HILL Process Simulation in Excel for a Quantitative Management Course

Process Simulation in Excel for a Quantitative Management Course
Raymond R. Hill Department of Operational Sciences Air Force Institute of Technology Wright-Patterson AFB, OH 45424
ray.hill@afit.edu

sheet capabilities are very good for sampling simulation methods but ill suited for discrete-event simulation. This paper proposes and discusses how to use SimQuick, an Excel-based simulation package, to overcome these limitations and bring discreteevent simulation into the spreadsheet-based quantitative management course. A simulation is a computer model used to evaluate a system numerically (Law and Kelton, 2000). Stochastic simulations involve random variates to model variables assumed to follow some probability distribution. When the simulation explicitly models a system as that system changes over time, the simulation is referred to as a dynamic simulation. Recent surveys list simulation as among the most popular and widely used operational research techniques (Lane, et al., 1993). Spreadsheets have long been in use in the business world while unfortunately ignored among some analysts and engineers. That tendency is rapidly falling away as the modern spreadsheet truly provides a diverse and robust environment for most modeling needs. The modern spreadsheet provides a means to store and manage data, run statistical analyses, conduct mathematical modeling, import and export tables and graphs, and interface to other more powerful computer packages. In short, the spreadsheet is a (nearly) complete analytical toolbox. Not surprisingly, quantitative management texts focused on surveying quantitative techniques have nearly unanimously adopted the spreadsheet as the computing platform of choice. The benefits provided the course instructor include:

Abstract A nagging limitation of teaching spreadsheet-based quantitative decision-making courses is the sometimes stilted view of simulation presented, a view that overly emphasizes sampling simulation at the expense of process simulation. Without a viable spreadsheet-based process simulation package, the best efforts aimed at overcoming this emphasis on sampling simulation have provided passing references to special purpose simulation packages focused on process simulation. We introduce and discuss SimQuick as an alternative approach for teaching process simulation within the context of a spreadsheet-based approach to teaching simulation. Although an early tool, and somewhat limited when compared to special purpose simulation packages, SimQuick provides a viable means for teaching the process of simulation modeling and reinforcing the salient features of process modeling as a quantitative technique.
Disclaimer: The views expressed in this article are those of the authors and do not reflect the official policy of the United States Air Force, Department of Defense, or the US Government.

• pre-existing familiarization with the platform;
and

• increased likelihood of student future use of
the quantitative techniques Introduction A nagging limitation of teaching spreadsheet-based modeling is providing sufficient coverage of simulation. Simulation is an important quantitative technique but spreadsheet-based approaches sometimes ignore a good portion of the technique. Basic spreadTeaching new concepts, such as is often the case in courses involving quantitative techniques, is facilitated by the students’ immediate grasp of the computer tool. The instructor challenge then becomes one of expanding the students’ abilities to understand and apply the quantitative methods. Then, because the spreadsheet is so widely available, and

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Add-ins like @Risk and Crystal Ball significantly increase one’s ability to conduct. The spreadsheet easily recalculates a model. Nearly all management science texts include a chapter on simulation. and teach. spreadsheet functions provide random number generators. Mathematical models are usually algebraic in representation. the graduated student may find their problems amenable to spreadsheet modeling and actually use the techniques in practice. simulation applications are either not discussed or just briefly XX • differences between mathematical formulation and spreadsheet paradigms. respectively. Typical models might be investment models. and the spreadsheet has plenty of capability to save and analyze the simulation data generated. and • process simulation (or discrete-event simulation). INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . The spreadsheet is a viable modeling platform but has limitations. These include: Simulation on Spreadsheets Analytical simulation falls into two broad categories: • sampling or Monte Carlo simulation. sampling simulation. even fairly simply queuing models are manageable in the spreadsheet (Ragsdale. a sufficient understanding of the technique’s salient features.HILL Process Simulation in Excel for a Quantitative Management Course if the instructor has made the proper academic-toapplication connection. This freedom is carried over into the design and specification of quantitative models. 2001. The spreadsheet paradigm is one of arrays and matrices of values but not necessarily matrix algebra. The dynamic interactions and uncertain event ordering are difficult to capture in a spreadsheet model without somehow augmenting spreadsheet capabilities. Typical examples might include maintenance operations involving demands on limited resources and unpredictable failure events. Other simulation applications. and • limited view of the breadth and depth of quantitative modeling. Sampling simulation applications are perfect for the spreadsheet. Process simulation for spreadsheets are not quite as applicable. in breadth of technique supported and in the size of models accepted. but such topics generally fall outside the scope of quantitative courses. and most importantly. The spreadsheet also imposes few limitations on how a user chooses to design a worksheet. and training simulations are excluded from the present discussion. or even complex combat models with multiple interacting systems engaged in conflict. This expressive freedom can be particularly troublesome when correct answers are obtained using questionable modeling methods or when the correct spreadsheet model bears no resemblance to an associated mathematical formulation. a chapter usually focused on sampling simulation. Sampling simulation is used to examine risk or uncertainty associated with static models or simulations that involve activity-scanning approaches. an appreciation of what is still unfamiliar with respect to the technique. The instructor must avoid overwhelming the student with spreadsheet capabilities and focus on effective quantitative modeling methodology. Thus. Camm and Evans. Advanced users can of course significantly extend spreadsheet capabilities (like in Excel) with special purpose programming (like VBA). as well as conduct risk analysis in simulation studies or student projects and theses. such as human-in-theloop. and often more realistic. These more complicated. 1996). The spreadsheet platform also introduces challenges for the instructor. Process simulation is used to capture complex system state changes over time. particularly when the state changes are defined by events within the system. Evans (2001) described these as Monte Carlo or risk simulation and systems simulation. Such expressive freedom can be a source of confusion to the novice modeler. • too much modeling freedom. The instructor needs to help the student build the mental mapping between the two paradigms. web-based. inventory models. distributed. the survey course should provide a basic understanding of a range of techniques. production processes involving looping within the various workstations within the facility. The survey course student will generally remain a novice user of quantitative management tools.

SimQuick is not an Excel add-in (such as an . we incorporated SimQuick into the simulation portion of our survey course. the parameterization of those elements. To overcome this limitation. ProModel. AweSim. and Laurence and Pasternack (1998) whose works include student versions of these more powerful packages. 2001) is a process-oriented simulation package for Excel. However. we have found SimQuick. process simulation follows sampling simulation for which we use Crystal Ball. Figure 1: SimQuick Control Panel XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . replete with significant limitations when compared to mature. The only elements available in SimQuick are those listed on the panel. See Evans (2000) or Ragsdale (2001) for details on sampling simulation using Crystal Ball. These specifications are indicated to SimQuick via particular worksheet tables whose access is controlled via VBA menus within the SimQuick spreadsheet. quite adequate in providing a spreadsheet tool with which to focus on the salient features of process simulation thereby providing more complete coverage of simulation as a quantitative technique. special purpose packages such as Extend. the student is not overwhelmed by the large number of modeling constructs such as one finds in the special purpose simulation packages. In our case. A stilted view of simulation due to spreadsheet limitations deprives the survey-course student a full appreciation of the power and benefits of the simulation as a quantitative technique. Each button transfers control to a worksheet containing the SimQuick tables through which one specifies a simulation.HILL Process Simulation in Excel for a Quantitative Management Course mentioned when referencing the more sophisticated simulation packages. Further. or Arena.xla file) but rather a spreadsheet template in which a user specifies the elements of a simulation model. despite its limitations. The instructor must however choose modeling projects that are appropriate for the SimQuick package. and described below. however. Evans and Olsen (1998). Figure 1 displays the SimQuick control panel. and the connections between the elements. This limitation on SimQuick constructs is a blessing for the survey course as the student must focus on the process of simulation modeling to successfully employ SimQuick. admittedly limited in the amount of time and space devoted to discussing how to use these more powerful simulation packages. SimQuick can be described as a first-generation package. These exceptions are. SimQuick Introduced SimQuick (Hartvigsen. Exceptions include Camm and Evans (1996).

and scenarios. Linkages among the elements are indicated by the directed arcs and specified to SimQuick via the unique names assigned the element. through the use of Crystal Ball’s distribution fitting capabilities to analyze historical data from which to derive representative probability distributions. A simple flow-chart augmented with additional syntax provides a simple. and sampling simulation. The SimQuick design provides a focus on the simulation process. Figure 2 contains sufficient detail to directly specify the model to SimQuick. 3. insight gained. We can use Step 3 to tie back to Crystal Ball. and 4. but rather a tool one builds within the simulation process. We want to count how many are painted so we use two buffers. and once painted leave the system. in this case. easy to learn and intuitive simulation process. are painted Red or Blue. Evans (2000) offers the following four step approach: 1. The true end product of a simulation effort. Figure 2: Paint Process Example XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS .HILL Process Simulation in Excel for a Quantitative Management Course Process of Simulation Modeling A frustrating aspect of teaching simulation. In this example. is reminding students that simulation is applied statistics. The simulation model is not the end result. Hartvigsen (2001) lists three steps in using SimQuick: 1.Formulate the problem to include defining objectives. and any other data required by the SimQuick element. wait for a paint station.Implement model on computer. 2. This flowchart in Figure 2 was drawn using the cell formatting and the line drawing facilities within Excel. a unique name for the element.Conceptually build a model of the process. 2. whether a component within a survey course.Enter the model into SimQuick. 3. via statistical analysis of simulation output. entities arrive.Test process improvement ideas with the model We expand the first step quite a bit when teaching process simulation with SimQuick to focus more on the methodology of simulation. just as in a mathematical modeling effort.Specify probabilistic assumptions. or a full-fledged simulation course. measurements.Develop a logical model. This includes increasing the specificity contained within a conceptual model. This is due to the increased complexity of a process model versus a static model as built for a sampling simulation application. This facilitates the second step as entering a model into SimQuick is very straightforward but does require the up-front planning during the conceptual modeling building process. Figure 2 is a very simple conceptual model intended to motivate our approach to teaching simulation. The flowchart elements in Figure 2 list the corresponding SimQuick element type. is insight into the system or process under study. Evans’ four-step approach is closer to our needs although additional emphasis is given to verifying and validating the logical model before implementing the model into SimQuick. Total Red and Total Blue. Stochastic simulation output is a function of input random variables and thus also a random variable and statistics are the language of random variables.

The delivery trucks have limited storage. There is also a limited choice of probability distributions although those implemented are quite commonly used in simulation. handling up to 15 finished components per pickup. Part B must be inspected and if required. Fortunately. • More than two decision points requires placing SimQuick decision point elements in sequence and determining the correct conditional probabilities. like any computer program it is. All components are polished. SimQuick Teaching Tips SimQuick limitations mean certain things cannot be easily modeled. • Emphasize the need to carefully read and grasp how SimQuick interprets connections between INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS .000 time units and 100 independent replications. each “limitation” of SimQuick provides an opportunity to reinforce two key concepts to the student: structured walk through of models for validation. not necessarily what the modeler thinks it will accomplish. There is no facility for removing transient data nor can one specify random number streams. re-sanded and repolished. The tables currently allow up to 20 elements of each type. For instance. one must learn to manipulate the language properly to obtain the desired modeling effect. Figure 3 shows an object entrance and a split XX • Emphasize the importance of fully understanding the system under study and then mapping the desired conceptual model onto the SimQuick syntax when creating the actual simulation model. two buffers feeding a common workstation produces a combine object effect. Not surprisingly SimQuick has limitations. A structured walkthrough is usually associated with software engineering but serves the novice modeler well to reinforce the notion that a simulation. SimQuick drops entities if those entities have no place to move or wait. will only do what is specified. The reader will note common elements in the figures. These common elements are the connecting points between the figures. without explicitly modeling maintainer travel. a maintenance process simulation can capture the effect of maintainer transient time. • Use buffers for each workstation. The complete flowchart for this example cannot fit neatly in single page. Resource usage is prioritized by the order in which workstations are defined in the Workstation worksheet and workstations handle as many entities as resources allow. and modeling for effect. For example. • Emphasize the importance of fully specifying the flowchart model and uniquely naming each piece in the model. and all simulation packages are programming languages.HILL Process Simulation in Excel for a Quantitative Management Course SimQuick Limitations SimQuick represents a new and initial capability for process simulation within Excel. Simulations are limited to 10. Just like any programming language. Modeling effects deals with using the structure and syntax of the language in such a way that the resulting model sufficiently mimics the intended process—the output data makes sense. Understanding and accommodating these limitations helps realize the benefits SimQuick brings to the classroom. Like more powerful packages. The following are some initial lessons learned. Figures 3-6 contain the components of the final flowchart. SimQuick will also do initial error checking before executing the simulation. Completed A and B components are paired and assembled into a finished component. A and B. Z. SimQuick elements are defined via tables within worksheets of the SimQuick workbook. SimQuick Example Consider the following example: Two components arrive simultaneously. Finished components are placed in holding racks until an hourly delivery truck arrives to cart off the components. by properly incorporating travel time into maintenance repair times. elements. An object will drop from the simulation if not buffered.

5 minutes.5 minutes. Finally. extending from Figure 3 Buffer WPA. Once fully defined and specified. These buffers are also the connecting points between Figure 4 and 5. Remaining components wait in the Loading Dock buffer. Figure 3: Components A and B Enter System Figure 4: Component A Polishing Process Figure 5: Component B Polishing and Reworking Process XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . A and B.HILL Process Simulation in Excel for a Quantitative Management Course into two components. The workstation handles one object at a time and does not require special resources. all buffer capacities are set to 200 effectively yielding no capacity limitations. with mean 2 and standard deviation of 0. each moving into a Buffer to await polishing. is the component A polishing process. the user can provide the model information to SimQuick via the proper SimQuick table. Figure 5. Figure 4. The sanding requires a constant 2 minutes. extending from Figure 3 Buffer WPB. an operation that requires 1. In this model. respectively. Objects from Buffers FinishA and FinishB combine to form the final product. into Figure 6. Figure 6 shows the final assembly process. is the component B polishing process which includes a 5% chance of inspection failure and required re-sanding and re-polishing. Z. The polishing process time follows a normal distribution. Delivery trucks arrive each hour and take away up to 15 completed components each arrival.

an example completed table. Figure 7: Specification of Arrival Entrance Element XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . A single object arrives and moves directly to the Login (workstation) element. named Arrive. Similar help is presented on other worksheets. Note the Entrances worksheet provides guidance on the acceptable inter-arrival and number of objects arriving distributions. The Examples button provides precisely that.HILL Process Simulation in Excel for a Quantitative Management Course Figure 6: Final Assembly and Packaging Processes Figure 7 is a partial screen shot showing the Entrance element (included in Figure 3). In this model. as specified to SimQuick. the time between arrivals is modeled as a uniform random variable between 6 and 9 time minutes. to include a constant value.

XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS .) Figure 9: Specification of Buffer Elements in Model Figure 9 contains a collage of all the buffer elements defined in the model. The name specified in the output destination ties directly to the directed arc used in the model flowchart in Figures 3-6. Note each element has a unique Name. To conserve space. the processing time may be a constant (0. A and B (since these arrive simultaneously. In the case of the Login workstation. neither the Decision Point element nor the Exit elements are shown. and the destination for once processing is completed is specified. a nominal time is given while the dual output destinations serve to split the single arrival into two components.5)).1 or 2) or some random amount of time (Nor(2. These tables specify the workstations from Figures 3-5.HILL Process Simulation in Excel for a Quantitative Management Course Figure 8:Specification of Four of Five Workstation Elements Figure 8 is a collage from four of the five tables in which the conceptual model workstations are specified to SimQuick. Each buffer is provided a capacity (use a large number if capacity is not an issue) and each buffer starts empty. Each element is provided a unique name and lists a single output destination..

As indicated in Figure 10. Variance information requires the user save the results worksheet and use Excel functions to calculate variance information based on the replication data. In class. For this model. across the ten replications. conducts the simulation. SimQuick provides general data on each element contained within the Figure 10: SimQuick Output Sample model.4 components arrive.4 items required sanding (difference in Work Cycles started for Polishing A versus Polishing B as well as the Work cycles started for Sanding B). along with cumulative statistics are written to another worksheet accessible via the View Results button (see Figure 1). SimQuick does pro- vide the data for each of the simulation replications.) SimQuick Output Figure 10 is a snapshot of the SimQuick output panel. various embellishments can be included and the resulting system impacts XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . The results of each simulation run. Other data provided (not shown) indicate a 1% utilization of the Sander workstation and only 47% of the delivery truck capacity is employed. SimQuick provides the data for each replication and a summary average across all the replications. SimQuick output is predefined. data which can be easily copied and further analyzed using Excel statistical analysis tools. an average of 64. the number of replications and length of each simulation are provided. When the Run Simulation button is selected.HILL Process Simulation in Excel for a Quantitative Management Course Once the elements are specified to SimQuick. This represents a 3. The Polishing workstations are utilized approximately 27% of the time (Fraction time working) and we can infer that 2. Inferences for the system are based on this data provided. the user gets what SimQuick provides. SimQuick does some error checking and if all passes. workstation and delivery truck utilization results (not included) indicate a woefully underutilized process (as one might expect by examining the system description. However.7% fail rate which is very close to the 5% theoretical fail rate specified for the model. In the case of this re-working example. SimQuick does not currently provide a means to specify output measures.

McGrawHill. J. (1996). NJ. A. L. “Spreadsheets as a Tool for Teaching Simulation. Ragsdale. (2000). Evans. Analysis and Interpretation. (1993). No. Harpell. Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Management Science. Mansour. SimQuick: Process Modeling with Excel. Introduction to Simulation and Risk Analysis. Practical Management Science: Spreadsheet Modeling and Applications. http://ite. Belmont. Pasternak. Prentice-Hall. J. and S. David. Upper Saddle River. Duxbury. Vol. 23. S. and W. R. M. South-Western. L. Laurence. Winston. Prentice-Hall. we introduce SimQuick and process simulation after presenting sampling simulation using Crystal Ball. Management Science: Modeling. C. and J. 1. 2. Evans. John Wiley & Sons. L.. C. T.org/ Vol1No1/evans/evans. SimQuick provides a useful spreadsheet-based vehicle for complementing products like Crystal Ball or @Risk and thus providing a relatively thorough familiarization of simulation. Spreadsheets are uniquely suited for sampling simulation and it is quite logical for spreadsheet-based texts to focus on sampling simulation. Applied Management Science: A ComputerIntegrated Approach for Decision Making. Third Edition. Ohio. and J. New York. A. D.informs.html Hartvigsen. Cincinnati. and B.R. Cincinnati. J. Upper Saddle River. “Operations Research Techniques: A Longitudinal Update. 1. (1998). pp. (2000). 63-68. R. Law. A.” INFORMS Transactions on Education . Albright. and D. Student feedback has been positive particularly in the ease of use of SimQuick once the process model is defined. As educators however we must provide simulation familiarization across the breadth of the analytical simulation spectrum. 1973-1988. New York. Olsen. M. (2001). A.” Interfaces. Ohio. Concluding Remarks In our class.HILL Process Simulation in Excel for a Quantitative Management Course examined using the output from separate SimQuick runs. (2001). References: Camm. (1998). CA XX INFORMS Transcations on Education 2:3 (XX-XX) © INFORMS . No. we were able to provide a familiarization of simulation that balances both sampling and process simulation. More importantly. J. While limited in capabilities. Evans. (1997). South-Western. Lane. Simulation Modeling and Analysis. H. Vol. Our focus has been on the process of simulation and in particular developing accuracy in defining the flowchart model of the process. NJ. W. Kelton.