Operations Modelling And Simulation
1. Practical questions: Operations modelling
Company ABC is a manufacturer of three products. Table 1 below describes the production details for each of the products respectively.
Table 1. Production information
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Input
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Inter arrival time
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Arrival lot size
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Raw material A
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2
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2
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Raw material B
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10
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5
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Processing
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Product I
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Sequence
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M1
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M2
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M4
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Setup time
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0
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2
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2
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Production time
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4
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2
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6
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Input material
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1 pc A
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1 pc B
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2 pcs A + 1 pc B
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Product II
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Sequence
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M2
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M3
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M4
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Setup time
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3
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0
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1
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Production time
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5
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2
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4
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Input material
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1 pc B
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1 pc A
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2 pcs B + 1 pc A
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Product III
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Sequence
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M2
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M3
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Setup time
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2
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1
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Production time
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2
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4
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Input material
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1 pc B
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1 pc B
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In addition, every new arrival material A batch (i.e. lot size is 2) will be split to one for Product I and one for Product II. Company ABC has 2 M1, 3 M2, 1 M3 and 2 M4 in total. 2 operators are hired to be responsible for all set-up activities and M1 is the machine with highest priority.
Considering this information, perform the following activities:
Activity a. If only Product I&II are being produced, build up the Gantt chart for the current process described in table 1 and identify the bottleneck of the overall production process. Your Gantt chart needs to be properly represented with reaching a steady state and how the bottleneck is identified needs to be elaborately explained.
Activity b. Regarding above information, what is the best buffer configuration that takes the least amount of buffers but encounters the least material flow disruptions. Your analysis needs to be explained in detail with support of modelling results.
Activity c. If the prices for Product I, II, & III are £20, £18, and £23 respectively, how would you plan your production in 10,000 minutes to reach the maximal sales revenue? You cannot change any parameter for all the entities but only can make decisions on how many numbers of Product I, II and III are going to be produced and how they are scheduled. Your solution should be supported with rich explanations and analyses.
2. Practical questions: System Dynamics
An e-commerce warehouse wants to manage its inventory for an item using system dynamics. The item has sales and procurement rates which are well known. Warehouse manager believes that system dynamics might help them plan inventory levels. It is very well known that if there is no inventory, there can be no sales. In other words, items are sold from inventory. It is also known that if there is no item procurement, there is no item inventory. Each item first goes into inventory once they arrive.
Warehouse manager knows item procurement rate. Item procurement rate positively impacts procurement (i.e. number of items procured). Warehouse manager also knows item sales rate. Sales rate positively impact sales (i.e. number of items sold). The procurement (i.e. number of items produced) is (=procurement rate*inventory level). The sales (i.e. number of items sold) is (=sales rate*inventory level).
Question 1: Draw the Causal-loop diagram, put the sign (positive or negative) for the whole model and write equations for variables.
Question 2: Assume that the procurement rate is 0.05 items per month, while sales rate is 0.03 items per month. And warehouse has an initial inventory level of 1000 items.
- Establish complete model on Vensim and report model as screenshot in the report. Run this model on Vensim for 100 months with time step of 0.25.
- Discuss results for inventory level and show graphs of results.
- What is the probability that inventory level will go below 500 items?
- Make recommendations to the warehouse.
Question 3: Now assume that the item is a perishable item. If you are asked to solve this problem for a perishable item, what would change in your model and in your parameters? Critically discuss this new setting.