SIMULATION IN

OPERATION RESEARCH

Presented by:-
Apsha Gupta (67)
Avneet Kaur (70)
Sayan Chatterjee (96)
Sneha Chhabra (99)
Swati Rawat (103)
Ujjawal Gupta (104)
 SIMULATION DEFINATION

•Simulation is a quantitative technique developed for studying alternative

courses of actions by building a model of that system and then conducting a
series of experiments to predict the behaviour of the system over a period of
time.
•T. H. Taylor defined Simulation as “A numerical technique for conducting
experiments on a digital computer, which involves certain types of
mathematical & logical relationships necessary to describe the behaviour and
structure of a complex real world system over extended period of time.”
•It is possible to simulate the given system for a given set of inputs and study
the impact of changes to be incorporated on the behaviour of the system.
•The simulation approach can be used to study a problem that involves
uncertainty.
 Advantages of Simulation
• Simulation is useful in solving problems
where all values of the variables are either not
known or partially known.
• In situations where it is difficult to predict or
identify bottlenecks, Simulation is used to
foresee these unknown difficulties.
• The simulation approach is useful to study a
problem that involves uncertainty.
 Types of Simulation
1. System Simulation: This technique is used in situations where business
or operating environment is reproduced to study the behaviour of the
system under different operating parameters. The impact of alternative
management actions on the system can be analysed. This involves
Simulation of an Inventory System and Simulation of Queuing System.

2. Monte Carlo Simulation: This technique is based upon probability

distribution and the use of random numbers. Also called computer
simulation, it can be described as a numerical technique that involves
modeling a stochastic system with the objective of predicting the
system’s behaviour.
It is more popular in business applications due to its ease of
implementation and low costs.
 Steps Involved in Simulation
(Monte Carlo Technique)
• Find the cumulative Probability
• Assign random numbers Interval corresponding to the
Probability.
• From the random number tables, choose a set of required
random numbers from any part of the table. This can be
done by following any fixed pattern like row wise,
column wise, diagonal wise.
• Choice of random numbers whether single digit, double
digit, triple digit etc. depends upon the number of places
to which Probability is known. Eg- If the prob. have been
calculated to two decimal places, which add up to 1.00,
we need 100 numbers of 2 digit to represent eaach point
of probability. Thus we take random no.s 00-99 to
represent them.
 Applications of Simulation
• Location of emergency vehicles
• Inventory policy decisions
• Financial planning (portfolio selection, capital budgeting
decisions)
• Scheduling production processes
• Design of sophisticated products such as reactors, military
equipments, planes, ships etc.
• Deciding the crew size for breakdowns/queuing systems
• Weather forecast
• Forecasting demand, sales, costs, profits etc. contd.
• Physical simulation of :
– Testing of Brake & Car engine testing
– Aero-dynamic testing of planes, cars etc. at design stage
– Training of pilots
Example 17.1 (Simulation of Inventory System)
Ques) Consider the case of a certain product for which the
probability distribution of daily demand and the probability
distribution of the lead time, both developed empirically by
observations made over a long span of peroid, are as
follows:
Probability distribution of daily demand
Units 3 4 5 6 7 8 9 10 11 12
demanded
Probability 0.02 0.08 0.11 0.16 0.19 0.13 0.10 0.08 0.07 0.06

Probability distribution of lead time

Lead time (days) 2 3 4 5
Probability 0.20 0.30 0.35 0.15

The ordering cost is known to be Rs 80 per order, the holding

cost per unit per day is estimated at Rs 2, while the unit
shortage cost, representing the loss in profits is Rs 20 unit per
day. The dealer is anxious to known, for specific re-order
levels and re-order quantities , what would be the total
inventory costs, (made up for holding, ordering and shortage
costs), and therby selecting an appropriate combination of two.

Soln) For our example, we shall evaluate a simulation plan

which calls for re-order quantity of 40 units and re-order level
of 20 units, with a beginning inventory balance 30 units.
Table 1. Random Number Coding: Demand Distribution
Daily Demand Probability Cumulative Random
Probability Number Interval
3 0.02 0.02 00-01
4 0.08 0.10 02-09
5 0.11 0.21 10-20
6 0.16 0.37 21-36
7 0.19 0.56 37-55
8 0.13 0.69 56-68
9 0.10 0.79 69-78
10 0.08 0.87 79-86
11 0.07 0.94 87-93
12 0.06 1.00 94-99
Table 2. Random Number Coding: Lead Time Distribution
Lead Time Probability Cumulative Random
(days) Probability Number
Interval
2 0.20 0.20 00-19
3 0.30 0.50 20-49
4 0.35 0.85 50-84
5 0.15 1.00 85-99
Table 3. Simulation Worksheet
Day R. No Demand R. No L.Time Receipts Balance O H S
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

0 - - - - - 30 - - -
1 68 8 - - - 22 - 44 -
2 13 5 47 3 - 17 80 34 -
3 09 4 - - - 13 - 26 -
4 20 5 - - - 8 - 16 -
5 73 9 - - 40 39 - 78 -
6 07 4 - - - 35 - 70 -
7 92 11 - - - 24 - 48 -
8 99 12 74 4 - 12 80 24 -
9 93 11 - - - 1 - 2 -
10 18 5 - - - 0 - 0 80
11 24 6 - - - 0 - 0 120
12 22 6 - - 40 34 - 68 -
13 07 4 - - - 30 - 60 -
14 29 6 - - - 24 - 48 -
15 57 8 25 3 - 16 80 32 -
16 33 6 - - - 10 - 20 -
17 49 7 - - - 3 - 6 -
18 65 8 - - - 35 - 70 -
19 92 11 - - - 24 - 48 -
20 98 12 21 3 - 12 80 24 -
21 00 3 - - - 9 - 18 -
22 57 8 - - - 1 - 2 -
23 12 5 - - 40 36 - 72 -
24 31 6 - - - 30 - 60 -
25 96 12 47 3 - 18 80 36 -
26 85 10 - - - 8 - 16 -
27 92 11 - - - 0 - 0 60
28 91 11 - - 40 29 - 58 -
29 77 9 69 4 - 20 80 40 -
30 37 7 - - - 13 - 26 -
31 34 6 - - - 7 - 14 -
32 11 5 - - - 2 - 4 -
33 27 6 - - 40 36 - 72 -
34 10 5 - - - 31 - 62 -
35 59 8 - - - 23 - 46 -
36 33 6 09 2 - 17 80 34 -
37 87 11 - - - 6 - 12 -
 38 72 9 - - 40 37 - 74 -

39 73 9 - - - 28 - 56 -

40 79 10 80 4 - 18 80 36 -

640 1,456 260

Total

O: Ordering Cost H: Holding Cost S: Shortage Cost

Completing a 40 day period, we find that the total ordering cost = Rs
640, the holding cost= Rs 1,456 and the out- of cost = Rs 260, the three
adding upto Rs 2,356.
 Example 17.3 N.K Vohra ( Monte Carlo Technique)
Ques) The Tit-Fit Scientific Laboratories is engaged in
producing different types of high class equipment for use in
science laboratories. The company has two different
assembly lines to produce its most popular product
“Pressurex”.The processing time for eaach of the assembly
lines is regarded as a random variable and is described by
the following distributions.
Process Time (minutes) Assembly A1 Assembly A2
10 0.10 0.20
11 0.15 0.40
12 0.40 0.20
13 0.25 0.15
14 0.10 0.05
Using the random numbers, generate data on the process times
for 15 units of the item and compute the expected process time
for the product. For the purpose, read the no.’s vertically
taking the first two digits for the processing time on assembly
A1 and the last two digits for processing time on assembly A2.

4134 8343 3602 7505 7428

7476 1183 9445 0089 3424

4943 1915 5415 0880 9309

Solution) Firstly, we will find the cumulative Prob. And random
number Intervals to the processing times on each of the assemblies.
Table 1.
Time Assembly A1 Assembly A2
(mts)
Prob. Cum. RN Prob. Cum. RN
Prob. Interval Prob. Interval

10 0.10 0.10 00-09 0.20 0.20 00-19

11 0.15 0.25 10-24 0.40 0.60 20-59

12 0.40 0.65 25-64 0.20 0.80 60-79

13 0.25 0.90 65-89 0.15 0.95 80-94

14 0.10 1.00 90-99 0.05 1.00 95-99

Table 2. Simulation Worksheet
Unit Assembly A1 Assembly A2 Total Time
R.Number Time R.Number Time (mts.)

1 41 12 34 11 12+11=23
2 74 13 76 12 25
3 49 12 43 11 23
4 83 13 43 11 24
5 11 11 83 13 24
6 19 11 15 10 21
7 36 12 02 10 22
8 94 14 45 11 25
9 54 12 15 10 22
10 75 13 05 10 23
11 00 10 89 13 23
Contd.
12 08 10 80 13 23

13 74 13 28 11 24

14 34 12 24 11 23

15 93 14 09 10 24
Expected time= 349/15
= 23.27

The expected completion time for a unit works out to be 23.27

minutes.
EXAMPLE 17.4

Haggins plumbing and heating maintains a stock of 30 million gallon hot water heaters that it
sells to home owners and installs for them. the owner likes the idea of having supply on hand so
as to meet all customer demand but he also recognizes that it is expensive to do so . He examine
hot water heater sales over the past 50 weeks and notes the following
Hot water heater sales per No. of weeks this no. was sold
week
4 6
5 5
6 9
7 12
8 8
9 7

10 3
Total 50

Using random no. given below, simulate demand for 20 weeks and answer the
following question
1.If Haggins maintains a constant supply of 8 hot water heaters in any given week,how
many times will he be out of stock during the 20 week simulation period?
2.What is the average no. of heaters demanded per week over the 20 week interval.
RANDOM NO.
10, 24,03,32,23,59,95,34,34,51,08,48,66,97,03,96,46,74,77,44

Demand per No. of weeks probability Cumulative Random no.

allocation probability interval
4 6 .12 .12 00-11
5 5 .10 .22 12-21
6 9 .18 .40 22-39
7 12 .24 .64 40-63
8 8 .16 .80 64-79
9 7 .14 .94 80-93
10 3 .06 1.00 94-99
Total 50 1.00
Day Random no. demand Day Random no. demand
1 10 4 11 08 4
2 24 6 12 48 7
3 03 4 13 66 8
4 32 6 14 97 10
5 23 6 15 03 4
6 59 7 6 96 10
7 95 10 17 46 7
8 34 6 18 74 8
9 34 6 19 77 8
10 51 7 20 44 7

No. of weeks e is expecting to be out of stock=3

Average demand for heaters per week= total demand/no. of weeks
= 135/20
=6.75
Ques) A company manufactures 30 units/day. The sale of these items depends
upon demand which has the following distribution.
Sales (Unit) Probability
27 0.10
28 0.15
29 0.20
30 0.35
31 0.15
32 0.05
• The production cost and sales price of each unit are Rs. 40 and Rs. 50,
respectively. Any unsold product is to be disposed off at loss of Rs. 15.
There is a penalty of Rs. 5 per unit if the demand is not met.
• Using the following random numbers, estimate the total profit/loss for the
company for the next ten days.
10, 99, 65, 99, 01, 79, 11, 16, 20
If the company decides to produce 29 units per day, what is the
advantage or disadvantage of the company?
Sales (unit) Probability Cumulative Random No. Interval
probability

27 0.10 0.10

28 0.15

29 0.20

30 0.35

31 0.15

32 0.05
Sales (unit) Probability Cumulative Random No. Interval
probability

27 0.10 0.10

28 0.15 0.25

29 0.20 0.45

30 0.35 0.80

31 0.15 0.95

32 0.05 1.00
As the first step, random numbers 00-99 are allocated to various possible sales values in
production to the probabilities associated with them.

Sales (unit) Probability Cumulative Random No. Interval

probability

27 0.10 0.10 00-09

28 0.15 0.25

29 0.20 0.45

30 0.35 0.80

31 0.15 0.95

32 0.05 1.00
• Now we simulate the demand for the next 10 days using the
given random numbers.
From the given following information, we have
Profit per unit sold = Rs. 50 – Rs. 40= Rs. 10
Loss per unit unsold = Rs. 15
Penalty for using demand = Rs. 5 per unit
• Using these inputs, the profit/loss for the 10 days is
calculated, first when production is 30 units per day and then
when it is 29 units.
• It is evident that the total profit/loss for the 10 days is Rs.
2695 when 30 units are produced. Also, if the company
decides to produce 29 units per day, the total profit works out
to be the same.
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units 29 units

1 10 28

2 99

3 65

4 99

5 95

6 01

7 79

8 1

9 16

10 20
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units 29 units

1 10 28

2 99 32

3 65 30

4 99 32

5 95 32

6 01 27

7 79 30

8 1 28

9 16 28

10 20 28
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units 29 units

1 10 28 28*10-2*15 = Rs. 250

2 99 32

3 65 30

4 99 32

5 95 32

6 01 27

7 79 30

8 1 28

9 16 28

10 20 28
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units

1 10 28 28*10-2*15 = Rs. 250

2 99 32 30*10-2*5 = Rs. 290

3 65 30 30*10 = Rs. 300

4 99 32 30*10-2*5 = Rs. 290

5 95 32 30*10-2*15 = Rs. 290

6 01 27 27*10-3*15 = Rs. 225

7 79 30 30*10 = Rs. 300

8 1 28 28*10-2*15 = Rs. 250

9 16 28 28*10-2*15 = Rs. 250

10 20 28 28*10-2*15 = Rs. 250

Total Profit = Rs. 2695
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units 29 units

1 10 28 28*10-2*15 = Rs. 250 28*10-1*15 = Rs. 265

2 99 32 30*10-2*5 = Rs. 290

3 65 30 30*10 = Rs. 300

4 99 32 30*10-2*5 = Rs. 290

5 95 32 30*10-2*15 = Rs. 290

6 01 27 27*10-3*15 = Rs. 225

7 79 30 30*10 = Rs. 300

8 1 28 28*10-2*15 = Rs. 250

9 16 28 28*10-2*15 = Rs. 250

10 20 28 28*10-2*15 = Rs. 250

Total Profit = Rs. 2695
Day Random Estimated Profit/Loss per day with production
Numbers Sales
(units) 30 units 29 units

1 10 28 28*10-2*15 = Rs. 250 28*10-1*15 = Rs. 265

2 99 32 30*10-2*5 = Rs. 290 29*10-3*5 = Rs. 275

3 65 30 30*10 = Rs. 300 29*10-1*5 = Rs. 285

4 99 32 30*10-2*5 = Rs. 290 29*10-3*5 = Rs. 275

5 95 32 30*10-2*15 = Rs. 290 29*10-3*5 = Rs. 265

6 01 27 27*10-3*15 = Rs. 225 27*10-2*15 = Rs. 240

7 79 30 30*10 = Rs. 300 29*10-1*5 = Rs. 285

8 1 28 28*10-2*15 = Rs. 250 28*10-1*15 = Rs. 265

9 16 28 28*10-2*15 = Rs. 250 28*10-1*15 = Rs. 265

10 20 28 28*10-2*15 = Rs. 250 28*10-1*15 = Rs. 265

Total Profit = Rs. 2695 = Rs. 2695

Example 17.2 N.K Vohra (simulation of queuing system)

Ques) In a large workshop undertaking servicing jobs,

the mechanics obtain their tools and requirements
from a central store. The manager, perturbed about
the waiting time of mechanics , is in the process of
determining whether more attendants be hired for
the store for raising the level of service. The idle time
cost for the mechanics and the wages required to be
paid to the attendants being known, he wishes to
ascertain how many attendants may be employed to
minimise the total cost involved. Foe helping the
manager solve his problem using simulation, we
proceed as follows. The foll. Data on the times
between successive arrivals and the service times for
the mechanics have been obtained from the past 200
observations made on the system presently in
operation.
Distribution of inter-arrival time:
Time
(Minutes) Frequency Probability
0 12 0.06
3 18 0.09
6 50 0.25
9 74 0.37
12 32 0.16
15 14 0.07
Total 200
Distribution of service time:
Time Frequency Probability
(Minutes)
4 6 0.04
6 20 0.10
8 36 0.18
10 88 0.44
12 48 0.24
Total 200
Sol.) Step 1: Assign random numbers to each observed
arrival time interval based on the likelihood of the
occurrence of each time interval
Time Probability Cumulative Random
(Minutes) Probability Number
Interval
0 0.06 0.06 00-05
3 0.09 0.15 06-14
6 0.25 0.40 15-39
9 0.37 0.77 40-76
12 0.16 0.93 77-92
15 0.07 1.00 93-99
Step 2: Follow the same procedure for the service time
distribution
Time Probability Cumulative Random
(Minutes) Probability Number
Interval

4 0.04 0.04 00-03

6 0.10 0.14 04-13

8 0.18 0.32 14-31

10 0.44 0.76 32-75

12 0.24 1.00 76-99

Step 3: Now Simulate the operation
Waiting Service
S. Arrivals Service Time (min) Queue
No. R. No. Time O’ (7) Length
R. No. Time (10)
(1) (2) (3) clock (5) (6) Begins Ends
(4) (8) (9)

1 58 9 8.09 am 87 12 00 8.09 8.21 1

am am
2 47 9 8.18 39 10 03 8.21 8.31 1
3 23 6 8.24 28 8 07 8.31 8.39 2
4 69 9 8.33 97 12 06 8.39 8.51 2
5 35 6 8.39 69 10 12 8.51 9.01 2
6 55 9 8.48 87 12 11 9.01 9.13 2
7 69 9 8.57 52 10 16 9.13 9.23 2
8 90 12 9.09 52 10 14 9.23 9.33 2
9 86 12 9.21 15 8 12 9.33 9.41 2
10 74 9 9.30 85 12 11 9.41 9.53 2
 Waiting Service
S. Arrivals Service Time (min) Queue
No. R. No. Time O’ (7) Length
R. No. Time (10)
(1) (2) (3) clock (5) (6) Begins Ends
(4) (8) (9)

11 39 6 9.36 41 10 17 9.53 10.03 2

12 15 6 9.42 82 12 21 10.03 10.15 3
13 90 12 9.54 98 12 21 10.15 10.27 4
14 98 15 10.09 99 12 18 10.27 10.39 4
15 39 6 10.15 23 8 24 10.39 10.47 4
16 16 3 10.18 77 12 29 10.47 10.59 5
17 52 9 10.27 42 10 32 10.59 11.09 6
18 56 9 10.36 60 10 33 11.09 11.19 6
19 21 6 10.42 22 8 37 11.19 11.27 6
20 23 6 10.48 91 12 39 11.27 11.39 5
 Waiting Service
S. Arrivals Service Time (min) Queue
No. R. No. Time O’ (7) Length
R. No. Time (10)
(1) (2) (3) clock (5) (6) Begins Ends
(4) (8) (9)

21 00 0 10.48 68 10 51 11.39 11.49 4

22 87 12 11.00 36 10 49 11.49 11.59 3
23 20 6 11.06 22 8 53 11.59 12.07 2
pm
24 40 9 11.15 92 12 52 12.07 12.19 1
pm
25 73 9 11.24 34 10 55 12.19 12.29 0
Total 6.23 mins 73