Page 107 - ExtendSim User Guide
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Areas of Application 81
Social sciences
• TheTargetInventoryis50(4weekleadtime*12.5/unitsexpectedtoshipeachweek) • Themodelrunsforasimulated52weeks
Model details
This model shows
inventory stocking/
depletion cycles. Its
purpose is to stabilize
the inventory level so
that over- or under-
stocking is avoided.
The model examines
the effect on inventory
levels of a 25% increase
in product demand. It
also uses Sensitivity
Analysis to explore the
effect of changing the lead times for stock delivery. The MultiSim plotter displays the differ- ence in inventory from one run to the next.
About the model
Customer demand for product is indicated by a Lookup Table block. The demand amount is the basis for the Customer Order Backlog amount and is also the basis for ordering more stock. Note that stock ordering, inventory replenishment, and shipments are shown as a flow, while the calculations (target inventory, etc.) are shown in a separate section. This helps clarify the model for presentation.
The demand for product determines what is shipped, unless there isn't enough inventory to meet demand. The Correction Factor indicates that a discrepancy between target and actual would be cured in 1 week (the lower the Correction Factor, the faster a discrepancy is cured.) Since you do not have Just In Time (JIT) delivery, you want to order sufficient stock to meet future demand, without over-ordering. You could order just enough to meet current demand, but because there is a delay until stock is received, inventory levels would not necessarily meet future demand (if demand increased, you'd be under stocked. If it decreased, you'd be over- stocked). You could also correct the stock order amounts so that they approach target inventory levels (target inventory considers stock lead time as well as current demand).
Because the model is set to run four times for sensitivity analysis, each page of the plotter will show the results of one of the runs. Flipping from one page to another quickly shows the effect of increasing the lead time.
Parameters you may want to change include the Correction Factor, Target Inventory, and/or Lead time.
Social sciences
Simulations in the fields of psychology, social dynamics are common. The example that fol- lows investigates the effect of available office space on new business growth in a small city.
Inventory Management model

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