For week 4, I would like you to discuss possible applications of the use of simulation in your...

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For week 4, I would like you to discuss possible applications of the use of simulation in your primary place of employment. As you lead the discussion, I would like your examples to be as specific as possible. For example, what variables would be considered random, what variable(s) would be considered the dependent variable(s) in the described application?			*For your information, I am currently unemployed and my professional background is Information Technology and prior Owner of two Grocery/Deli businesses in NJ.*				Answer the discussion question in terms of one of my two professions and how these applications can be applied within a grocery/deli business or the field of Information Technology in general.				Document Preview:				Week 04 Discussion - Introduction to Simulation For week 4, I would like you to discuss possible applications of the use of simulation in your primary place of employment. As you lead the discussion, I would like your examples to be as specific as possible. For example, what variables would be considered random, what variable(s) would be considered the dependent variable(s) in the described application? *For your information, I am currently unemployed and my professional background is Information Technology and prior Owner of two Grocery/Deli businesses in NJ.* Answer the discussion question in terms of one of my two professions and how these applications can be applied within a grocery/deli business or the field of Information Technology in general.	Week 04 Discussion - Introduction to Simulation For week 4, I would like you to discuss possible applications of the use of simulation in your primary place of employment. As you lead the discussion, I would like your examples to be as specific as possible. For example, what variables would be considered random, what variable(s) would be considered the dependent variable(s) in the described application? *For your information, I am currently unemployed and my professional background is Information Technology and prior Owner of two Grocery/Deli businesses in NJ.* Answer the discussion question in terms of one of my two professions and how these applications can be applied within a grocery/deli business or the field of Information Technology in general.   Spreadsheet Modeling & Decision Analysis: Introduction to Simulation  Using Crystal Ball Chapter 12 * Introduction to Simulation 	In many spreadsheets, the value for one or more cells representing independent variables is unknown or uncertain.   	As a result, there is uncertainty about the value the dependent variable will assume: Y = f(X1, X2, …, Xk) 	Simulation can be used to analyze these types of models. * What is a Dependent & an Independent Variable? Consider the following variables: Grass Growth Frequency of fertilization Amount of sunshine How are these variables related? * Dependent Versus Independent Variables Grass growth is a function of frequency of  fertilization and amount of sunshine. Or mathematically: Grass growth = f(frequency of fertilization, amount of sunshine) Thus, grass growth is labeled as the dependent variable, while fertilization and sunshine would be the independent  variables. * Another Example 	Suppose that you are self-employed.  In a given month, your profit (bottom line performance measure) will obviously be a function of your monthly revenues and costs (i.e., revenues & costs are your independent variables).   * Example (continued) 	What is the mathematical function linking profit to revenues and costs?  Simple! 	Profit = Total Revenue – Total Cost 	Thus, if you know with certainty the values of revenue and cost, then we will know with certainty the value of the dependent variable profit. * Example (continued) 	However, in real life applications we may not know what our future revenues or costs will be.  That is they are called random variables. This is were simulation comes to the rescue.  For instance, assume that based on historical data our monthly revenues range between $1000 and $2000 (assume that any value in this range occurs with an equal likelihood). * Example (continued) 	Also, assume that our monthly costs resemble a bell-shaped curve (i.e., a normal distribution) with a mean of $600 and a standard deviation of $150. 	Note that I have defined the probability distributions for both independent variables?  Can you name them? * Example (continued) 	Monthly revenue is actually a continuous uniform distribution  (it is called uniform because all values occur with equal likelihood), while cost is a normal probability distribution. 	Now to simulate a single monthly profit value, we will generate a single revenue value and a single cost value from their corresponding distributions and plug these values into the profit equation identified earlier on. * Example (continued) 	Now we have a single simulated value for one month.  Are we going to base our profit estimates based on only a single value?  Obviously not!  We need to generate hundreds or perhaps thousands of profitability values to get a better feel of our expected monthly profits.  This is were a software program such as Crystal Ball can make our job easy! * Random Variables & Risk 	A random variable is any variable whose value cannot be predicted or set with certainty. 	Many “input cells” in spreadsheet models are actually random variables. the future cost of raw materials future interest rates future number of  employees in a firm expected product demand 	Decisions made on the basis of uncertain information often involve risk. 	“Risk” implies the potential for loss. * Methods of Risk Analysis 	Best-Case/Worst-Case Analysis 	What-if Analysis 	Simulation * Best-Case/Worst-Case Analysis 	Best case - plug in the most optimistic values for each of the uncertain cells. 	Worst case - plug in the most pessimistic values for each of the uncertain cells. 	This is easy to do but tells us nothing about the distribution of possible outcomes within the best and worst-case limits. * Possible Performance Measure Distributions Within a Range worst case best case worst case best case worst case best case worst case best case * What-If Analysis 	Plug in different values for the uncertain cells and see what happens. 	This is easy to do with spreadsheets. 	Problems: Values may be chosen in a biased way. Hundreds or thousands of scenarios may be required to generate a representative distribution. Does not supply the tangible evidence (facts and figures) needed to justify decisions to management. * Simulation 	Resembles automated what-if analysis. 	Values for uncertain cells are selected in an unbiased manner. 	The computer generates hundreds (or thousands) of scenarios. 	We analyze the results of these scenarios to better understand the behavior of the performance measure. 	This allows us to make decisions using solid empirical evidence. * Simulation 	To properly assess the risk inherent in the model we need to use simulation. 	Simulation is a 4 step process: 1) Identify the uncertain cells in the model. 2) Implement appropriate random numbers for each uncertain cell. 3) Replicate the model n times, and record the value of the bottom-line performance measure. 4) Analyze the sample values collected on the performance measure. * What is Crystal Ball? 	Crystal Ball is a spreadsheet add-in that simplifies spreadsheet simulation. 	A limited life trial version of Crystal Ball is on the CD-ROM accompanying this book. 	It provides: dialogs & functions for generating random numbers commands for running simulations graphical & statistical summaries of simulation data * Random Number Generators (RNGs) 	A RNG is a mathematical function that randomly generates (returns) a value from a particular probability distribution. 	We can implement RNGs for uncertain cells to allow us to sample from the distribution of values expected for different cells. * How RNGs Work 	The RAND( ) function in Excel returns uniformly distributed random numbers between 0.0 and 0.9999999. 	Suppose we want to simulate the act of tossing a fair coin. 	Let 1 represent “heads” and 2 represent “tails” (Note that I could have used other values than “1” and “2” such as “1” and “0”). 	Consider the following RNG: =IF(RAND( )

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Running head: INTRODUCTION TO SIMULATION
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Introduction to Simulation
Running Head: INTRODUCTION TO SIMULATION
Introduction to Simulation
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Introduction
Business simulations are computer programs developed to imitate the real business and understand the ideas on the management and career development of the company. Simulations are used in businesses to get an insight on their processes and growth since a real evaluation is expensive. Simulations use variables to test different outcomes under varying conditions. On the same note, variables can be defined as units that display different values under varying conditions and are divided into dependent variables, independent variables and random variables. The dependent variables rely on the outcome of the independent variables that in turn are affected by nature. Nonetheless, while developing a simulation, Best-Case/ Worst-Case analysis and What-if analysis are some of the methods applied in analyzing business risks.
Applications of Simulation in the Grocery Business
Simulation in a grocery store can be applied in the improvement of checkout queues at a lower cost and at the same time, try to balance between staffing and customer satisfaction. Before applying this simulation, the arrival rate of customers and the serving time should be considerations. The aim of such a simulation is to reduce the waiting time of customers when checking out of the grocery store through the express lane,

Forweek 4, I would like you to discuss possible applications of the use ofsimulation in your primary place of employment. As you lead the discussion, Iwould like your examples to be as specific as...

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