To make decisions
the manager has only information about the present and the past.
He knows the various parameters associated with the system.
He can observe the current inventory level, has a record of
the demands in each of the previous days and knows the status
of replenishment orders placed previously. He must use this
information to make decisions that will affect the future.
Excel is useful for modeling and simulating such an iterative
system. We model each iteration on a row of an Excel worksheet.
A model of the inventory system for 50 days will consist of
50 rows. Any particular row holds a model of the various costs
and interactions for a single iteration. The model can include
formulas that reference current information (stored in cells
in the current row) and past information (stored in cells from
previous rows).
When all iterations have the same model it is easy to build
an analysis of an arbitrary number of iterations. We create
a model of the first day on one row or the worksheet. Then we
select the first row and any additional number of rows below
the first. We then select the "Fill Down" command
of Excel. This copies all the formulas from the first row into
all the rows below. Because the copy command creates relative
addresses in the formulas, the interactions modeled in the first
row are maintained for all the following rows. Using the statistical
functions of Excel, summary results for all rows are easily
obtained. The statistics can be used to experiment with alternative
parameters settings. For instance the inventory manager might
use them to find an optimum policy for choosing the frequency
and size of replenishments.
The simulation add-in builds and runs
multiline simulation models. When installed, the menu items
on the figure above appear under the OR_MM menu. We show the
menu with both the Random Variables and Simulation add-ins installed.
The former is often useful when the simulation model includes
random variables.
In the following pages, we describe the
operations of the add-in. The Build Sim item builds and
changes a structure on which a multiline simulation model can
be constructed and run. The Build Model item provides
access to some specific models that are automatically constructed.
The Relink command is necessary when opening a model
on a computer other than the one on which the model was constructed.
It creates new buttons and functions that are linked to the
add-in the users computer.
There are several other pages on this site where simulation
models are described.
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