ment of Ebony, a leading manufacturer Questions I. anageme of bath soap, is trying to control its inventory eekly cost of holding one unit of soap Develop a simulation model for 52 weeks of operation at Ebony. Graph the inventory of soap over time. What is the total cost (inven- tory cost plus production change cost) for the 52 weeks? Run the simulation for 500 iterations to esti- mate the average 52-week cost with values of U ranging from 30 to 80 in increments of 10. Keep L30 throughout. Report the sample mean and standard deviation of the 52-week cost under each policy. Using the simulated results, is it possible to construct valid 95% confidence intervals for the average 52-week cost for each value of U? In any case graph the average 52-week cost versus U. What is the best value of U for L 30? costs. The n invento ry is $30 (one unit is 1000 cases of soa marketing department estimates that weekl es 120 units, with a standard devia- of 15 units, and is reasonably well modeled by;a tion. If demand exceeds the amount 2. normal distribu n hand, those sales are lost-that is, there is of demand. The production depart ent can produce at one of three levels: 110, 120, no backlogging r 130 units per week. The cost of changing the pro- 3. ction level from one week to the next is $3000. Management would like to evaluate the following production policy. If the current inventory is less than L-30 units, they will produce 130 units in the than U 80 units, they will produce 110 units in the next week. If the current inventory is greater What other production policies might be useful to investigate? n next week. Otherwise, Ebony will continue at the 4. previous week's production level. Ebony currently has 60 units of inventory on hand. Last week's production level was 120. Ebony Bath Soap Simulation Inputs Average demand Stdev of demand Unit holding cost Prod change cost Initial inventory Current prod level Production policy: If inventory Otherwise, don't change production level 30 then produce 80 then produce 15 $30 $3,000 110 Simulation 1 Simulation 2 Simulation 3 Simulation 4Simulation 5 average 120 Annual cost Varying U 30 50 Simulation of 52 weeks Next week Week Normal Demand Inventory Production Holding cost Change cost Weekly cost 0 70 6 10 12 13 14 15 16 17 18 19 20 21 ment of Ebony, a leading manufacturer Questions I. anageme of bath soap, is trying to control its inventory eekly cost of holding one unit of soap Develop a simulation model for 52 weeks of operation at Ebony. Graph the inventory of soap over time. What is the total cost (inven- tory cost plus production change cost) for the 52 weeks? Run the simulation for 500 iterations to esti- mate the average 52-week cost with values of U ranging from 30 to 80 in increments of 10. Keep L30 throughout. Report the sample mean and standard deviation of the 52-week cost under each policy. Using the simulated results, is it possible to construct valid 95% confidence intervals for the average 52-week cost for each value of U? In any case graph the average 52-week cost versus U. What is the best value of U for L 30? costs. The n invento ry is $30 (one unit is 1000 cases of soa marketing department estimates that weekl es 120 units, with a standard devia- of 15 units, and is reasonably well modeled by;a tion. If demand exceeds the amount 2. normal distribu n hand, those sales are lost-that is, there is of demand. The production depart ent can produce at one of three levels: 110, 120, no backlogging r 130 units per week. The cost of changing the pro- 3. ction level from one week to the next is $3000. Management would like to evaluate the following production policy. If the current inventory is less than L-30 units, they will produce 130 units in the than U 80 units, they will produce 110 units in the next week. If the current inventory is greater What other production policies might be useful to investigate? n next week. Otherwise, Ebony will continue at the 4. previous week's production level. Ebony currently has 60 units of inventory on hand. Last week's production level was 120. Ebony Bath Soap Simulation Inputs Average demand Stdev of demand Unit holding cost Prod change cost Initial inventory Current prod level Production policy: If inventory Otherwise, don't change production level 30 then produce 80 then produce 15 $30 $3,000 110 Simulation 1 Simulation 2 Simulation 3 Simulation 4Simulation 5 average 120 Annual cost Varying U 30 50 Simulation of 52 weeks Next week Week Normal Demand Inventory Production Holding cost Change cost Weekly cost 0 70 6 10 12 13 14 15 16 17 18 19 20 21
