Abstract: Every system needs to be analyzed or examined to make any change or improvement. There are a lot of methods to analyze any system. We can do this either by the actual system or by the model of the system, which may be a physical model or a mathematical model. If we don’t have an exact analytical solution then we have to analyze the system by simulation and it is the most effective technique to analyze considering the cost, risk or time involved. Simulation enables the designer to analyze not only a single system but also the interaction of all the systems of an enterprise so that the net result of all the systems used in the best combination to achieve the stated objectives.

Abstract: In any simulation, there is a model that involves quantities whose values can vary randomly, and therefore, whose values are unknown and sampled from an appropriate population of observations. The model is represented using a computer program, and the program actually samples the random variables, performs the computations of the model and reports the outcome, usually in the form of one or more observations. Spreadsheet simulation refers to the use of a spreadsheet as a platform for representing simulation models and performing the simulation experiment. This paper models a simple production management system inside a shop floor with the help of its necessary elements such as the demand, stocking quantity, safety stock etc. To incorporate the idea of ever-changing market demands, probabilistic random variables have been applied to make the model stochastic. Sensitivity analyses are performed on different variables to answer the “what-if” questions for different production scenarios. The model is run for a month with different streams of random demands. Finally, the optimized production lot size is achieved.