 36 2 15 15 17 2 0 2
5 65 4 91 6 19 19 25 6 0 2
6 44 3 88 6 22 25 31 9 3 0
7 41 3 23 2 25 31 33 8 6 0

The above table is, in effect, the actual model of the scenario. The
headings are the key to expressing the relationships between the
various model elements as relatively simple (that is, intuitive) for-
mulas. The relationships need only be expressed once, for cus-
tomer/caller 1, are then copied down for as many callers as are
required in the simulation window (here 2 hours). Relevant mea-
sures of performance have to be chosen and evaluated for each
trial. Here, for example, they are the average and maximum of
time in the system (that is, time on hold  time being served),
time on hold, time server idle, and server utilization. (All times
are in minutes.)
To obtain steady-state results, the trial above has to be repeated
a sufcient number of times, where each time the measures of
performance are stored in a summary table seen on the next page.

Summary of Trials
TIME TIME TIME TIME TIME TIME
IN IN SERVER PERCENT IN IN SERVER PERCENT
TRIAL SYSTEM QUEUE IDLE UTILIZATION TRIAL SYSTEM QUEUE IDLE UTILIZATION
Avg.: 8.9 5.7 0.4 88.4 Max.: 18.0 14.5 4.3 98.1
0 7.6 4.0 0.43 89.5 0 14.0 10.0 4.0
1 8.6 5.1 0.23 93.9 1 17.0 15.0 5.0
2 3.8 1.2 1.00 72.4 2 10.0 7.0 5.0
3 17.3 13.8 0.25 93.4 3 30.0 27.0 3.0
4 4.8 1.8 0.65 82.3 4 11.0 6.0 6.0
5 6.0 2.8 0.80 80.0 5 14.0 9.0 4.0
6 7.8 4.1 0.25 93.6 6 13.0 11.0 5.0
7 4.7 1.9 0.55 83.5 7 9.0 7.0 5.0

A straightforward way of determining when the various mea-
sures of performance have stabilized is graphically (see Figures 1
and 2), and these long-term averages can be used to make recom-
mendations regarding hiring a second reservation agent.
For part (b) essentially the approach above is repeated with
the new arrival distribution.
It is possible to automate the procedure above by using
macros, although by no means are they necessary or required.
(Students with more advanced spreadsheet experience often elect
to do this spontaneously.)
Discussion: A number of items can be addressed in the dis-
cussion of the case:
Reliability of the recommendations, vis--vis the number of tri-
als, structure of the model, and so on.
Importance of having relevant and meaningful measures of per-
formance (for example, average wait times may be low but if
their standard deviation is large, the maximum times in line
may be unacceptable.
Human and soft issues: Is utilization of, for example, 95% for
a human server appropriate or indeed desirable?
What are the assumptions in the model [for example, callers do
not hang up, changeover times are negligible (or included in
service times), there are no calls in the system at time zero].
What are the implications/restrictions?
The model and simulation can easily be extended to become
more realistic by incorporating the various assumptions and simulat-
ing callers hanging up, multiple servers, and so on, depending on
the level of the class and the students familiarity with spreadsheets.
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CHAPTER 15 SIMULATION MODELING 245

Average Idle Time

5
Maximum Idle Time
4.5
4
3.5
3
Minutes 2.5
2
1.5
1
0.5
0
0 10 20 30 40
Number of Trials

Figure 1. Server Idle Time: Summary of Trials

Average Line Average System

Maximum Line Maximum System
18
16

14
12
Minutes

10
8
6

4
2
0 10 20 30 40 50
Number of Trials
Figure 2. Time in System and Time in Line: Summary of Trials
Conclusion: The application described above, although not changing the arrival interval and service time distributions. Fi-
exceedingly complex, is nevertheless considered to be more realistic nally, a not insignicant benet is the popularity among students
than could normally be attempted without resorting to a simulation of this approach, where they can dramatically demonstrate for
model. Even the least quantitatively oriented students persevere themselves the consequences of various what if scenarios by
with implementation and experimentation of these models and amending a few parameters.
based on formal feedback (evaluations) and informal feedback
(verbal comments) view the experience as highly benecial. Two SOLUTION TO STATEWIDE DEVELOPMENT
reasons are given for this: First, the use, abuse, and relevance of
modeling in decision making is demonstrated dramatically in
CORPORATION CASE
We will assume that the time of concern is from 8:00 a.m. until
problems more realistic and complex than the typical compara-
8:00 p.m. each weekend day. The results will vary based on the
tively trivial or textbook examples, which require hand or calcula-
random numbers used. However, the following tables can be used
tor computation. Second, the time and energy that students spend
to assign random numbers to the events. The times are expressed
in acquiring the appropriate spreadsheet skill levels are perceived
in hours.
by them as acquiring an extremely useful skill, since an in-depth
familiarity with a spreadsheet package is now a necessary require-
ment for a business major.
The application described above has been used successfully Time between Cumulative Random number
calls (Hrs.) Probability probability interval
in the classroom to demonstrate the principles and usefulness of
simulation. Clearly, many other (nonqueuing) situations lend 0.5 0.15 0.15 115
themselves to be modeled in the same manner. The case can read- 1.0 0.30 0.45 1645
ily be updated/renewed from semester to semester (1) by changing 1.5 0.30 0.75 4675
2.0 0.25 1.00 7600
Alabama Airlines to a bank, movie theater, and so on, and (2) by
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246 CHAPTER 15 SIMULATION MODELING

Cumulative Random number

Time for repair Probability probability interval
0.5 0.45 0.45 145
1.0 0.30 0.75 4675
1.5 0.20 0.95 7695
2.0 0.05 1.00 9600

Trip for Cumulative Random number

supplies Probability probability interval
No 0.9 0.9 19
Yes 0.1 1.0 0

The time for a repair that requires a trip to the supply house
will be 2 hours and 30 minutes 30 minutes to nd the problem,
1 hour to make the trip, and 1 hour to install the part.
Using an Excel spreadsheet, the simulation can be performed
as shown.

Time RN for supply Time RN for Time for

Call RN for Until next Time call house Trip needed work repair job with Work Waiting
Number call call arrives trip (time 2.5) begins time no trip Ends time
1 68 1.5 9.30 3 No 9:30 55 1 10:30 0
2 63 1.5 11:00 1 No 11:00 87 1.5 12:30 0
3 28 1 12:00 5 No 12:30 68 1 1:30 0:30
4 91 2 2:00 0 Yes 2:00 21 2.5* 4:30 0
5** 84 2 4:00 4 No 4:30 61 1 5.30 0.30

*Because a trip to the supply house was necessary for this service call, the time for the repair is 2.5 hours. The random number for the repair is not used for
this call.
**Only 5 calls are shown. For the entire simulation, 150 calls were simulated. This was repeated several times.

A similar table was developed in an Excel spreadsheet. While

different simulations produced different results due to the random
numbers used, the typical cost paid to tenants who must wait is
less than $60 per day. In about 2% of the simulations, the total
cost per day is over $100, and in less than 0.1% is the cost over
$240 per day which is the cost of the extra worker. Therefore,
based on the cost, it is less expensive to have only one worker.

SOLUTIONS TO INTERNET CASES

SOLUTION TO ABJAR TRANSPORT COMPANY CASE

Table 1 uses a cumulative normal distribution of monthly cargo
tonnages in generating freight weights. The distribution of cargo
between containerized and non-containerized cargo is 25% to
75%. It is assumed that the noncontainerized shipments will carry
the capacity cargo of 60 tons. Hence, daily freight hauled by each
truck is 180 tons (60 tons/trips  3 trips/day).
For containerized cargo:
60% is packaged in 40-ft containers
20% is packaged in 30-ft containers
20% is packaged in 20-ft containers
Cargo weights:
40 ft handles 60 tons
30 ft handles 45 tons
20 ft handles 20 tons
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CHAPTER 15 SIMULATION MODELING 247

Table 1
Trucks Trucks
Freight Required Required
per Day 75% 3 Trips/Day 25% 3 Trips/Day
Mo. RN Freight (30 Days) Noncontainerized 60 Tons/Trip Containerized 53 Tons/Trip
1 63 171,000 5,700 4,275 24 1,425 9
2 88 197,000 6,567 4,925 27 1,642 10
3 55 165,000 5,500 4,125 23 1,375 9
4 69 176,000 5,867 4,400 24 1,467 9
5 13 124,000 4,133 3,100 17 1,033 7
6 17 131,000 4,367 3,275 18 1,092 7
7 36 150,000 5,000 3,750 21 1,250 8
8 81 186,000 6,200 4,650 26 1,550 10
9 84 190,000 6,333 4,750 26 1,583 10
10 63 172,000 5,733 4,300 24 1,433 9
11 70 177,000 5,900 4,425 25 1,475 9
12 06 110,000 3,667 2,750 15 917 6

It is noted that a truck can carry two 20-foot containers, so Biales Waste Disposal, GMBH.:
that the total cargo is 40 tons. Thus average cargo hauled by con- Costs in German Marks (DM):
tainerized freight is 53 tons, or 0.6  60  0.2  45  0.2  40. Shipment: DM 900 per load
Daily cargo hauled is 3  53  159 tons/day. Loading/unloading DM 120 per load
Table 1 shows simulated monthly freight shipments. Cargo is Overhead (DM 41,000/25) DM 1,640 per load
then categorized into containerized and noncontainerized ship- DM 2,660 per load
ments. The daily truck requirements for each month is projected.
As seen from the simulated years operation, the daily truck
requirement for noncontainerized cargo ranges from 15 to 27. For
containerized cargo it ranges from 6 to 10 trucks. The maximum
number of trucks required to handle the load in any single period
is 37. It should be noted that the utilization factor is 0.96. Hence
the number of trucks should be adjusted upward accordingly.
A discussion of obtaining a simulated Freight from a Ran-
dom Number should be highlighted; for example, why does the
random number 63 result in a freight of 171,000?

Probability distributions for Bialis Waste Disposal case study:

Random Revenue Random

Number of Number per Number
Barrels Loaded Probability Interval Barrel Probability Interval
2630 (28) 0.12 0112 DM50 0.20 0120
3135 (33) 0.16 1328 DM60 0.44 2164
3640 (38) 0.24 2952 DM70 0.28 6592
4145 (43) 0.36 5388 DM80 0.08 9300
4650 (48) 0.12 8900 1.00
1.00
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248 CHAPTER 15 SIMULATION MODELING

Number Revenue Repair times are simulated by the use of cumulative normal
Truckload Random of Random per Total distributions for routine and accelerated repair procedures. It is
Simulation Number Barrels Number Barrel Revenue suggested that the student begins the simulation process by using
only the routine repair procedure. Calciner availability should be-
1 52 38 06 DM50 DM1,990
come apparent as the simulation process is executed.
2 37 38 63 60 2,280 Table 1, on the next page, is a one year (366 days of failures)
3 82 43 57 60 2,580 simulation of calciner failures and repairs using both normal and
4 69 43 02 50 2,150
accelerated procedures. (For practicality in scale interpretation,
two-digit random numbers that would yield greater than 60 days
5 98 48 94 80 3,840 between failures were not accepted. This corresponds to a failure
6 96 48 52 60 2,880 of 0.5 or less.) Cumulative calciner downtime for normal repairs
7 33 38 69 70 2,660 was 355.5 days, and for accelerated repairs was simulated to be
181 days.
8 50 38 33 60 2,280
Lost production for normal repairs:
9 88 43 32 60 2,580
355.5 calciner days  100 tons/calciner day  35,550 tons
10 90 48 30 60 2,880
Lost production for accelerated repairs:
11 50 38 48 60 2,280
181 calciner days  100 tons/calciner day  18,100 tons
12 27 33 88 70 2,310
Additional output for accelerated repairs:
13 45 38 14 50 1,900 35,550 tons  18,100 tons  17,450 tons
14 81 43 02 50 2,150
Prot and overhead contribution:
15 66 43 83 70 3,010 17,450 tons  $12/ton  $209,400
16 74 43 05 50 2,150 For calciner failures 116 or one years simulation, the fol-
17 30 38 34 60 2,280 lowing are rental costs for crane. (Note: there is a $12,000 mini-
18 59 43 55 60 2,580 mum charge per rental.)

19 67 43 09 50 2,150
Dryer Failure Repair Days Cost
20 60 43 77 70 3,010
1 13 $19,500
21 60 43 08 50 2,150 2 9.5 14,250
3* 7 10,500*
22 80 43 45 60 2,580
4* 11 16,500
23 53 43 84 70 3,010 5* 12.5 18,750
24 69 43 84 70 3,010 6* 8 12,000
7 9.5 14,250
25 37 38 77 70 2,660 8 11 16,500
DM 63,260 9 9.5 14,250
10 13 19,500
11 10.5 15,750
Average income per load  DM2,544.40 12* 13.5 20,250
13 7.5 11,250*
Loss per load  DM2,660  2,554.40  DM105.60 14 8.5 12,750
Loss per year  25 DM105.60  DM2,640 15 10.5 15,750
16 10.5 $215,750
The conclusion, based on just one short simulation, is that money
Total $247,500
will be lost by continuing service to Italy.
*As seen in the simulation, the crane was rented continuously for repairs
Buffalo Alkali and Plastics 36 and 1213. These represent only one rental and the minimum charge
The solution to the case is based on Monte Carlo simulation of of $12,000 applies once each for these two cases.
shell failures and repairs by normal as well as accelerated proce-
dures. Simulation models are the cumulative probability distribu- Hence, rental costs for 16 failures  $247,500; prot and over-
tions displayed in the tables on the next page. head contribution amounts to $209,400 for additional output.
Simulation of shell failures is achieved through the use of the Since costs exceed contribution, the accelerated procedure should
cumulative Poisson distribution that is determined by an average not be adopted.
failure rate of 1.5 per month. Failure frequency is converted to
time between failures and is plotted against cumulative proba-
bility. The arrival of failures is simulated by selecting two-digit
random numbers which are projected on the cumulative probabil-
ity axis. Corresponding time between failures are then deter-
mined by these randomly selected probabilities.
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CHAPTER 15 SIMULATION MODELING 249

Table 1. Buffalo Alkali Simulation

Time Time Normal Repairs Accelerated Repairs Cumulative
Dryer Random Between Failure Begin Repairs Random Repair Time Repair Time Calciner Downtime Days
Failure No. Failure Day Normal Accel. Number Time Finished Time Finished Normal Accelerated
1 42 53 53 53 53 93 19.5 72.5 13 66 19.5 13
2 77 16 69 72.5 69 39 14 86.5 9.5 78.5 37* 22.5**
3 99 5 74 86.5 78.5 06 10 96.5 7 85.5 59.5 34
4 96 7.5 81.5 96.5 85.5 72 17 113.5 11 96.5 91.5 49
5 89 12 93.5 113.5 96.5 91 19 132.5 12.5 109 130.5 64.5
6 85 13 106.5 132.5 109 14 12 144.5 8 117 168.5 75
7 63 24 130.5 144.5 130.5 36 14 158.5 9.5 140 196.5 84.5
8 51 32 162.5 162.5 162.5 69 16.5 179 11 173.5 213 95.5
9 52 31 193.5 193.5 193.5 40 14 207.5 9.5 203 227 105
10 48 43 236.5 236.5 236.5 93 19.5 256 13 249.5 246.5 118
11 54 30 266.5 266.5 266.5 61 16 282.5 10.5 277 262.5 128.5
12 81 14.5 281 282.5 281 97 20.5 303 13.5 294.5 284.5 142
13 91 10.5 291.5 303 294.5 12 11 314 7.5 302 307 152.5
14 69 21 312.5 314 312.5 21 12.5 326.5 8.5 321 321 161
15 91 10.5 323 326.5 323 54 15.5 342 10.5 333.5 340 170.5
16 46 43 366 366 366 53 15.5 381.5 10.5 376.5 355.5 181

*37 days is calculated as follows: 3.5 days (elapse before repairs can begin) plus 14 days (repair) plus 19.5 (previous downtime).
**22.5 days is calculated as follows: 9.5 days (repair time) plus 13 days (previous downtime).