windows related to this model.

CLICK ON The X-Upper Right of Each Window

Otherwise, to end the session

CLICK ON The X-Upper Right of Main Window.

13. STOCKCTL.GPS

Simulation of a warehouse and branch inventories.

Problem Statement

A manufacturing company makes waste disposal units, which it sells for $200 each. Total annual demand is for 20,000 units. Distribution is through three branches, from a factory warehouse. The lead time for delivery of an order, from the manufacturing plant to the factory warehouse, is 4 weeks. The lead time for delivery of an order, from the factory warehouse to the branches is 1 week.

The proposed inventory control method is by an economic order quantity and order point system. The initial stocks, order points, economic order quantities, weekly demand and standard deviation, are shown in the table below, for the factory warehouse and each of the branches.

Inventory Control Parameters

Location Initial Order Economic Weekly Weekly Stock Point Quantity Demand Std Dev Warehouse 3400 2100 2300

Branch 1 430 240 115 64 24

Branch 2 600 430 165 128 32

Branch 3 1000 630 200 192 48

Simulate the inventory control system for 75 weeks.

1. Determine the distribution of inventories at the three branches and the factory warehouse.

2.Tabulate the distribution of actual monthly sales.

3.Calculate the average value of the inventories at the branches, and at the factory warehouse.

4.Does the system meet the company’s service policy of one stockout, in eight years?

Listing

; GPSS World Sample File - STOCKCTL.GPS, by Gerard F. Cummings

****************************************************************

**

*Factory Warehouse and Distributors Inventory *

*Time unit is one week *

****************************************************************

INITIAL X1,3400 ;Fact warehouse inventory INITIAL X2,2100 ;Fact warehouse order pnt INITIAL X3,2300 ;Fact warehouse order qty INITIAL X$Stock1,430 ;Dist 1 stock initial INITIAL X$Stock2,600 ;Dist 2 stock initial INITIAL X$Stock3,1000 ;Dist 3 stock initial INITIAL X$EOQ1,115 ;Economic order qty 1 INITIAL X$EOQ2,165 ;Economic order qty 2 INITIAL X$EOQ3,200 ;Economic order qty 3 INITIAL X$Point1,240 ;Order point 1

INITIAL X$Point2,430 ;Order point 2 INITIAL X$Point3,630 ;Order point 3 Demand1 VARIABLE (Normal(2,64,24)) Demand2 VARIABLE (Normal(3,128,32)) Demand3 VARIABLE (Normal(4,192,48)) Total VARIABLE P1+P2+P3

Sales TABLE X5,200,200,20 Region_1 TABLE X$Stock1,0,40,20 Region_2 TABLE X$Stock2,0,40,20 Region_3 TABLE X$Stock3,0,40,20 Factory TABLE X1,0,200,20

****************************************************************

*Reordering by Factory Warehouse

GENERATE ,,,1,2 ;Order point xact

Backhere TEST LE X1,X2 ;Factory order point? ADVANCE 4 ;Lead time is 4 weeks

SAVEVALUE 1+,X3 ;Inv increase by order qty TRANSFER ,Backhere ;Cycle xact around

****************************************************************

*Reordering at Each of the Distributors

GENERATE 1,,,1 ;First distributor

Distr1 TEST L X$Stock1,X$Point1 ;Order point reached? ADVANCE 1 ;Lead time = 1 week

SAVEVALUE 1-,X$EOQ1 ;Warehouse supplies SAVEVALUE Stock1+,X$EOQ1 ;Distr invent increased TRANSFER ,Distr1 ;Xact finished

GENERATE 1,,,1 ;Second distributor

Distr2 TEST L X$Stock2,X$Point2 ;Order point reached ADVANCE 1 ;Lead time = 1 week

SAVEVALUE 1-,X$EOQ2 ;Warehouse supplies SAVEVALUE Stock2+,X$EOQ2 ;Inventory increased TRANSFER ,Distr2 ;Cycle xact around

GENERATE 1,,,1 ;Third distributor

Distr3 TEST L X$Stock3,X$Point3 ;Order point reached? ADVANCE 1 ;Lead time = 1 week

SAVEVALUE 1-,X$EOQ3 ;Warehouse supplies EOQ SAVEVALUE Stock3+,X$EOQ3 ;Distr invent increased TRANSFER ,Distr3 ;Cycle xact around

****************************************************************

* Weekly Demand at Each Distributor GENERATE 1,,,,3 ;Priority weekly demand ASSIGN 1,V$Demand1 ;P1 = Demand distr one ASSIGN 2,V$Demand2 ;P2 = Demand distr two ASSIGN 3,V$Demand3 ;P3 = Demand distr three SAVEVALUE Stock1-,P1 ;Distr 1 Weekly demand SAVEVALUE Stock2-,P2 ;Distr 2 Weekly demand SAVEVALUE Stock3-,P3 ;Distr 3 Weekly demand

SAVEVALUE 5+,V$Total ;Accumulate total demand TABULATE Region_1 ;Record invent distr 1 TABULATE Region_2 ;Record invent distr 2 TABULATE Region_3 ;Record invent distr 3 TABULATE Factory ;Factory warehouse invent TERMINATE 1

****************************************************************

* Monthly Recording of Sales

GENERATE 4,,,,1 ;Low priority xact monthly TABULATE Sales

SAVEVALUE 5,0 ;Reset sales=0 each month TERMINATE ;Xact finished

****************************************************************

The model is organized into several segments. After non-Block

Entities are defined, there are 7 more model segments. Transactions created in the top segment represent orders by the factory warehouse. Transactions in the next three segments represent orders from each of the three regional warehouses. Each Transaction in the next segment, represents customer orders in all three regions. Each regional demand is placed in a different Transaction parameter. This segment also times the simulation (in weeks) by decrementing the Termination Count. Transactions in the last segment record monthly sales.

Notice that nothing prevents inventories from becoming negative. The model is intended to test for stockouts, but not to simulate the delays involved with them. To incorporate these features into the simulation we could add TEST Blocks to test for orders which cannot be filled, or perhaps use Storage Entities to represent the inventories, as was done in the PERIODIC.GPS example.

Running the Simulation

To run the simulation and create a Standard Report,

CHOOSE File / Open and in the dialog box

SELECT STOCKCTL

and then

SELECT Open

Next, create the simulation.

CHOOSE Command / Create Simulation

then

CHOOSE Command / START

and in the dialog box, replace the 1.

TYPE 75

SELECT OK

The simulation will end when 75 Transactions have entered the

TERMINATE 1 Block. This represents 75 weeks of operation.

When the simulation ends, GPSS World writes a report to the default report file, Stockctl.1.1. As discussed in Chapter 1, the

Report extension will vary depending on saved simulations and previously existing reports. For our purposes, we will assume that this is the first time the simulation has been created and run giving an extension of 1.1.

This report will be automatically displayed in a window. If you close the window, you can reopen it by using the GPSS World File / Open in the Main Menu. Then you should choose Report

in the "Files of type" drop down box at the bottom of the window. GPSS World reports are written in a special format. If you wish to edit the report, you will have to copy its contents to the clipboard and from there into a word processor. You will not be able to open the file directly in a word processor.

Discussion of Results

In the Standard Report, the inventory distributions are given by the Tables Region_1, Region_2, Region_3, and Factory. The average stock levels for these inventories were about 175, 256,

335, and 1751, respectively.

Monthly sales were tabulated in the Table Sales. The monthly average was about 1540.

The simulation did experience a stockout at Distributor 1 during the 75 simulated weeks. We would certainly want to do additional replications to determine if this result is due to random variation. To quantify the probability of no stockouts in 8 years, we could replicate an 8 year simulation several times, and use the Chi-square distribution to calculate an interval estimate.

Inside the Simulation

Let’s now explore the ending condition of the simulation which generated the Standard Report above. If you are not at the end of the simulation, please Retranslate the model and run it again.

Now let’s open a Table Window.

CHOOSE Window / Simulation Window / Table Window and in the drop-down box in the dialog box

CLICK ON The Down Arrow at the end of the Table Name Box

and

CLICK ON Sales

SELECT OK

Here we see the distribution of monthly sales. Now, let’s look at

Region_1 where the stockout occurred.

CHOOSE Window / Simulation Window / Table Window and in the drop-down box in the dialog box

CLICK ON The Down Arrow at the end of the Table Name Box

and

CLICK ON Region_1

SELECT OK

It appears the stockout only occurred once. We definitely need to pursue this further before we make any determinations on established inventory levels.

To view the inventory histograms, repeat the action you just completed substituting the name of each of the regions and then Factory for the last Table when asked for Table name in the dialog box.

The current scheme appears that it might be satisfactory. You might also want to examine the system under different customer demand load to see if changes may need to be made. You may want to simulate the effects of stockouts by adding your own Blocks to the simulation. You could easily collect statistics on order completion times by adding QUEUE, DEPART, and QTABLE Blocks.

Please feel free to modify the parameters and Blocks of this simulation.

If you wish to go on to the next lesson, close all windows related to this model.