# Computer Simulation For Business Assignment – UK.

Unit Title :- Computer Simulation For Business
Assessment Type :- Assignment
General coursework instructions
• The coursework is to be done in groups of four people.
• The assignment is worth 50% of the total coursework marks for the module – so that means it counts for 25% of the overall module assessment.
• The situation to be modelled is that of a company’s production, delivery and marketing activities with all the connections between these activities.
Computer Simulation For Business Assignment – UK.

Course work tasks – everything relates to the Case Study – ” Classic Verandas”.

PART A.
i) List your variables for the system, ii) put them into linked pairs. Please provide the list of variables and pairs in your report.
ii) Draw a full Causal Loop Diagram for the problem situation or system described below in the case study. Show for each loop whether it is reinforcing or balancing. Do draft or rough versions first and please include these as photos, and finally the full neat finished version in your report.
iii) Fully describe each of the main loops, parts or areas of the system, as represented by your diagram. Describe their behaviour, and what determines this. Then explain how these major parts interact and make up the system as a whole, and so determine the overall system’s behaviour. Include in your description the interactions or links between the variables within loops and between loops.

Advice and feedback on and help with this part will be provided.

PART B.
Now move from your Causal Loop Diagram (CLD) to a Stock and Flow Model of this system – so translate one into the other – so use the CLD as the basis for this second representation or model. We would call this first version of the stock and flow model, the Baseline Model.

i) Build up and draw your stock and flow diagram – first do one or more draft versions and then implement your model using iThink software, and so create a final neat version.Please include all these versions of your model, as diagrams, clearly labelled, in the report.

Broadly, you will need to identify and include in your diagram, these elements:

• stock variables – but keeping these to a minimum is seen as good practice – and then
• those variables that are the material flows in and out of the stocks you have identified,and the rates of flow, and then
• the determinants of these, thus auxiliary variables, constants or givens, and
• the causal links or information flows linking all these together, as well as the parts of the system, plus
• the sources and sinks / ends of the system, its boundaries.

Advice and help with this part will be provided.

ii) Describe fully the main parts of your stock and flow model, the interactions between the parts.

iii) Define fully the equations for the model – so for what determines the stocks, the rates of flow in and out of stocks, and for those auxiliary variables that need an equation.

Input initial values for your Baseline Model, eg for stocks and the givens or constants as provided in the study.

In the report, please list all the equations, the variables, givens and constants, and initial values, together with the associated units they are in.

iv) Run the Baseline Model implemented in i Think and check the output generated matches your expectations.Please include the final version of your Baseline operational model with your report as a separate i Think file as well as the diagram of the model, as above.

v) Once satisfied with your model, briefly explain your equations where necessary, and this should include how you have modelled both information smoothing and non-linear relationships.

PART C.
i) Decide on an appropriate set of key variables, and run and range specifications, and run the Baseline model to see the predicted behaviour of these variables over time eg a 60-month period,with the current system structure and parameters. You should generate as output: a minimum of 3 sets of graphs and 2 tables. Please include these in your report.

ii) Looking at the output, describe what you see happening over this period (assuming the current system structure and parameters).

iii) Given what you see as the forecast system behaviour, identify between 5 and 8 changes of policy that might bring about improved company performance over the 60-month period. For example, you might try an increased fraction of revenues to the marketing department, better sales rep generation of orders, larger production capacity or higher utilisation of capacity. Briefly say with each, how the particular change might be achieved in practice.

Make each of these changes to your model in turn, one by one, and run the model to see what happens as a result of the modified scenario. Provide the resulting graphs of behaviour for a set of key variables. With each graph describe what you see as the impact of the particular change made.

PART D.
i) Based on your view of the current situation gained via your models, and the various simulations or different scenarios you have tried, explain your conclusions about the company’s present position and what could be done to improve this in the future. For example, say what are the constraints on the business – what might limit its growth revenues and profits.

ii) Say what your policy recommendations are for the company therefore, so that it may have a successful and profitable future that can be sustained in the longer term:

a) in the short term – up to one year;
b) in the longer term – from one year to five years or longer.

The situation.
Classic Verandas is a relatively new company that manufactures and sells a range of traditional and contemporary verandas, plus decking, glass rooms, terrace roofs, carports and awnings for homes and small commercial premises. Its clear focus is on high quality distinctive products and a first-rate service. The owners were previously skilled, experienced employees in a much bigger business operating in the same industry but were made redundant. Once their new business is well established, with a good reputation they aim to market these products for larger commercial educational and industrial premises too. It is quite a small concern at present, but the owners want to understand what is likely to happen with regard to sales, revenue and profitability, and what its policies should be so it can grow rapidly and successfully over a period of years.

Computer Simulation For Business Assignment – UK.

We are concerned mostly with the company’s marketing department and its production department.

The marketing department currently employs 4 sales representatives (reps) – referred to in their literature as “design engineers or veranda consultants” – who contact customers to inform them about the company’s products. In all cases, the sales reps / consultants will visit these prospective customers in order to discuss and find out the exact requirements eg the type size and specifications of the veranda, decking, room, carport etc. If customers decide to buy the products, they place an order through the sales rep. that has contacted and visited them. He or she is additionally responsible for any needed measuring and specification – as each product will have specialist fixings and a bespoke framework.

The role of the production or manufacturing department is to produce to order, and deliver the products to customers, as well as fit the products on site.

Each sales rep generates an average of 6 orders per month. Assume orders are passed on immediately to the production department. Once an order has been produced, it is delivered to the customer and fitted on site by the company’s fitters, who are part of the production department The company expects orders to grow rapidly and the department has a new total capacity of 75 orders per month, and given the current pressure on production, percentage utilisation is currently 50% of this. Order fill rate (or shipment rate) depends on the capacity and the percentage utilisation of capacity. Assume there is an initial or current order backlog of 75 orders.

Percentage utilisation of capacity depends on the pressure on production and therefore on the time needed to clear the backlog of orders – so the order backlog to capacity ratio. This relationship will take a non-linear form.

Glass rooms can be £14,000-21,000 but most orders are for smallish verandas at £6,500 – 9,000 – and the average price (or revenue) per order is about £12,000.

NB. The customer pays only when the products have been delivered, assembled and fitted to the customer’s satisfaction – so when the order has been fulfilled. The marketing department is allocated a budget equal to a certain percentage – currently 14% – of the reported sales revenues – so, post order fulfilment.

Computer Simulation For Business Assignment – UK.

One determinant of the reported sales revenues is thus the average order fill rate (or shipment rate). Information must be gathered for this over time. The time it takes to average the orders filled is 1 month. Average order fill rate depends on the order fill rate, and the time to average the order fill rate.

The marketing department budget is used to determine the required number of sales reps,given that the monthly salary of a sales rep is £4000. Assume all the budget goes to paying sales reps’ salaries. If the required number of sales reps is higher than the actual number of sales reps with the company, this gap is filled by recruiting new staff. And if the required number of sales reps is lower than the number of sales reps with the company, the gap is closed by firing staff. The time it takes to hire and train, or to fire a sales representative is on average, 6 months. The hire / fire rate thus depends on the size of the gap, and the time it takes to hire and fire.

In its advertising, the company stresses both the quality of its products and the speed and convenience to the customer of the whole process from sales rep. visit, customer decision, taking down the specifications, the manufacturing and delivery, the assembly and fitting process. Thus, customers expect both high quality products, great service and not to have to wait too long for the delivery of their order. A lot of time and care is taken over production and the quality is kept high.

With regard to the time it takes to produce and deliver orders, if delivery delay rises slightly, this has no significant effect on the overall customer order rate. Delivery delay will depend on the size of the order backlog, and the rate at which orders are being filled – the order fill rate. However, if the delivery delay increases beyond this, some of the existing customers or prospective customers may start to think about cancelling their orders. The percentage reduction in orders becomes greater as delivery delay increases. This is thus a non-linear relationship. The company has a good reputation for reliability, and so customers don’t decide immediately but will monitor the delivery delay over a period of time – (with the time to recognise delivery delay at 6 months) – before deciding, on the basis of this now recognised delivery delay, about their future orders. Thus, it is recognised delivery delay that directly impacts orders rather than actual delivery delay, (with recognised delivery delay depending on actual delivery delay and the time to recognise delivery delay.)

Computer Simulation For Business Assignment – UK.

The company wishes to grow fast, develop its customer base and achieve maximum sales,revenue and profitability, at the same time as maintain a reputation for high quality products and service.

The owners are concerned about the possible impact of delivery delay on the business once it has reached a certain size and if growth in orders is rapid.

It has asked you to explore the situation fully, and advise it on what policies to implement or changes it will need to make to enhance its future prospects – both in the immediate short term and in the longer term.