Reference no: EM131106719

In Example 11.3, we commented on the 95th percentile on days required in cell I35 and the corresponding date in cell J35. If the company begins production on this date, then it is 95% sure to complete the order by the due date. We found this date to be August 2. Do you always get this answer? Find out by (1) running the simulation 10 more times, each with 1000 iterations, and finding the 95th percentile and corresponding date in each, and (2) running the simulation once more, but with 10,000 iterations. Comment on the difference between simulations (1) and (2) in terms of accuracy. Given these results, when would you recommend that production should begin?

Example 11.3

TRYING TO MEET AN ORDER DUE DATE AT WOZAC

The Wozac Company is a drug manufacturer. Wozac has recently accepted an order from its best customer for 8000 ounces of a new miracle drug, and Wozac wants to plan its production schedule to meet the customer's promised delivery date of December 1, 2010. There are three sources of uncertainty that make planning difficult. First, the drug must be produced in batches, and there is uncertainty in the time required to produce a batch, which could be anywhere from 5 to 11 days. This uncertainty is described by the discrete distribution in Table 11.1. Second, the yield (usable quantity) from any batch is uncertain. Based on historical data, Wozac believes the yield can be modeled by a triangular distribution with minimum, most likely, and maximum values equal to 600, 1000, and 1100 ounces, respectively. Third, all batches must go through a rigorous inspection once they are completed. The probability that a typical batch passes inspection is only 0.8. With probability 0.2, the batch fails inspection, and none of it can be used to help fill the order. Wozac wants to use simulation to help decide how many days prior to the due date it should begin production.

Objective To use simulation to determine when Wozac should begin production for this order so that there is a high probability of completing it by the due date.