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Simulation Optimization Using a Hybrid Scheme … 133

Step 3) Minimize objective function along direction ud
For every direction d = 1,..,np
 Find the value  that minimizes J(S 1 - d +  d u d )
d
 Set S = S +  d u
d
d
1 - d
Step 4) Update directions
 Set ud = ud+1, d = 1,..,np-1
 u n p = S n p - S
0
Step 5) Iteration updating: Set k = k + 1.
Step 6) Minimize objective function along direction u
n p
 Find the value  that minimizes J(S +  )
u
0 n p
 Set Z = S +  u
k 0 n p
*
Step 7) Stopping criteria: If J(Z k ) > J(Z k 1 ) then stop, Z is the optimal solution;
k
otherwise go to step 2.

CASE STUDY: THE PMOC MODEL

PMOC Technologies Inc. is a manufacturer of optical solutions for medical,
industrial, communications, defense, test, and measurement applications. The precision
molded optics (PMO) process produces lenses for industrial laser and other optical
applications and is the focus of the simulation model.
PMOC Inc. has built its reputation on providing customized products to long-term
customers who have designed their equipment to use PMOC lenses. Lenses make up to
65% of the company’s operations. It has a stable customer base of around 1,700
customers that are willing to pay relatively higher than traditional market prices. This has
helped PMOC Inc. maintain a stable market share over the past few years despite using
an old manufacturing technology with limited capacity. Due to relatively long term plan
to move the lenses operations to Asia, the company desires to continue serving its
customer base using existing workers and overtime.
The company depends on its stable base of customers who continue to rely on PMOC
specially designed lenses until they upgrade to new technologies. The company however,
should minimize expenses in the form of scrape and maintain stable operations. The goal
of management is to find a policy that avoids large oscillations in the inventory if
expected increase of customer orders on regular types of lenses occurs.