engleski

A Decision Model for Bakery Production Using a Monte-Carlo Approach

A daily question faced by bakery managers concerns how to determine the optimal quantity of output. Because their products are perishable, this is one of the most important issues for bakeries. Excessive production results in losses due to unsold products, whereas insufficient production carries along opportunity costs. Making correct estimates of demand is therefore one of the major tasks for any bakery manager. In a decision making process on daily output managers can be supported by several methods and models. The decision making model for bakery production presented in this paper is based on Monte-Carlo approach. According to this approach, for each production quantity a large number of iterations of demand for the analyzed bakery product should be simulated. Average profit is then calculated for each production quantity. The decision on the quantity the bakery should produce is finally made on the basis of confidence interval for the expected profit. The presented model can be improved by repeating the procedure in a larger number of sets.

decision model; manager; quantity of output; Monte-Carlo approach; simulation; confidence interval for the expected profit

nije evidentirano