System Dynamics :Practical Assessment
1. Practical questions: System Dynamics (40 Marks)
The COVID-19 pandemic has a massive negative impact on human wellbeing and the global economy since its outbreak at the end of 2019. Early studies have shown that using Personal Protective Equipment (PPE) helps for protection against the spread of the disease. Therefore, retailers have put an enormous effort on the stable, reliable, and rapid management of PPE supply chain. During the pandemic, the procurement and inventory management for PPE has gained immense attention.
Retailers believe that system dynamics might help them plan procurement, inventory and sales planning for PPE. It is very well known that if there is no PPE inventory, there can be no sales. In other words, PPEs are sold from inventory. It is also known that if there is no PPE procurement, there is no PPE inventory. Each PPE item first goes into inventory once they arrive. If the PPE sales increase,retailers purchase more PPE.
To be on the relatively safe side, retailers have a target inventory which is equal to coverage level (c months) times PPE sales (i.e. target inventory is ¢ months of sales). There is a time to replenish PPE
inventory and itis called lead time.
a) Draw the Causal-loop diagram, put the sign (positive or negative) for the whole model and write equations for variables. (10 Marks).
b) Aretailer has a coverage level of 4 months and the lead time of PPE is 1.5 months. Assume that the retailer has an initial inventory level of 120000 PPE and the demand of PPE has a step-wise function. Demand is 18000 nits between 0-19 months, demand is 45000 between 25-65 months, and finally demand is 66000 units between 75-100 months. (20 Marks).
- Establish complete model on Vensim and report model as screenshot in the report. Run this model on Vensim for 120 months with time step of 0.35.