Simulation Techniques

Reporters:
Joshua R. Perlas
Ricci Jan Mae Roca
 History
The history of computer simulation dates back to World
War II when two mathematicians Jon Von Neumann and
Stanislaw Ulam were faced with the puzzling problem of
behaviour of neutrons. Hit and trial experimentation were
too costly and the problem was too complicated for
analysis. Hence, the Roulette wheel technique was
suggested by the mathematicians. The basic data regarding
the occurrence of various events were known, into which
the probabilities of separate events were merged in a step by
step analysis to predict the outcome of the whole sequence
of events. With the remarkable success of the techniques on
neutron problem, it soon became popular and found many
applications in the business and industry.
 Simulation
-Model that replicates real system
2 inputs:
-Controllable Inputs
-Probabilistic Inputs
Simulation model is used to eliminate the effects of various
actions. The idea behind simulation is threefold:
-To imitate a real world situation mathematically
-Then to study its properties and operating characteristics
-Finally, to draw conclusions and make action decisions based on
the result of the simulation

Simulation Techniques:
•Monte Carlo Technique
•Queuing
•Simulation on Inventory Analysis
 Simulation Techniques
Monte Carlo Technique - Monte Carlo Technique is
a method for selecting numbers randomly from a
probability distribution for use in simulation
. Simulation of a Queuing Problem
An important use of simulation is in the waiting-line
problems. The assumptions required for solving
queuing problems are quite restrictive
Simulation and Inventory Analysis
The commonly used EOQ models are based on the
assumption that both product demand and reorder
lead time are known, constant values. In most real-
world inventory situations, though, demand and lead
time are variables, so accurate analysis becomes
extremely difficult to handle by any means other
than simulation.
Illustrative Problem – Simulation of a Queuing
Problem

Number of Probability Cumulative Random - Number

Arrivals Probability Intervals
0 0.13 0.13 01 through 13
1 0.17 0.3 14 through 30
2 0.15 0.45 31 through 45
3 0.25 0.7 46 through 70
4 0.2 0.9 71 through 90
5 0.1 1 91 through 00
1
 Daily Probability Cumulative Random - Number

Unloading Rates Probability Intervals

1 0.05 0.05 01 through 05
2 0.15 0.2 06 through 20
3 0.5 0.7 21 through 70
4 0.2 0.9 71 through 90
5 0.1 1 91 through 00
1
 Number Number Total

Delayed from Random of Nightly to Be Random Number

Day Previous Day Number Arrivals Unloaded Number Unloaded

1 - 52 3 3 37 3
2 0 6 0 0 63 0
3 0 50 3 3 28 3
4 0 88 4 4 2 1
5 3 53 3 6 74 4
6 2 30 1 3 35 3
7 0 10 0 0 24 0
8 0 47 3 3 3 1
9 2 99 5 7 29 3
10 4 37 2 6 60 3
11 3 66 3 6 74 4
12 2 91 5 7 85 4
13 3 35 2 5 90 4
14 1 32 2 3 73 3
15 0 0 5 5 59 3
20 41

Total delays Total Arrivals

 Optimization vs. Simulation
Optimization Models
-Yield decision variables as outputs
-Promise the best (optimal) solution to the model
Simulation Models
-Require the decision variables as inputs
-Give only satisfactory answer
 Advantages and Disadvantages:
Advantages:
• Simulation is relatively straightforward and flexible
• It can be used to analyse large and complex real-world situations
that cannot be solved using conventional operations management
models.
• Real-world complications can be included that most OM models
cannot permit.
• “Time compression” is possible
• Simulation allows “what-if?” types of questions.
• Simulations do not interfere with real-world systems. It may be too
disruptive.
• Simulation can study the interactive effects of individual
components or variables in order to determine which ones are
important
Disadvantages
• Good simulation models can be very expensive; they may
take many months to develop.
• It is a trial-and-error approach that may produce different
solutions in repeated runs. It does not generate optimal
solutions to problems.
• Managers must generate all of the conditions and
constraints for solutions that they want to examine. The
simulation model does not produce answers without
adequate realistic input.
• Each simulation model is unique. Its solutions and
inferences are not usually transferable to other problems.
 References:
• -Operation Management 10th Edition by Jay Heizer and Barry
Render
• -Quantitative Methods for Business 12th Edition by David R.
Anderson, et. al
• -Operation Management 7th Edition by Russell and Taylor
• -Operations Management (An Asian Perspective) by William J.
Stevenson and Sum Chec Chuang
• -Simulation Modelling by Lee Revere and John Large
• -Understanding Monte Carlo Simulation Jim Frost 25, April 2017
• -BlueBookAcademy.com

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