simulating production volume


case study:

The industrial Engineer measures the volume of production in a production company over time. Due to business transformations, the company reduces production periodically by a specific share but there are also some non-deterministic influences that relate to economics, politics etc. Using R we can easily simulate such a process and plot it.

We start the series with a total of 5000 units of production and simulate the reduction in production with an autoregressive process that exhibits a downward movement in the long-run and has normally distributed errors ut:

 


solution:

#simualtion of a model:

set.seed(321)

Date = seq(as.Date("1951/1/1"), as.Date("2000/1/1"), "year")

x = c(5000, rep(NA, length(Date) - 1))

for (i in 2:length(Date)){

   x[i] = -50 + .98*x[i-1] + rnorm(n = 1, sd = 200)

}

plot(x = Date, 

     y = x, 

     type = "l", 

     col = "green", 

     ylab = "Production Level", 

     xlab = "Time"

)

plot:





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