Lecture No. 9
Chapter 3
Contemporary Engineering Economics
Copyright 2010
Contemporary Engineering Economics, 5th edition, 2010
Composite Cash Flows
Situation 1: If you
make 4 annual
deposits of $100 in
your savings account
which earns a 10%
annual inter
Chapter 10
Verification and Validation
of Simulation Models
Banks, Carson, Nelson & Nicol
Discrete-Event System Simulation
Purpose & Overview
The goal of the validation process is:
To produce a model that represents true behavior
closely enough for decisi
Random-Number
Generation
Properties of Random Numbers
Random Number, Ri, must be independently drawn from a
uniform distribution with pdf:
U(0,1)
1, 0 x 1
f ( x) =
0, otherwise
2
x
E ( R ) = xdx =
0
2
1
1
0
1
=
2
Figure: pdf for
random numbers
Two import
MONTECARLO (STATIC) SIMULATIONS
Examples
Monte-Carlo (Static) Simulation
Estimating profit on a sale promotion
Newsvendor problem
Estimating value
Approximating integrals
Profit on a Sale Promotion
Furniture Store
Unit cost: $175
Demand distribution : TRI
INVENTORY SYSTEMS
Inventory Systems
Assume periodic review, i.i.d. random demands,
constant (possibly non-zero) lead times and full
backlogging.
When to order?
How much to order?
Inventory Costs
Ordering Cost
setup cost for placing an order, K
per-unit
QUEUEING SYSTEMS
Queueing Systems
Entities
Population
Server
Waiting Line (Queue)
Finite vs.
Infinite
One line vs.
Multiple lines
One server vs.
multiple server
Characteristics
Interarrival and Service Times
Exponential (M)
Deterministic (D)
Erlang (E)
Ge
GAMBLERS RUIN in a FAIR GAME
Gamblers Ruin in a Fair
Game
In a fair game, let player A has a fortune of k and player B
has a fortune of l. At each iteration of the game, the winner
takes one unit from the loser. The game ends when one
player loses everyth
Modeling Basic
Operations and
Inputs
Chapter 4
Last revision June 21, 2009
Simulation with Arena, 5th ed.
Chapter 4 Modeling Basic Operations and Inputs
Slide 1 of 68
What Well Do .
Model 4-1: Electronic assembly/test system
Model 4-2: Enhanced electronic