Question

3i

3 i) You have been exposed to the ARENA Simulation Modeling the operational effectiveness of a manufacturing system System for evaluating Describe your understanding of the role of simulation modeling in a manufacturing system, Use the Jamestown Industry model you developed as an example illustration of the model. . Provide an b) Name the elements of a simulation model. c) List some of the measures of effectiveness (MOE's) of a simulation model (model results & outputs) and d) State how you can use the outputs to improve the efficiency of operation of a simulation modeling system. 3 i) A retailer is concerned about balancing the cost or ordering for materials and the cost of holding items in inventory in support of business operations and customer satisfaction. The annual demand for the product is 25,000 units. The Setup cost is $2.00 per unit, the holding cost is $1.00 per unit. Using the information provided, find: a) The Economic Order Quantity needed to support operations b) Find the total annual cost of holding and ordering the items c) What is: (0) the average inventory and what is (il) the average order replenishment cycle time

Answer 1

a.

The Economic/Optimal Order amount (EOQ) is given as pursues:

Q* = √(2AS/(h))

A = Annual Demand = 25,000 jugs

S = Ordering/setup cost = $2.00 per request

h = yearly holding expense = $1.00 every year per unit

Q* = √(2*25,000*2/(1))

Q* = 316.23 units

Ideal Order amount = 317 units

B)

Annual Holding Cost	AHC = (Q*/2) x h	(317/2)x $1.00
		= $158.11
Annual Ordering	AOC = D/Q* x S	25,000/317 x $2
		$158.11
Total annual Cost	TC = AHC + AOC	$158.11 + $158.11
		= $316.23

c.

I) Average stock = request amount/2 = 317/2 = 158.11 units

ii) normal request renewal process duration = 1/no. of requests

no. orders = yearly interest/request amount = 25000/317 = 79.06

normal request renewal process duration = 1/no. of requests = 1/79.06 = 0.0126

normal request renewal process duration = 4.55 days