OPERATIONS RESEARCH

Problems on Simulation

1. A bakery keeps stock of a popular brand of cakes. Previous experience shows the daily
demand pattern for the item with associated probabilities as given below :
Daily Demand : 0 10 20 30 40 50
Probability : 0.01 0.20 0.15 0.50 0.12 0.02
Use the following sequence of random numbers to simulate the demand for next 10
days.
Random Nos : 25 30 65 76 12 05 73 89 19 49
Also estimate the daily average demand for the cakes on the basis of simulated data.

2. A company manufactures around 200 mopeds. Depending upon the availability of raw
materials and other conditions, the daily production has been varying from 196 mopeds
to 204 mopeds, whose probability distribution is as given below :
Production per day Probability
196 0.05
197 0.09
198 0.12
199 0.14
200 0.20
201 0.15
202 0.11
203 0.08
204 0.06
The finished mopeds are transported in a specially designed three storied lorry that can
accommodate only 200 mopeds. Using the following 15 random numbers, simulate
the process to find out :
(a) What will be the average number of empty spaces on the lorry.
(b) What will be the average number of mopeds waiting in the factory.
Random Numbers : 82 89 78 24 53 61 18 45 04
23 50 77 27 54 10

3. A production line turns out about 50 trucks per day. Fluctuations occur for many
reasons. The production can be described by a probability distribution.
Production per day Probability Production per day Probability
45 0.03 51 0.15
46 0.05 52 0.10
47 0.07 53 0.07
48 0.10 54 0.05
49 0.15 55 0.03
50 0.20
Finished trucks are transported by train at the end of the day. If the train capacity is only
51, what will be the average number of trucks waiting to be shipped and what will be the
average number of empty spaces on the train. Devise a simulation model to solve this
problem. Use the following random numbers :
37 35 63 25 50 71 95 16
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4. A person sells confectionery items. Past data of demand per week (in hundred
kilograms) with frequency is given below :
Demand per week : 5 10 15 20 25
Frequency : 11 8 21 6 4
Using the following random numbers, generate the demand for next 10 weeks. Also
find the average demand per week. The random numbers are :
35 90 13 52 73 23 34 57 35 66

5. Gupta Bakery Amritsar keeps stock of a popular brand of cake. Daily demand based on
past experience is as given below :
Daily demand : 0 15 25 35 45 50
Probability : 0.01 0.15 0.20 0.50 0.12 0.02
Consider the following sequence of random numbers :
48 78 09 51 56 77 15 14 68 09
Using the sequence, simulate the demand for the next 10 days.
Find out the stock situation if the owner of the bakery decides to make 35 cakes per
day. Also estimate the daily average demand for the cakes on the basis of simulated data.

6. A small retailer has studied the weekly receipts and payments over the past 200 weeks
and has developed the following set of information :
Weekly Receipts Probability Weekly Payments Probability
(Rs) (Rs)
3,000 0.20 4,000 0.30
5,000 0.30 6,000 0.40
7,000 0.40 8,000 0.20
12,000 0.10 10,000 0.10
Using the following set of random numbers, simulate the weekly pattern of receipts and
payments for the 12 weeks of the next quarter, assuming further that the beginning
bank balance is Rs. 8,000. What is the estimated balance at the end of the 12 week
period. What is the highest weekly balance during the quarter ? What is the average
weekly balance for the quarter.
Random Numbers :
For Receipts : 03 91 38 55 17 46 32 43 69 72 24 22
For Payments : 61 96 30 32 03 88 48 28 88 18 71 99

7. The management of a company is considering the problem of marketing a new product.

The investment or the fixed cost required in the project is Rs. 25,000. There are three
factors that are uncertain -- selling price, variable cost and the annual sales volume.
The product has a life of only one year. The management has the past data regarding
the possible levels of the three factors.
Unit SP Probability Unit VC Probability Sales Volume (Units) Prob
40 0.30 20 0.10 3,000 0.20
50 0.50 30 0.60 4,000 0.40
60 0.20 40 0.30 5,000 0.40
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Using the Monte-Carlo Simulation technique, determine the average profit from the said
investment on the basis of 20 trials.

8. The inter arrival time of customers follows a discrete distribution as shown in the
following table :
Probability of distribution of inter-arrival time
Inter arrival time : 1 2 3 4 5 6
Probability : 0.20 0.25 0.35 0.10 0.08 0.02
Find out the mean arrival time with the application of appropriate formula.
Random Numbers : 22 19 16 78 03 93

9. The director of finance for a farm co-operative is concerned about the yields per acre she
can expect form this year’s corn crop. The probability distribution of the yields for the
current weather conditions is given below :
Yield in kg., per acre Probability
120 0.18
140 0.26
160 0.44
180 0.12
She would like to see a simulation of the yields she might expect 10 years for weather
conditions similar to those she is now experiencing.
(i) Simulate the average yield she might expect per acre using the following random
numbers : 20 72 34 54 30 22 48 74 76 02.
She is also interested in the effect of market price fluctuations on the co-operatives farm
revenue. She makes this estimate of per kg., prices for corn :
Price per kg. Probability
(Rs)
2.00 0.05
2.10 0.15
2.20 0.30
2.30 0.25
2.40 0.15
2.50 0.10
(ii) Simulate the price she might expect to observe over the next 10 years using the
following random numbers :
82 95 18 96 20 84 56 11 52 03

(iii)
Assuming that prices are independent of yields, combine these two into the
revenue per acre and also find out the average revenue per acre she might expect
every year.
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10. An investment corporation wants to study the investment projects based on three
factors : Market demand in units, Contribution (sales price - variable cost) per unit and
the investment required. These factors are felt to be independent of each other. In
analyzing a new consumer product for a washing powder factory the corporation
estimates the following probability distribution :

Annual Demand Contribution per unit Investment required

Units Probability Rs. Probability Rs. Probability
20,000 0.05 3.00 0.10 17,50,000 0.25
25,000 0.10 5.00 0.20 20,00,000 0.50
30,000 0.20 7.00 0.40 25,00,000 0.25
35,000 0.30 9.00 0.20
40,000 0.20 10.00 0.10
45,000 0.10
50,000 0.05

Use Monte Carlo simulation for 10 runs to estimate the percentage of return on
investment (ROI %) defined by :
ROI % = Cash Inflow x 100
Investment
For each run, recommend an optimum investment strategy based on model value of
ROI %.
The Random Numbers are :
28 19 18 57 07 67 60 90 16 17 02 71 64
57 43 20 28 68 27 29 47 58 83 24 61 58
19 30 41 97
Use the first three random numbers for first run, next three numbers for second run etc.