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

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.