Application of Simulation Techniques

2016 ◽  
pp. 268-299
Author(s):  
Ningombam Sanjib Meitei ◽  
Snigdha Banerjee
Keyword(s):  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Factors Affecting ◽  
Simulation Techniques ◽  
Business System ◽  
Demand Rate ◽  
Optimal Values ◽  
Optimal Order Quantity

In the present work, we provide a simulated inventory model incorporating multiple stochastic factors affecting an inventory model. This can provide solutions to managerial problems faced by retailers that have been addressed through the Single period problem (SPP) models. For a time dependent SPP with multiple discounts of random amounts at random time points, we consider a model wherein the factors demand rate, lead-time, number of discounts during a season, discount rates, time epoch at which a new discount rate is offered are stochastic. We provide solution procedures as pseudo algorithms for simulating near optimal order quantity and estimate of rate of price decline as well as optimal values of order quantity and total expected profit for a given value of initial selling price. Illustrative examples are presented in order to enable the researchers to be able to apply the methodology explained. The technique for estimating the probability that a business system shall be profitable or be a loss venture is demonstrated using numerical example.

Static Inventory Model with Unknown Proportion of Defectives in the Supplied Lot

1983 ◽  
Vol 32 (3-4) ◽  
pp. 169-176
Author(s):  
S. P. Mukherjee ◽  
M. Pal
Keyword(s):  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Sampling Inspection ◽  
Shortage Cost ◽  
Inspection Plan ◽  
Purchase Cost ◽  
Net Profit ◽  
Optimal Order Quantity

A static inventory model where lots received (against orders) are accepted through a curtailed single sampling inspection plan has been considered. Since the proportion of non-defective units in a lot is not likely to be known in advance, a probability Jaw has been assumed for the same. The optimal order quantity has been obtained by maximizing the expected net profit, taking into account selling price, purchase cost, carrying cost, shortage cost, salvage cost and inspcctioo cost.

Utilizing Simulation to Build a Retail Store Inventory Optimization Model

2013 ◽  
Vol 5 (1) ◽  
Author(s):  
VICENTE SALVADOR E. MONTAÑO ◽  
MICHAEL E. CARTER II
Keyword(s):  
Simulation Model ◽  
Goodness Of Fit ◽  
Inventory Model ◽  
T Test ◽  
Optimal Order ◽  
Order Quantity ◽  
Goodness Of Fit Test ◽  
Reorder Point ◽  
Kolmogorov Smirnov ◽  
Optimal Order Quantity

The researchers build an inventory model for retail stores by validating their economicorder quantity through data driven simulation. This paper created an inventoryoptimization model for a personal care retailing business, to avoid stock out and minimize their holding cost and ordering cost. Simulating a thousand different scenarios, the research come up with an optimal inventory model for the two most sellable products in the store. The t-test reveals that product A has a significantly higher demand than product B. The simulation model validates the optimal order quantity of 59 units, with a reorder point of 25 units for product A. However, the simulation model recommends an optimal order quantity of 37 units and a reorder point of 10 units for product B. The Kolmogorov-Smirnov Goodness of Fit Test reveals the normal distribution of the 30 days inventory for Product A but not for Product B. Confirming that stocks out will unlikely happen for product A but will probably occur for product B. The model confirms EOQ findings of product with relatively high demand but low price but a departure for products with low demand but the high price.Keywords: Operations management, retail inventory system, t-test, Monte Carlo Simulation,Kolmogorov-Smirnov Goodness of Fit Test, Davao City, Philippines, Southeast Asia

scholarly journals Managing the Newsvendor Modeled Product System with Random Capacity and Capacity-Dependent Price

2015 ◽  
Vol 2015 ◽  
pp. 1-10 ◽  
Author(s):  
Qingying Li ◽  
Ciwei Dong ◽  
Ruixin Zhuang
Keyword(s):  
Numerical Study ◽  
Market Price ◽  
Optimal Order ◽  
Selling Price ◽  
Newsvendor Model ◽  
Order Quantity ◽  
Product System ◽  
Random Capacity ◽  
Optimal Order Quantity ◽  
House Production

We consider a newsvendor modeled product system, where the firm provides products to the market. The supply capacity of the product is random, so the firm receives either the amount of order quantity or the realized capacity, whichever is smaller. The market price is capacity dependent. We consider two types of production cost structures: the procurement case and the in-house production case. The firm pays for the received quantity in the former case and for the ordered quantity in the latter case. We obtain the optimal order quantities for both cases. Comparing with the traditional newsvendor model, we find that the optimal order quantity in both the procurement case and the in-house production case are no greater than that in the traditional newsvendor model with a fixed selling price. We also find that the optimal order quantity for the procurement case is greater than that for the in-house production case. Numerical study is conducted to investigate the sensitivity of the optimal solution versus the distribution of the random capacity/demand.

scholarly journals Profitability Index Maximization in an Inventory Model with a Price- and Stock-Dependent Demand Rate in a Power-Form

Mathematics ◽  
2021 ◽  
Vol 9 (10) ◽  
pp. 1157
Author(s):  
Valentín Pando ◽  
Luis A. San-José ◽  
Joaquín Sicilia ◽  
David Alcaide-López-de-Pablo
Keyword(s):  
Cycle Time ◽  
Optimal Policy ◽  
Inventory Model ◽  
Selling Price ◽  
Lot Size ◽  
Financial Investment ◽  
Demand Rate ◽  
Holding Cost ◽  
Optimal Values ◽  
Dependent Demand

This paper presents the optimal policy for an inventory model where the demand rate potentially depends on both selling price and stock level. The goal is the maximization of the profitability index, defined as the ratio income/expense. A numerical algorithm is proposed to calculate the optimal selling price. The optimal values for the depletion time, the cycle time, the maximum profitability index, and the lot size are evaluated from the selling price. The solution shows that the inventory must be replenished when the stock is depleted, i.e., the depletion time is always equal to the cycle time. The optimal policy is obtained with a suitable balance between ordering cost and holding cost. A condition that ensures the profitability of the financial investment in the inventory is established from the initial parameters. Profitability thresholds for several parameters, including the scale and the non-centrality parameters, keeping all the others fixed, are evaluated. The model with an isoelastic price-dependent demand is solved as a particular case. In this last model, all the optimal values are given in a closed form, and a sensitivity analysis is performed for several parameters, including the scale parameter. The results are illustrated with numerical examples.

scholarly journals Retailer’s replenishment policies under conditions of permissible delay in payments

2004 ◽  
Vol 14 (2) ◽  
pp. 231-246 ◽  
Author(s):  
Yung-Fu Huang
Keyword(s):  
Cycle Time ◽  
Real Life ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Credit Period ◽  
Optimal Order Quantity ◽  
Delay In Payments ◽  
S Model

Goyal (1985) is frequently cited when the inventory systems under conditions of permissible delay in payments are discussed. Goyal implicitly assumed that: 1. The unit selling price and the unit purchasing price are equal; 2. At the end of the credit period, the account is settled. The retailer starts paying for higher interest charges on the items in stock and returns money of the remaining balance immediately when the items are sold. But these assumptions are debatable in real-life situations. The main purpose of this paper is to modify Goyal?s model to allow the unit selling price and the unit purchasing price not necessarily be equal to reflect the real-life situations. Furthermore, this paper will adopt different payment rule. We assume that the retailer uses sales revenue during the permissible credit period to make payment to the supplier at the end of the credit period. If it is not enough to pay off the purchasing cost of all items, the retailer will pay off the remaining balance by taking loan from the bank. So, the retailer starts paying for the interest charges on the amount of loan from the bank after the account is settled. Then the retailer will return money to the bank at the end of the inventory cycle. Under these conditions, we model the retailer?s inventory system as a cost minimization problem to determine the retailer?s optimal cycle time and optimal order quantity. Four cases are developed to efficiently determine the optimal cycle time and the optimal order quantity. Numerical examples are given to illustrate these cases. Comparing with Goyal?s model, we also find that the optimal cycle times in this paper are not longer than those of Goyal?s model.

scholarly journals An EPQ model under cash discount and permissible delay in payments derived without derivatives

2007 ◽  
Vol 17 (2) ◽  
pp. 177-193 ◽  
Author(s):  
Yung-Fu Huang ◽  
Chung-Li Chou ◽  
Jui-Jung Liao
Keyword(s):  
Cycle Time ◽  
Optimal Order ◽  
Selling Price ◽  
Order Quantity ◽  
Permissible Delay In Payments ◽  
Special Cases ◽  
Time Optimal ◽  
Optimal Order Quantity ◽  
Cash Discount ◽  
Delay In Payments

The main purpose of this paper is to investigate the case where the retailer?s unit selling price and the purchasing price per unit are not necessarily equal within the economic production quantity (EPQ) framework under cash discount and permissible delay in payments. We establish the retailer?s inventory system as a cost minimization problem to determine the retailer?s optimal inventory cycle time, optimal order quantity and optimal payment time. This paper provides an algebraic approach to determine the optimal cycle time, optimal order quantity and optimal payment time. This approach provides one theorem to efficiently determine the optimal solution. Some previously published results of other researchers are deduced as special cases. Finally, numerical examples are given to illustrate the result and the managerial insights are also obtained.

A New Fuzzy Backorder Inventory Model for the Decision Making of Material Inventory in the Manufacture System

2010 ◽  
Vol 431-432 ◽  
pp. 106-109 ◽  
Author(s):  
Chien Chang Chou
Keyword(s):  
Inventory Management ◽  
Fuzzy Number ◽  
Inventory Model ◽  
Optimal Order ◽  
Fuzzy Approach ◽  
Order Quantity ◽  
Square Roots ◽  
Manufacture System ◽  
The Past ◽  
Optimal Order Quantity

Inventory management is one of important issues in the manufacture system. Thus, this paper proposes a new fuzzy approach to solve the inventory management problems in the manufacture system. In the past, few papers discussed the square roots of fuzzy number. The square roots of fuzzy number can be applied to solve the optimal inventory quantity problems in the fuzzy manufacture system. This paper first proposed the square roots of fuzzy number. Finally, the square roots of fuzzy number are applied to obtain the optimal order quantity for the fuzzy backorder inventory model in the manufacture system.

scholarly journals PENGENDALIAN PERSEDIAAN PROBABILISTIK PRODUK SUBSTITUSI DENGAN PERMINTAAN SEBAGAI FUNGSI HARGA

2021 ◽  
Vol 16 (1) ◽  
pp. 56-62
Author(s):  
Laila Nafisah ◽  
Sutrisno Sutrisno
Keyword(s):  
Sensitivity Analysis ◽  
Inventory Model ◽  
Optimal Order ◽  
Lost Sales ◽  
Business Unit ◽  
Order Quantity ◽  
Product Substitution ◽  
Inventory Models ◽  
Total Cost ◽  
Optimal Order Quantity

Kamara Living merupakan suatu unit usaha yang bergerak dalam penjualan kebutuhan sehari-hari. Salah satu produk yang populer adalah sarung bantal. Sarung bantal yang ditawarkan memiliki beberapa desain motif dan jenis yang berbeda. Permintaan akan produk sarung bantal tidak menentu antara satu desain dengan desain yang lain. Ketika desain tertentu persediaannya habis, perusahaan akan menawarkan desain lain dari jenis kain yang sama. Jika konsumen tidak bersedia maka terjadi kehilangan penjualan. Ketika persediaan berlebih, perusahaan akan memberikan harga promosi untuk mendongkrak tingkat penjualannya. Jika ini dibiarkan terus-menerus, tentu saja perusahaan akan mengalami penurunan keuntungan. Pada makalah ini dikembangkan model persediaan dengan mempertimbangkan produk substitusi dengan permintaan sebagai fungsi harga yang bertujuan untuk meminimasi total biaya persediaan. Penyelesaian model yang dilakukan mampu menghasilkan solusi kuantitas pemesanan dan titik pemesanan yang optimal. Validasi model dilakukan dengan membandingkan hasil dari model yang dikembangkan terhadap kondisi riil. Selain itu juga dilakukan analisis sensitivitas terhadap parameter-parameter yang berpengaruh. Abstract[Product-substitution Inventory Model with Demand depend on Price] Kamara Living is a business unit engaged in selling daily stuff. One popular product is pillowcases. The pillow cover offered has several different motif designs and types. The demand for pillowcases is uncertain between one design and another. When a stockout occurs for a particular design, the company will offer another design of the same type of fabric. If consumers are not willing, there will be lost sales. When there is overstock, the company will provide promotional prices to increase sales levels. If this is allowed to continue, of course the company will experience a decline in profits. In this paper, an inventory model is developed by considering substitute products with demand as a price function that aims to minimize the total cost of inventory. Completion of the model carried out is able to produce optimal order quantity and order point solutions. Model validation is done by comparing the results of the models developed against real conditions. In addition, a sensitivity analysis was carried out on the influential parameters.Keywords: Inventory Models; Product Substitution; Demand Depend on Price

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