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viii CONTENTS

Sensitivity Analysis for the EOQ Model 414 11.4 Some General Relationships for Queuing
Excel Solution of the EOQ Model 415 Models 466
Summary of the EOQ Model Assumptions 415 11.5 Economic Analysis of Queues 468
10.3 Economic Production Lot Size Model 416 11.6 Other Queuing Models 470
Total Cost Model 418
11.7 Single-Channel Queuing Model with
Economic Production Lot Size 420
Poisson Arrivals and Arbitrary Service
10.4 Inventory Model with Planned Shortages 421 Times 471
10.5 Quantity Discounts for the EOQ Model 425 Operating Characteristics for the M/G/1
10.6 Single-Period Inventory Model with Model 471
Probabilistic Demand 427 Constant Service Times 472
Juliano Shoe Company 428 11.8 Multiple-Channel Model with Poisson
Arabian Car Rental 431 Arrivals, Arbitrary Service Times and No
10.7 Order-Quantity, Reorder Point Model with Queue 473
Probabilistic Demand 433 Operating Characteristics for the M/G/k
The How-Much-to-Order Decision 434 Model with Blocked Customers
The When-to-Order Decision 435 Cleared 473
10.8 Periodic Review Model with Probabilistic 11.9 Queuing Models with Finite Calling
Demand 437 Populations 476
More Complex Periodic Review Models 440 Operating Characteristics for the M/M/1 Model
with a Finite Calling Population 476
Summary 441
Worked Example 442 Summary 479
Problems 443 Worked Example 479
Case Problem 1 Wagner Fabricating Company 447 Problems 481
Case Problem 2 River City Fire Department 448 Case Problem 1 Regional Airlines 486
Appendix 10.1 Development of the Optimal Order Case Problem 2 Office Equipment, Inc 487
Quantity (Q) Formula for the EOQ Model 449
Appendix 10.2 Development of the Optimal Lot Size
12 Simulation 489
(Q*) Formula for the Production Lot Size
Model 450 12.1 Risk Analysis 492
PortaCom Project 492
What-If Analysis 492
11 Queuing Models 451 Simulation 493

11.1 Structure of a Queuing System 452 Simulation of the PortaCom Problem 501
Single-Channel Queue 454 12.2 Inventory Simulation 504
Distribution of Arrivals 454 Simulation of the Butler Inventory
Distribution of Service Times 455 Problem 507
Steady-State Operation 456 12.3 Queuing Simulation 509
11.2 Single-Channel Queuing Model with Poisson Hong Kong Savings Bank ATM Queuing
Arrivals and Exponential Service Times 456 System 510
Operating Characteristics 457 Customer Arrival Times 510
Operating Characteristics for the Dome Customer Service Times 511
Problem 458 Simulation Model 511
Managers’ Use of Queuing Models 458 Simulation of the ATM Problem 515
Improving the Queuing Operation 459 Simulation with Two ATMs 516
Excel Solution of the Queuing Model 461 Simulation Results with Two ATMs 518
11.3 Multiple-Channel Queuing Model with Poisson 12.4 Other Simulation Issues 520
Arrivals and Exponential Service Times 462 Computer Implementation 520
Operating Characteristics 462 Verification and Validation 521
Operating Characteristics for the Dome Advantages and Disadvantages of Using
Problem 464 Simulation 522

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