Tuesday, April 16, 2013

Demo video for Oracle Crystal Ball

We have a new demo video out, and it looks fantastic. This would be a great way to introduce someone to the methodology of "thinking in ranges" espoused by Oracle Crystal Ball. Available from this link, it needs a quick registration. Enjoy !!

Monte Carlo simulation example in transportation

I used to work on transportation services procurement auction in my doctoral days. Since graduation, I have moved away from that sector. But, recently I had a chance to work on a technical research presentation in the transportation sector. 

In my dissertation, I mostly used mixed integer programming formulations for solving bidding problems. Although there was a little bit of predictive analytics in the model, I did not really explore much of the Monte Carlo simulation aspect of it, except generating random numbers from normal distributions. This time though, I was able to use MC simulation quite a bit. The problem was on determining the safety stocks of tractors/trailers/drivers for a small trucking company which wishes to maintain certain service level.

Although, network is an important part of transportation, I sidestepped that aspect by aggregating on the lanes in the transportation network. Agreed, that makes the model somewhat weak, but in my opinion, the model is still useful enough to get some mileage out of it.

Following is the title and abstract of the presentation. Please get in touch using the comments section if you are working on something similar.

Title: Determining Safety Stock for a Small Trucking Operation
Abstract: In this presentation, we will determine the safety stock of trucks required by a small trucking operation to maintain a certain service level. We will start off with a simple model and use Monte Carlo simulation and stochastic optimization to determine the safety stock. Next we will extend the model to include more realistic situations and show that our approach still provides a fast, efficient and reliable way to calculate the variables and statistics of interest in the model.
Presentation: Available here.

My Ph.D. dissertation is also available on this page, just scroll to the 2006 entry.