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(Solution Library) Simulation Modeling The Pelnor Corporation is the nation’s largest manufacturer of industrial-size washing machines. A main ingredient in

Question: Simulation Modeling

The Pelnor Corporation is the nation’s largest manufacturer of industrial-size washing machines. A main ingredient in the production process is 8- by 10-foot sheets of stainless steel. The steel is used for both interior washer drums and outer castings.

Steel is purchased weekly on a contractual basis from the Smith-Layton Foundry, which, because of limited availability and lot sizing, can ship either 8,000 or 11,000 square feet of stainless steel each week. When Pelnor’s weekly order is placed, there is a 45% chance that 8,000 square feet will arrive and a 55% chance of receiving the larger size order.

Pelnor uses the stainless steel on a stochastic (nonconstant) basis. The probabilities of demand each week follow:

Still needed per week (sq ft) Probability
6,000 0.05
7,000 0.15
8,000 0.2
9,000 0.3
10,000 0.2
11,000 0.1

Pelnor has the capacity to store no more than 25,000 square feet of steel at any time.  Because of the contract, orders must be placed each week regardless of the on-hand supply.

  1. Simulate stainless steel order arrivals and use for 20 weeks.  (Begin the first week with a starting inventory of 0 stainless steel.) If an end-of-week inventory is ever negative, assume that back orders are permitted and fill the demand from the next arriving order.

The results of the simulation, which was performed with Excel (see spreadsheet attached), is shown below:

Week Supply Demand Shortage Surplus Inventory Space Left
1 8000 6000 0 2000 2000 23000
2 8000 7000 0 1000 3000 22000
3 8000 7000 0 1000 4000 21000
4 11000 10000 0 1000 5000 20000
5 8000 6000 0 2000 7000 18000
6 11000 10000 0 1000 8000 17000
7 8000 8000 0 0 8000 17000
8 11000 11000 0 0 8000 17000
9 8000 8000 0 0 8000 17000
10 11000 9000 0 2000 10000 15000
11 8000 7000 0 1000 11000 14000
12 11000 10000 0 1000 12000 13000
13 8000 7000 0 1000 13000 12000
14 8000 7000 0 1000 14000 11000
15 11000 10000 0 1000 15000 10000
16 11000 10000 0 1000 16000 9000
17 8000 7000 0 1000 17000 8000
18 11000 9000 0 2000 19000 6000
19 11000 10000 0 1000 20000 5000
20 8000 7000 0 1000 21000 4000

(b)   Should Pelnor add more storage area? If so, how much? If not, comment on the system.

Price: $2.99
Solution: The downloadable solution consists of 3 pages
Deliverable: Word Document


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