An Investigation of the Sequential Sampling Method for Crossdocking Simulation Output Variance Reduction

TL;DR

This study evaluates the effectiveness of the Sequential Sampling method in reducing variance in simulation output for crossdocking systems, highlighting its potential and limitations in achieving desired confidence intervals.

Contribution

It applies the Sequential Sampling method to a JIT crossdocking simulation, demonstrating its variance reduction capabilities and computational challenges.

Findings

Achieved a 95% confidence interval half width of ±2.8 for total usage cost

Required a large number of replications to meet variance reduction goals

Used Arena simulation software for analysis

Abstract

This paper investigates the reduction of variance associated with a simulation output performance measure, using the Sequential Sampling method while applying minimum simulation replications, for a class of JIT (Just in Time) warehousing system called crossdocking. We initially used the Sequential Sampling method to attain a desired 95% confidence interval half width of plus/minus 0.5 for our chosen performance measure (Total usage cost, given the mean maximum level of 157,000 pounds and a mean minimum level of 149,000 pounds). From our results, we achieved a 95% confidence interval half width of plus/minus 2.8 for our chosen performance measure (Total usage cost, with an average mean value of 115,000 pounds). However, the Sequential Sampling method requires a huge number of simulation replications to reduce variance for our simulation output value to the target level. Arena (version 11) simulation software was used to conduct this study.