Hindawi

Advances in Operations Research

Volume 2018, Article ID 6721912, 15 pages
https://doi.org/10.1155/2018/6721912

Research Article
The Behavior of Procurement Process as Described by
Using System Dynamics Methodology

Mohd Izhan Mohd Yusoff

Telekom Research & Development Sdn Bhd, TM Innovation Center, Lingkaran Teknokrat Timur, 63000 Cyberjaya,
Selangor Darul Ehsan, Malaysia

Correspondence should be addressed to Mohd Izhan Mohd Yusoff; izhan@tmrnd.com.my

Received 19 December 2017; Revised 22 February 2018; Accepted 4 March 2018; Published 22 April 2018

Academic Editor: Viliam Makis

Copyright © 2018 Mohd Izhan Mohd Yusoff. This is an open access article distributed under the Creative Commons Attribution
License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly
cited.

System dynamics methodology has been used in many fields of study which include supply chain, project management and
performance, and procurement process. The said methodology enables the researchers to identify and study the impact of the
variables or factors on the outcome of the model they developed. In this paper, we showed the use of system dynamics methodology
in studying the behavior of procurement process that is totally different from those mentioned in previous studies. By using a typical
procurement process employed by a telecommunication company as a case study, we proposed a new one (i.e., procurement process)
and developed a procurement model where we discovered that the number of days involved in completing the whole procurement
process depends heavily upon the scenarios we created (especially those that exceed two months), and suggested future research
undertakings.

1. Introduction reports by technical and commercial evaluation committee

Procurement process plays a vital or important role in
ensuring that a telecommunication company gets its supplies
(for projects) in timely manner, at the best price (offered
by the wining vendor), and free from all elements of foul
play (or bribery). At the beginning, the procurement process
activities employed by a telecommunication company were
done manually; for example, the vendors involved in call for
quotation exercise were required to (apart from registering
themselves to the telecommunication company) submit their
quotations (in hardcopy format) by placing them in labelled
boxes located at the said company’s finance or procurement
department. The labels were stated, for example, the supply
and installation of hardware or software (with technical spec-
ifications as required by the telecommunication company).
Then online procurement process system was introduced.
The vendors involved in call for quotation exercise were
required to upload their quotations (in softcopy format)
into the said system. The following are procurement process
activities that did not change (over time) and are done
manually: the evaluation of quotations and preparation of
and the approval of the reports (submitted by technical and
commercial evaluation committee) by approval committee.
Recently, new “gates” are introduced to evaluate the reports
submitted by technical and commercial evaluation commit-
tee before they are presented to approval committee, with the
aim or purpose of expediting the approval process, as well as
to eliminate all elements of foul play (or bribery).
No (scientific) study was done or conducted to evalu-
ate the performance of the existing and new procurement
processes especially before the deployment of the latter. The
introduction of online procurement process system did not
solve all the problems faced by the existing procurement
process. For example, the number of papers that the approval
committee could handle or manage at any given time is
limited. The meeting would normally be held during working
days, once a month, and for a specific number of hours
only. More and more reports from the existing meeting are
forwarded to the next meeting due to either time constraint
or lack of quorum. More and more reports are rejected by
approval committee due to failing to meet the criteria fixed
by approval committee.
2 Advances in Operations Research
Our research undertakings are focused on solving the
problems as mentioned above via the introduction of a new
procurement process. They are solved in stages where the
new procurement process is updated or expanded on each
stage. On the first stage and the main highlight of this paper,
the problem we wish to solve is the frequency of approval
committee meetings. The rest of the problems are solved in
future research undertakings. We performed the following
steps for the first stage: firstly, we studied the procurement
process of a telecommunication company (via Standard
Operating Procedure, or SOP, documents supplied by them).
Secondly, we collected (one year) real data, which include
the number of days required for an applicant to complete the
whole procurement process. Thirdly, we designed and built
the procurement model using system dynamics methodology
and a portion of (or all) real data collected from previous
step. Finally, we studied the performance of the procurement
model, which includes comparing the (procurement) model’s
results with the real data collected from previous step.
2. Literature Survey
Supply chain, which manages the flow of finished products or
services, is part and parcel of product development cycle and
it is normally invoked when the product is completed (i.e.,
when the product has gone through all tests related to quality
with flying colors). Asgari and Hoque [1] demonstrated the
use of system dynamics methodology to understand the
behavior of all variables involved in Ready-Made-Garment
(RMG) industry (such as enablers, performance or results,
and inhibitors), especially those related to supply chain,
so that top management could make effective decisions
to improve the supply chain of the said industry. They
conducted a survey and individual interviews with senior
management personnel, supply chain professionals, and mer-
chandisers of RMG industry. Kussainov [2] on the other hand
modeled and analyzed vaccine supply chain management in
view of significant (or important) contribution of immuniza-
tion programs to public health advancement. The contri-
butions of the said programs are, among others, increasing
longevity, reducing child mortality rates, economic growth,
development, and prosperity across the board for most of the
world.
Malik and Cheng [3] used system dynamics methodology
to understand the factors that alter the project as well as
the relationship between different knowledge areas in a
construction project. They believed the model they devel-
oped, apart from improving project performance, addressed
the weaknesses displayed by Project Management Body of
Knowledge, or PMOK, which introduced ten knowledge
areas. Latorre et al. [4] identified obstacles which prevent
achievement of the overall performance desired for the
UK’s construction industry (especially how project managers’
decisions impact such performance). The model visualizes
the interactions of all relevant goals and elements, presents
the need for increased efficiency in the construction indus-
try, and presents the role that KPIs have in driving these
required efficiencies. Using system dynamics methodology,
Cahyo et al. [5] modeled the resource provision policy
in multiunit maintenance program (emphasizing resource
strategy involving human and procurement). The model is
divided into several submodels, namely, human resource
submodel, which focuses on policies related to provision and
management, and procurement submodel, which emphasizes
the procurement process and inventory system. The model
showed the impact of one decision in a certain maintenance
resourcing system on the other maintenance resourcing
system and will lead to an optimum policy for maintenance
resource provision system. Sadreddin et al. [6] used a large
Canadian construction company as case study to develop the
cost of quality (coq) model for the procurement process of the
construction industry and establish a general course of action
for minimizing quality costs. The use of the prevention-
appraisal-failure approach for the coq model of the procure-
ment process, the internal quality costs within the company,
and costs of its suppliers were considered. Several different
policies were designed and their effects on quality costs
were investigated via system dynamics methodology. Their
findings suggested that prevention costs should be increased
to minimize failures, and they also found that appraisal cost is
quite high in the procurement process and should be reduced
in order to minimize overall coq. However this strategy could
increase failure occurrences thereby damaging company’s
reputation. The possible reductions of appraisal cost in the
construction companies should thus be carefully considered.
Ross-Smith and Yearworth [7] listed several weaknesses
which include traditional independent project performance
evaluations which are time consuming and disruptive to
business as usual and used system dynamics methodology to
combine performance evaluation and continual tracking into
one performance auditing method, thus allowing a model
of a system to be continually updated and internally and
independently analyzed as required. Using the Bernard gray
report of defense procurement as a test case, they found
that qualitative system dynamics has utility in creating an
enterprise performance audit.
Croom and Johnston [8] addressed the issues relating to
the impact of e-business developments on internal customer
service with a focus on electronic procurement introduction.
In other words, it concentrates on the intraorganizational
system dynamics of e-business. Marquez and Blanchar [9]
presented simulation study to extend current methods for
real options strategies in the management of strategic com-
modity type parts. They simulated 3 generic types of supplier
contracts to accomplish varying degrees of security and
flexibility and simulated a portfolio of these contracts applied
to secure a single part, with the purpose of extending and
refining portfolio valuation. Mula et al. [10] used Vensim
simulation tool to propose a simulation approach based on
system dynamics for operational procurement and trans-
port planning in a two-level, multiproduct and multiperiod
supply chain. The results are compared with spreadsheet
based simulation, fuzzy multiobjective programming, and
system dynamics based simulation models. Marinkovic [11]
concentrated on a specific antihail public service provider
in Siberia, exploring not only the outcome of the public
provider’s procurement practices, but also outputs of such
actions on the territory level, and built a model of corruption
Advances in Operations Research
Level_1
Rate_1
Link
Auxiliary_1
Figure 1: An example of a model developed using system dynamics
methodology.
based on Dynamics Performance Management approach in
order to extend their understanding of corruption and its
background as well as to provide an input to future policy-
making on corruption issues.
In this paper, which is divided into Methodology, The
Procurement Model, Results, and Conclusion sections, we
will show the use of system dynamics methodology in
studying the behavior of procurement process that is totally
different from those mentioned in the above studies.
3. Methodology
System dynamics methodology is defined as a field for
understanding how things change through time. It deals with
how the internal feedback loops within the structure of a
system create behavior and focuses on the feedback behavior
of variables within the closed loop of the system. The strength
of SD is its way of analyzing the impact of information
feedback on decision making of a complex system. The
following are some of the common symbols used in system
dynamics methodology.
Stock, represented by Level 1 in Figure 1, is an element
that accumulates and depletes over time. Flow, represented
by Rate 1, is the rate of change in a stock. Link defines
dependency between elements of a stock and flow diagram;
and Auxiliary, represented by Auxiliary 1, is used to define
some intermediate concepts. Positive feedback loops enhance
or amplify changes, which tends to move a system away from
its equilibrium state and make it more unstable. Negative
feedback loops dampen or buffer changes, which tends to hold
a system to some equilibrium state making it more stable [12];
practical example is given in the Appendix.
Note that Powersim Studio Enterprise 2005 is the applica-
tion used to develop procurement model.
4. The Procurement Model
The purchasing of hardware and software for projects under-
taken by a telecommunication company must go through
procurement process involving call for quotation, technical
and commercial evaluation committee, and approval com-
mittee. For example, if the price of hardware is less than say
3
$1000, two quotations are collected from authorized vendors
via call for quotation process (the duration for the said
process is 14 days). They (i.e., quotations) are evaluated and
only one is selected by technical and commercial evalua-
tion committee. Approval committee chaired by Manager
of Procurement studies the reports submitted by technical
and commercial evaluation committee and approves the
purchasing of hardware from selected vendor. If the price of
hardware is greater than say $100,000, more quotations are
required by technical and commercial evaluation committee
from authorized vendors, and approval committee is chaired
by Chief Executive Officer. Figure 2 shows a normal or typical
procurement process where the blue arrow lines represent
first path taken by user or applicant whilst the red arrow
lines represent second path, which is taken when approval
committee rejects the recommendation from technical and
commercial evaluation committee (in this paper, we are
focusing on readvertisement because this action clearly adds
more days to the whole procurement process). The rejection
might be due to several reasons; one of them is that the
number of quotations submitted by vendors did not meet
the criteria fixed by approval committee. The details of the
procurement process used by a telecommunication company
will not be revealed in this paper and they will be treated as
confidential information.
The procurement model, as shown in Figures 4 and 5
(using an algorithm as shown in Figure 3), which represent
two (2) scenarios, used random numbers between zero and
one (to create application date and chances and add realism
to the simulation), fixed 30 days for each month, ignored
Saturday and Sunday as well as official (or unofficial) holidays,
fixed the 10th and 20th of each month for approval committee
to convene or meet (i.e., twice for each month) (in real data,
approval committee meets once a month on working days
where they reserved time, date, and venue to discuss the
submitted reports, (the reservation depends heavily upon the
availability of committee members), and the measurement
used to represent cycle time is working days), and fixed
either the 3rd or 13th of each month for the (technical
and commercial evaluation committee) reports to reach the
secretariat (of the approval committee). If the reports reached
on the 3rd or 13th, they are tabled (or presented) on the
10th or 20th, respectively. Call for quotation process starts
on the same day as the applicant submits his or her form to
the relevant authority. The price of hardware or software to
be procured was not considered in the said model (further
clarification on the assumptions used: (1) if there are at least 7
days to complete 10 items in the reports, 7 of them are not
met with less than 7 days leading to postponement of the
submission date. There are cases where 10 items are met in
less than 7 days; (2) if there are 10 criteria fixed by approval
committee, 7 of them are not met leading to an extension of
procurement process; (3) the fixing of date of submission and
date of convene (for approval committee) could only be done
or achieved if online (process) system (replacing manual
process) is used. Reports can be uploaded into online system
by the applicant where approval committee could study and
approve them via the same system (on the stipulated or agreed
date)).
4 Advances in Operations Research
Start
User/Applicant
Procurement
department
Close Request for
Quotation
Advertisement
Submit quotation
Vendor
Figure 2: Flow diagram shows a normal (or typical) procurement process employed by a telecommunication company.
Scenario 1. Figure 4 is best described via the following
example: the applicant submits his or her form to the relevant
authority say in January and, based on the information given
in the form, the relevant authority calls for quotations from
authorized vendors for a period of 14 days. Once completed,
that is, before the 30th of January, in terms of call for
quotation process, the technical and commercial evaluation
committee (where the applicant is also a member) reports
(which include evaluation of the quotations submitted by
the authorized vendors) are submitted to the secretariat
(of approval committee) on the 3rd of February where the
(approval) committee meets on the 10th of February.
When the reports are presented (or tabled) before the
approval committee on the 10th of February and due to the
fact that, among others, the number of quotations received
(from the first call for quotation process) did not meet the
targeted value (or criteria), there are more than 70% chances
that the (approval) committee will request the applicant to
repeat the call for quotation process for (an additional) seven
days. The updated technical and commercial evaluation com-
mittee reports (which include evaluation of the quotations
submitted by the authorized vendors) are submitted to the
secretariat (of approval committee) on the 3rd of March to
be presented and approved by the approval committee seven
days later, that is, on the 10th of March. Otherwise, the
reports are approved by the approval committee on the 10th
of February. This scenario assumes that the number of days to
complete the reports is greater than (or equal to) seven days.
If the number of days to complete the reports (after 14
days of call for quotation process) is less than seven days,
there are more than 70% chances that the technical and
commercial evaluation committee reports (which include
User/Applicant:
Technical/
Commercial
Evaluation
Committee
Approval
Committee
No
Approve?
Yes
Letter Of
Acceptance/
Purchasing Order/
Delivery Order
evaluation of the quotations submitted by the authorized
vendors) are not complete (or ready) for submission (to the
secretariat of approval committee) on the 3rd of February. The
reports are submitted to the secretariat of approval committee
on the 13th of February instead and presented before the
said committee on the 20th of February. When the reports
are presented before the approval committee on the 20th of
February and due to the fact that, among others, the number
of quotations received (from the first call for quotation
process) did not meet the targeted value (or criteria), there
are more than 70% chances that the (approval) committee will
request the applicant to repeat the call for quotation process
for (an additional) seven days. The updated technical and
commercial evaluation committee reports (which include
evaluation of the quotations submitted by the authorized ven-
dors) are submitted to the secretariat (of approval committee)
on the 3rd of March to be presented and approved by the
approval committee seven days later, that is, on the 10th of
March. Otherwise, the reports are approved by the approval
committee on the 20th of February.
Scenario 2. Figure 5 is best described thru the following
example: the applicant submits his or her form to the relevant
authority say in January and, based on the information given
in the form, the relevant authority call for quotations from
authorized vendors for a period of 14 days. Once completed,
that is, well after the 30th of January, in terms of call for
quotation process, the complete technical and commercial
evaluation committee reports (which include evaluation of
the quotations submitted by the authorized vendors) are
submitted to the secretariat (of approval committee) on either
the 3rd of February, 13th of February, or 3rd of March,
Advances in Operations Research 5

User/Applicant
User/Applicant:
(date of submission) Technical/
Commercial
Evaluation
Committee

Yes Status of No
Procurement the report,
department Ready?
Close Request for
Quotation
(+14 days from date of
submission)
Secretariat Secretariat
Approval Approval
Committee, 3rd Committee, 13th
Advertisement (mm-yyyy) (mm-yyyy)

Submit quotation

Vendor Approval Approval

A Committee, Committee,
No No
10th 20th
(mm-yyyy), (mm-yyyy),
Approve? Approve?
B

Yes Yes

Letter Of
Acceptance/
Purchasing Order/
Delivery Order

User/Applicant:
User/Applicant
Technical/
(date of rejection)
Commercial
Evaluation
Committee

Procurement
department

Secretariat
Close Request for
Approval
Quotation
Committee, 3rd
(+7 days from date of
((mm+1)-yyyy)
rejection)

Advertisement

Approval
Submit quotation Committee 10th
((mm+1)-yyyy)
Approve

Vendor

Letter Of
Acceptance/
Purchasing Order/
Delivery Order

User/Applicant:
User/Applicant Technical/
(date of rejection) Commercial
Evaluation
Committee

Status of
Procurement Yes No
the report,
department Ready?
Close Request for
Quotation
(+7 days from date of
rejection) Secretariat Secretariat
Approval Approval
Committee, 3rd Committee, 13th
((mm+1)-yyyy) ((mm+1)-yyyy)
Advertisement

Submit quotation
Approval Approval
Committee 10th Committee 20th
((mm+1)-yyyy) ((mm+1)-yyyy)
Vendor Approve Approve

Letter Of
Acceptance/
Purchasing Order/
Delivery Order

Figure 3: Due to its size, only a portion of the algorithm used in developing the procurement model is presented in this paper, and in the
form of the above flow diagram.
6 Advances in Operations Research

Auxiliary_15 Auxiliary_18
Auxiliary_21
Rate_18
Auxiliary_36

Auxiliary_17
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Auxiliary_4

Auxiliary_15 Auxiliary_41 Auxiliary_15

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Level_3
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Level_3

Auxiliary_15

Copy of Auxiliary_15 Copy of Auxiliary_18

Copy of Auxiliary_21
Copy of Rate_18
Copy of Auxiliary_36

Copy of Auxiliary_17
Copy of Auxiliary_19 Copy 2 of Level_4
Copy of Auxiliary_44 Copy 2 of Rate_8 Copy 2 of Rate_9
Auxiliary_4
Copy of Auxiliary_15 Copy of Auxiliary_15
Copy of Auxiliary_16 Copy of Auxiliary_41
Copy of Auxiliary_20

Copy 2 of Level_3
Copy 2 of Rate_6 Copy 2 of Rate_7 Copy of Level_10 Copy of Level_11
Copy of Rate_19 Copy of Rate_20 Copy of Rate_21 Copy of Rate_22
Copy of Auxiliary_15
Auxiliary_5 Copy of Auxiliary_43
Auxiliary_32

Copy of Auxiliary_38
Copy of Auxiliary_42
Auxiliary_29 Copy of Auxiliary_39
Copy of Auxiliary_29 Copy of Level_9
Copy of Auxiliary_16 Copy of Rate_17 Copy of Rate_18
Copy of Auxiliary_40
Copy 2 of Level_3

Copy of Auxiliary_15

Figure 4: The procurement model developed using system dynamics methodology (Scenario 1).

where the (approval) committee meets on either the 10th of approval committee on either the 10th of February, 20th of
February, 20th of February, or 10th of March, respectively. February, or 10th of March. This scenario assumes that the
When the reports are presented (or tabled) before the number of days to complete the reports is greater than (or
approval committee on either the 10th of February, 20th equal to) seven days.
of February, or 10th of March and due to the fact that, If the number of days to complete the reports (after 14
among others, the number of quotations received (from the days of call for quotation process) is less than seven days,
first call for quotation process) did not meet the targeted there are more than 70% chances that the technical and
value (or criteria), there are more than 70% chances that commercial evaluation committee reports (which include
the (approval) committee will request the applicant to repeat evaluation of the quotations submitted by the authorized
the call for quotation process for (an additional) seven days. vendors) are not complete (or ready) for submission (to the
The updated technical and commercial evaluation committee secretariat of approval committee) on either the 3rd or 13th
reports (which include evaluation of the quotations submit- of February. The reports are submitted to the secretariat of
ted by the authorized vendors) are submitted to the secretariat approval committee on either the 13th of February or 3rd
(of approval committee) on either the 3rd of March or of March instead and presented before the said committee
3rd of April to be presented and approved by the approval on either the 20th of February or 10th of March. When
committee seven days later, that is, on the 10th of March or the reports are presented before the approval committee on
the 10th of April. Otherwise, the reports are approved by the either the 20th of February or 10th of March and due to the
Advances in Operations Research 7

Auxiliary_4 Auxiliary_51
Auxiliary_25
Auxiliary_24 Auxiliary_15 Auxiliary_52 Copy of Level_4
Copy of Rate_8 Copy of Rate_9
Auxiliary_35
Auxiliary_31 Auxiliary_34 Auxiliary_35
Auxiliary_15
Copy of Level_3 Copy of Rate_7
Copy of Rate_7 Auxiliary_28
Auxiliary_32 Copy of Rate_6
Auxiliary_26 Auxiliary_15
Auxiliary_15
Auxiliary_16 Copy of Level_3
Level_6
Copy of Auxiliary_8 Rate_10 Rate_11
Auxiliary_56 Auxiliary_57
Auxiliary_5 Auxiliary_30 Copy of Auxiliary_10

Copy of Auxiliary_7 Auxiliary_49

Copy of Auxiliary_9 Level_12 Level_14
Rate_23 Rate_24 Rate_28 Rate_29
Auxiliary_50
Auxiliary_34 Auxiliary_53
Copy of Rate_7 Rate_24
Auxiliary_33
Auxiliary_45
Auxiliary_47 Level_13 Level_15
Rate_25 Rate_26 Rate_27 Rate_30
Auxiliary_51
Auxiliary_15
Auxiliary_46
Auxiliary_48 Auxiliary_15

Auxiliary_55
Auxiliary_54

Rate_24

Copy of Auxiliary_51
Auxiliary_4
Copy of Auxiliary_25 Copy of Auxiliary_52
Copy of Auxiliary_24 Auxiliary_15 Copy of Copy of
Copy of Copy of Level_4 Copy of Copy of
Copy 2 of Rate_8 Rate_9
Copy of Auxiliary_31 Auxiliary_35 Copy 2 of Copy 2 of
Auxiliary_15 Auxiliary_34 Auxiliary_35
Copy of Copy of Copy of Copy of
Level_3 Copy of Copy of Copy of Auxiliary_28
Auxiliary_32 Copy of Copy of Copy of Auxiliary_26 Rate_7 Auxiliary_15
Rate_6 Rate_7
Auxiliary_15
Auxiliary_16 Copy of Copy of
Level_3 Copy 2 of Level_6
Copy of Copy of Copy 2 of Rate_10 Copy 2 of Rate_11
Auxiliary_8 Auxiliary_58 Auxiliary_59
Auxiliary_5 Copy of Auxiliary_30
Copy of Copy of
Auxiliary_10
Copy of Copy of Copy of Auxiliary_49
Auxiliary_30 Copy of Level_12 Copy of Level_14
Auxiliary_7 Copy of Copy of Copy of Rate_24 Copy of Rate_28 Copy of Rate_29
Auxiliary_9 Copy of Auxiliary_51 Copy of Rate_23
Copy of Auxiliary_50
Copy 2 of Copy of Auxiliary_53
Copy of Copy of Copy of Rate_24
Auxiliary_34 Rate_7
Copy 2 of
Auxiliary_33
Copy of Auxiliary_45
Copy of Auxiliary_46 Copy of Level_13 Copy of Level_15
Copy of Auxiliary_47
Copy of Rate_25 Copy of Rate_26 Copy of Rate_27 Copy of Rate_30
Auxiliary_15
Copy of Auxiliary_48 Auxiliary_15

Copy of Auxiliary_55
Copy of Auxiliary_54

Copy of Rate_24

Figure 5: The procurement model developed using system dynamics methodology (Scenario 2).

fact that, among others, the number of quotations received 5. Results

(from the first call for quotation process) did not meet the
We performed 100 runs (which produced at most 1,200
targeted value (or criteria), there are more than 70% chances
observations) and some of them (i.e., results) are given in this
that the (approval) committee will request the applicant to
paper. Example of one (1) run is shown in Figures 6, 7, 8, and
repeat the call for quotation process for (an additional) seven
9 where each procurement process is represented by three
days. The updated technical and commercial evaluation com- spikes of different colors, namely, green (representing the date
mittee reports (which include evaluation of the quotations of submission), yellow (representing the date when call for
submitted by the authorized vendors) are submitted to the quotation process is completed), and red (representing the
secretariat (of approval committee) on either the 3rd of March date when approval committee approved the reports). All
or 3rd of April to be presented and approved by the approval submissions are randomly made; hence they are independent
committee seven days later, that is, on the 10th of March or of each other.
10th of April. Otherwise, the reports are approved by the The first three spikes in Figure 6 represent the following
approval committee on either the 20th of February or 10th behavior: the application was submitted on the 15th of
of March. January and call for quotation process was completed on the
8 Advances in Operations Research

1 1

0 0

1-1-2016
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Auxiliary_18 Auxiliary_42 Auxiliary_25 Auxiliary_56
Auxiliary_20 Auxiliary_43 Auxiliary_26 Auxiliary_57

Figure 6: Behavior produced from the procurement model’s Sce- Figure 8: Behavior produced from the procurement model’s Sce-
nario 1. nario 2.

1 1

0 0
1-1-2016
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1-9-2016
21-9-2016
11-10-2016
1-11-2016
21-11-2016
11-12-2016

Copy of Auxiliary_17 Copy of Auxiliary_21 Copy of Auxiliary_31 Copy of Auxiliary_28

Copy of Auxiliary_18 Copy of Auxiliary_42 Copy of Auxiliary_25 Auxiliary_58
Copy of Auxiliary_20 Copy of Auxiliary_43 Copy of Auxiliary_26 Auxiliary_59

Figure 7: Behavior produced from the procurement model’s Sce- Figure 9: Behavior produced from the procurement model’s Sce-
nario 1 (continued). nario 2 (continued).

29th of January. The applicant cum technical and commercial
evaluation committee (henceforth, the applicant) managed
to complete the reports and submitted them on the 3rd of
February. The approval committee approved the reports on
the 10th of February. The total number of days involved is
25. The second three spikes (in the same figure) represent
the following behavior: the application was submitted on the
13th of May and call for quotation process was completed
on the 27th of May. The applicant managed to complete the
reports and submitted them on the 3rd of June. The approval
committee approved the reports on the 10th of June. The total
number of days involved is 27. The third three spikes represent
the following behavior: the application was submitted on
the 14th of September and call for quotation process was
completed on the 28th of September. The applicant did
not manage to complete the reports on the 3rd of October
and submitted them on the 13th of October instead. The
approval committee did not approve the reports on the 20th
of October. The applicant submitted the updated reports on
the 3rd of November. The approval committee approved the
reports on the 10th of November. The total number of days
involved is 56. The fourth (final) three spikes represent the
following behavior: the application was submitted on the 15th
of November and call for quotation process was completed on
the 29th of November. The applicant managed to complete
the reports and submitted them on the 3rd of December.
The approval committee approved the reports on the 10th of
December. The total number of days involved is 25.
Advances in Operations Research
Figure 7’s first three spikes represent the following behav-
ior: the application was submitted on the 11th of February
and call for quotation process was completed on the 25th of
February. The applicant completed and submitted the reports
on the 3rd of March. The approval committee did not approve
the reports on the 10th of March. The applicant submitted the
updated reports on the 3rd of April. The approval committee
approved the reports on the 10th of April. The total number
of days involved is 59. The second three spikes (in the same
figure) represent the following behavior: the application was
submitted on the 6th of October and call for quotation
process was completed on the 20th of October. The applicant
managed to complete the reports and submitted them on
the 3rd of November. The approval committee approved
the reports on the 10th of November. The number of days
involved is 34. The third (final) three spikes represent the
following behavior: the application was submitted on the 6th
of December and call for quotation process was completed
on the 20th of December. The rest of the (procurement)
processes were brought forward to the next year. The total
number of days involved is not calculated.
The first three spikes in Figure 8 represent the following
behavior: the application was submitted on the 20th of March
and call for quotation process was completed on the 4th of
April. The applicant managed to complete the reports and
submitted them on the 13th of April. The approval committee
approved the reports on the 20th of April. The total number
of days involved is 30. The second three spikes (in the same
figure) represent the following behavior: the application was
submitted on the 18th of June and call for quotation process
was completed on the 2nd of July. The applicant managed to
complete the reports and submitted them on the 3rd of July.
The approval committee approved the reports on the 10th of
July. The total number of days involved is 22. The third (last)
three spikes represent the following behavior: the application
was submitted on the 25th of August and call for quotation
process was completed on the 9th of September. The applicant
managed to complete the reports and submitted them on
the 13th of September. The approval committee approved the
reports on the 20th of September. The total number of days
involved is 25.
Figure 9’s first three spikes represent the following behav-
ior: the application was submitted on the 28th of April and
call for quotation process was completed on the 12th of May.
The applicant did not complete and submit the reports on the
13th of May. The applicant submitted them on the 3rd of June
instead. The approval committee did not approve the reports
on the 10th of June. The applicant submitted the updated
reports on the 3rd of July that approval committee approved
on the 10th of July. The total number of days involved is
72. The second (final) three spikes represent the following
behavior: the application was submitted on the 28th of July
and call for quotation process was completed on the 12th
of August. The applicant managed to complete the reports
and submitted them on the 13th of August. The approval
committee approved the reports on the 20th of August. The
total number of days involved is 22.
Summary (or standard) statistics average, standard devi-
ation, minimum, and maximum for the above observations
9
(related to total number of days involved) are 36.1, 17.6, 22,
and 72, respectively.
Results for the rest of the (100) runs (especially related to
total number of days involved) are presented in the form of
summary (or standard) statistics average, standard deviation,
minimum, and maximum, which were produced using four
(4) specially designed (system dynamics) models; one of
them is shown in Figure 10. Summary (or standard) statistics
average, standard deviation, minimum, and maximum for
Figure 11’s 1052 observations (related to total number of days
involved) are 37.25, 13.58, 21, and 77, respectively. “SimData”
in Figure 11(a) refers to total number of days involved
in completing the procurement process. Two humps are
(vividly) observed: first hump lies between 21 days and 47
days (for the procurement process to complete) and second
hump between 52 days and 77 days. If number of days for
each month is fixed at 30, there are quite a considerable
number of cases/runs where the procurement process would
take approximately 29 days as well as 63 days (more than two
months) to complete; refer to Figure 11(b) [13].
Figure 11 is dissected into Scenario 1, represented by
Figures 12(a) and 12(b). Summary (or standard) statistics
average, standard deviation, minimum, and maximum for
Figure 12’s 570 observations (related to total number of days
involved) are 40.49, 13.94, 24, and 69, respectively. Similar
to the previous figure, “SimData” refers to total number of
days involved in completing the procurement process. Two
humps are observed: first hump lies between 24 days and 56
days (for the procurement process to complete) and second
hump between 57 days and 69 days. If number of days for
each month is fixed at 30, there are quite a considerable
number of cases/runs where the procurement process would
take approximately 33 days (more than one month) as well
as 62 days (more than two months) to complete; refer to
Figure 12(b).
Scenario 2, represented by Figures 13(a) and 13(b), is
the final output from Figure 11’s dissection. Summary (or
standard) statistics average, standard deviation, minimum,
and maximum for Figure 13’s 482 observations (related to
total number of days involved) are 33.43, 12.08, 21, and
77, respectively. Three humps are observed: first hump lies
between 21 days and 35 days (for the procurement process to
complete), second hump between 36 days and 63 days, and
third hump between 71 days and 77 days. If number of days
for each month is fixed at 30, there are quite a considerable
number of cases/runs where the procurement process would
take approximately 24 days, 42 days (more than one month),
and 75 days (more than two months) to complete; refer to
Figure 13(b).
The procurement model (simulated) data of 1052 observa-
tions (refer to Figure 11) are compared with the real data of 59
observations (refer to Figure 14) to see if the former “behaves”
in the same manner as the latter (if their “behavior” is the
same, it is as though, or if, the new procurement process is
deployed “live”). Note that summary (or standard) statistics
averages, standard deviation, minimum, and maximum for
Figure 14 (representing real data) are 33.42, 10.35, 13, and 60,
respectively.
10 Advances in Operations Research

Auxiliary_37 Auxiliary_61

Level_8
Rate_14

Rate_15

Level_7
Rate_12 Rate_13

Auxiliary_60
Auxiliary_61

Auxiliary_37

Auxiliary_43

Auxiliary_27
Auxiliary_11
Auxiliary_42

Auxiliary_21

Auxiliary_17
Auxiliary_15
Auxiliary_20

Figure 10: Specially designed system dynamics model used to calculate total number of days involved.

Two statistical nonparametric tests are chosen; they are as
follows:
(a) Mann–Whitney 𝑈 test is a nonparametric test of
the null hypothesis where it is equally likely that a
randomly selected value from one sample is less than
or greater than a randomly selected value from a
second sample. It does not require the assumption of
normal distributions.
(b) Kolmogorov-Smirnov two-sample test statistics is a
nonparametric test of the equality of continuous, one-
dimensional probability distributions that can be used
to compare a sample with a reference probability
(one-sample 𝑘-𝑠 test) or to compare two samples
(two-sample 𝑘-𝑠 test).
Details can be found in Sachs [14].
As mentioned above, Mann–Whitney 𝑈 test and
Kolmogorov-Smirnov two-sample test statistics are used to
test that the distributions of both populations are equal and
two samples come from a common distribution, respectively.
The two populations and samples are referring to Figures 11
and 14. Table 1 shows especially the 𝑝 value corresponding
to Asymptotic Significance (2-tailed) where both of them are
greater than 0.05, the distributions of both populations are
equal (Mann–Whitney 𝑈 test), and two samples come from
a common distribution (Kolmogorov-Smirnov two-sample
test statistics) (if Asymptotic Significance (2-tailed) is less
than (<) 0.05, the distributions of both populations are not
equal (Mann–Whitney U test) and two samples come from
different distribution (Kolmogorov-Smirnov two-sample
test statistics)). In other words, their (i.e., Figures 11 and 14)
“behavior” is the same.
Advances in Operations Research 11

4.50E − 02
60 4.00E − 02
50 3.50E − 02
3.00E − 02
40
2.50E − 02
Frequency

30 2.00E − 02
1.50E − 02
20
1.00E − 02
10 5.00E − 03
0 0.00E + 00
21
23
25
27
29
31
33
35
37
39
41
43
45
47
52
54
56
58
60
62
64
66
68
71
73
75
77

10.97958258
15.13806573
19.29654889
23.45503204
27.6135152
31.77199835
35.93048151
40.08896467
44.24744782
48.40593098
52.56441413
56.72289729
60.88138045
65.0398636
69.19834676
73.35682991
77.51531307
81.67379622
85.83227938
SimData

f(t(k))
(a) (b)

Figure 11: One thousand and fifty-two (1052) observations representing 100 runs are displayed in the form of (a) bar chart and (b) probability
density function (pdf).

6.00E − 02
50
45 5.00E − 02
40
35 4.00E − 02
Frequency

30
3.00E − 02
25
20 2.00E − 02
15
10 1.00E − 02
5
0 0.00E + 00
24
26
28
30
32
34
36
38
54
56
58
60
62
64
66
68

9.891363036
13.8954327
17.89950237
21.90357204
25.90764171
29.91171138
33.91578104
37.91985071
41.92392038
45.92799005
49.93205972
53.93612938
57.94019905
61.94426872
65.94833839
69.95240805
73.95647772
77.96054739
81.96461706
SimData

f(t(k))
(a) (b)

Figure 12: Scenario 1’s five hundred and seventy (570) observations are displayed in the form of (a) bar chart and (b) probability density
function (pdf).

Table 1: Asymptotic Significance (2-tailed) for both Mann–Whitney process normally employed by a telecommunication com-
𝑈 test and Kolmogorov-Smirnov two-sample test. pany and introduced new procurement process via procure-
ment model (Scenarios 1 and 2) using system dynamics
Kolmogorov-Smirnov
Mann–Whitney 𝑈 test methodology. In the said model, several assumptions were
two-sample test
made (which include (1) using random numbers between
Asymp. Sig.
0.181 0.230 zero and one to create application date and chances, (2) fixing
(2-tailed)
30 days for each month, ignoring Saturday and Sunday as well
as official or unofficial holidays, (3) fixing the 10th and 20th
of each month for approval committee to convene or meet,
6. Conclusion and (4) fixing either the 3rd or 13th of each month for the
technical and commercial evaluation committee reports to
In the previous sections, we listed several studies related reach the secretariat of the approval committee) and it was
to supply chain, project management and performance, and executed for 100 runs. The results from the said execution
procurement process. We also highlighted a procurement showed the procurement process could be less than 30
12 Advances in Operations Research

5.00E − 02
60 4.50E − 02
4.00E − 02
50
3.50E − 02
40 3.00E − 02
Frequency

2.50E − 02
30
2.00E − 02
20 1.50E − 02
1.00E − 02
10 5.00E − 03
0 0.00E + 00

8.362755728
12.80745432
17.25215291
21.6968515
26.1415501
30.58624869
35.03094728
39.47564587
43.92034447
48.36504306
52.80974165
57.25444024
61.69913883
66.14383743
70.58853602
75.03323461
79.4779332
83.9226318
88.36733039
21
23
25
27
29
31
33
35
37
39
41
43
45
47
52
63
72
74
76
SimData

f(t(k))
(a) (b)

Figure 13: Scenario 2’s four hundred and eighty-two (482) observations are displayed in the form of (a) bar chart and (b) probability density
function (pdf).

6 in approval committee are approved by the said committee

5 (i.e., to ensure all criteria are met), and building several
models for different price of hardware and software to
4 be procured, the above model could also be incorporated
Frequency

3 into the model as shown in Figure 15 for future research

undertakings (especially to visualize the benefits such that
2 more reports could be handled or managed by approval com-
1 mittee). Figure 15 uses the following assumptions (subjected
to changes): (1) 30 days are fixed for every month; (2) Saturday
0 and Sunday as well as official holidays are not considered in
13
17
18
21
23
24
25
27
28
29
30
31
32
34
35
36
37
38
39
40
41
43
44
45
51
52
53
55
60

the model; (3) applications submitted per month come from 4

RealData
Figure 14: Fifty-nine (59) observations of real data are displayed in
the form of bar chart.
days (or one month) if technical and commercial evaluation
committee reports satisfied approval committee’s criteria and
more than two months if they did not. The number of runs
for scenario one is greater than scenario two especially when
the number of days involved for procurement process to
complete is greater than two months. In other words, it is
most likely (or probable) for procurement process to exceed
two months for scenario one as compared to scenario two.
The said model is useful if the company’s main business
involved procuring hardware and software for executing (or
completing) its projects. If procuring hardware and software
was not done properly (or in timely manner), the projects
may suffer (significant) delays and require more monies to
complete (as well as negative impact on key performance
indicators of those who are involved in the projects). Note
that the “behavior” of procurement model data and real data
is the same when tested using statistical nonparametric tests.
Apart from building approval committee model using
system dynamics methodology (which includes listing all
of the variables or factors affecting approval committee’s
decision making), adding “gates” to ensure all reports tabled
projects, namely, A, B, C, and D. They are selected at random
(to add realism to the simulation); (4) the applications are
generated between the 1st and 30th of each month; (5) 3
applications are generated from 3 different projects selected at
random from 4 projects; (6) 2 applications are generated from
2 different projects selected at random from 4 projects; (7)
1 application is generated from a project selected at random
from 4 projects; (8) standard cycle time is 3 days and several
days are added at random; (9) next model (or Model 2)
focuses on each application especially on the cycle time. The
cycle time depends on when the application is submitted that
is either before or after the 15th of each month (15th is the
date the committee holds its meeting) plus the number of days
needed to complete the process.
Appendix
Two scenarios are considered for water tank model as shown
in Figure 16; they are as follows.
Scenario A.1. The following are the equations used in water
tank model: Rate 1 = 10 Liter/Hour; Level 1 = 0 Liter (at
the beginning); Rate 2 = Level 1 Liter/Hour if Level 1 ≥ 100
Liters; Rate 2 = 0 Liter if otherwise. Over a period of 24 hours
where the water tank is empty at the beginning, water flows
into the tank at the rate of 10 Liters per hour. If water in the
Advances in Operations Research 13

Probability Level_1
Rate_1

Level_2
Rate_2 Rate_3
standard cycle time Additional Time
Level_3
Rate_4

standard plus
additional Auxiliary_12 Auxiliary_15 Auxiliary_10

Level_4
Rate_5
Auxiliary_134
Auxiliary_89

Level_8
Auxiliary_153 Rate_11
Auxiliary_115
Level_5
Rate_6
Auxiliary_102
Auxiliary_173 Auxiliary_16 Level_7 Auxiliary_23
Rate_9 Rate_10

Auxiliary_175 Auxiliary_17
Auxiliary_9 Auxiliary_13
Auxiliary_1
Auxiliary_21
Auxiliary_18
Auxiliary_3
Auxiliary_19

Level_9
Level_6 Rate_12
Auxiliary_8
Rate_7 Rate_8 Auxiliary_25
Auxiliary_22 Auxiliary_20

Level_12 Counter
Rate_15 Rate_16

Auxiliary_2 Auxiliary_24

Auxiliary_12 Auxiliary_11
Auxiliary_117
Level_10
Rate_13 Auxiliary_27
Auxiliary_5 Auxiliary_14
Auxiliary_4
Auxiliary_6
Auxiliary_33
Auxiliary_123 Auxiliary_35

Auxiliary_7 Level_13
Auxiliary_30
Rate_17 Rate_18
Auxiliary_34 Auxiliary_38
Bulan
Auxiliary_26
Auxiliary_31 Auxiliary_78
Tahun
Auxiliary_32
Level_11
Auxiliary_79 Rate_14 Auxiliary_29
Auxiliary_77 Auxiliary_84

Auxiliary_47 Auxiliary_81
Level_15 Auxiliary_86 Auxiliary_80
Auxiliary_89
Rate_21 Auxiliary_40 Level_14
Auxiliary_46 Rate_19 Rate_20
Auxiliary_82
Auxiliary_87
Auxiliary_41 Auxiliary_44 Auxiliary_85
Auxiliary_39
Auxiliary_45 Auxiliary_28
Auxiliary_42 Auxiliary_83
Auxiliary_88
Auxiliary_111 Auxiliary_107
Auxiliary_43 Auxiliary_58 Auxiliary_103
Auxiliary_54
Auxiliary_65 Auxiliary_68
Auxiliary_52 Auxiliary_112
Auxiliary_108
Auxiliary_55 Auxiliary_59 Auxiliary_104
Auxiliary_69 Auxiliary_115
Auxiliary_53 Auxiliary_62 Auxiliary_64 Auxiliary_66 Auxiliary_71 Auxiliary_72 Auxiliary_74
Auxiliary_113
Auxiliary_109
Auxiliary_60 Auxiliary_76 Auxiliary_105
Auxiliary_56
Auxiliary_51
Auxiliary_67 Auxiliary_70
Auxiliary_73 Auxiliary_75 Auxiliary_114
Auxiliary_63
Auxiliary_57 Auxiliary_61
Auxiliary_118 standard cycle time Auxiliary_106 Auxiliary_110

The higher the complexity, more time is

needed to complete the process.
Auxiliary_133
Auxiliary_120 Complexity impacting cycle time
Auxiliary_121 Probability
Auxiliary_98
Auxiliary_90 Auxiliary_94
Auxiliary_12
Auxiliary_134
Auxiliary_123
Auxiliary_49 Auxiliary_99
Auxiliary_91 Auxiliary_95
Auxiliary_122
Auxiliary_119 Auxiliary_102
Auxiliary_50
Auxiliary_92 Auxiliary_100 Auxiliary_96
Auxiliary_132 Auxiliary_123 Auxiliary_128 Auxiliary_130 Auxiliary_131

Auxiliary_48
standard plus
additional
Auxiliary_93 Auxiliary_101 Auxiliary_97
standard cycle time
Copy of Auxiliary_54 Copy of Auxiliary_58

Copy of Auxiliary_68
Copy of Auxiliary_52
Copy of Auxiliary_65 Auxiliary_127
Copy of Auxiliary_59 Copy of Auxiliary_72 Auxiliary_125
Copy of Auxiliary_64
Copy of Auxiliary_71 Copy of Auxiliary_74 Auxiliary_128
Copy of Auxiliary_55
Copy of Auxiliary_62 Copy of Auxiliary_66 Copy of Auxiliary_69
Copy of Auxiliary_53
Auxiliary_126
Copy of Auxiliary_76
Copy of Auxiliary_56 Copy of Auxiliary_60
Auxiliary_124
standard plus
Copy of Auxiliary_67 additional
Copy of Auxiliary_51 Copy of Auxiliary_63 Auxiliary_12
Copy of Auxiliary_75
Copy of Auxiliary_73
Copy of Auxiliary_57 Copy of Auxiliary_61 Copy of Auxiliary_70

standard cycle time

Auxiliary_129

Auxiliary_12 Auxiliary_132
Auxiliary_12 Auxiliary_131
Auxiliary_130

standard plus
additional
Auxiliary_12

Copy of The higher the complexity, more time is

Auxiliary_135 Auxiliary_139 Copy of Auxiliary_154
Auxiliary_139 needed to complete the process.
Auxiliary_135 Complexity impacting cycle time
Auxiliary_36
Probability
Auxiliary_140 Copy of
Auxiliary_136 Copy of Auxiliary_140
Auxiliary_89 Auxiliary_89 Auxiliary_136 Auxiliary_153
Auxiliary_143 Copy of
Auxiliary_35 Auxiliary_143

Auxiliary_89
Auxiliary_141 Copy of Copy of
Auxiliary_137
Auxiliary_137 Auxiliary_141

Copy 3 of Auxiliary_152 Copy of Copy 2 of

Auxiliary_152 Auxiliary_152 Auxiliary_152
Auxiliary_138 Copy of
Auxiliary_142 Copy of
Auxiliary_138
Auxiliary_142

Auxiliary_146 Auxiliary_149
Copy of Copy of
Copy of Auxiliary_146
Auxiliary_144 Auxiliary_149
Auxiliary_143 Copy of
Copy of Auxiliary_143
Auxiliary_147
Auxiliary_152 Auxiliary_144 Copy of
Auxiliary_150 Copy of
Auxiliary_147 Copy of Auxiliary_152
Auxiliary_150
Auxiliary_143 Auxiliary_145 Auxiliary_148
Auxiliary_151 Auxiliary_143 Copy of Copy of standard cycle time
Auxiliary_145 Auxiliary_148
Copy of
standard cycle time Auxiliary_151
Copy 3 of
Auxiliary_149 standard plus
Copy 2 of Copy 2 of Copy 3 of
additional
Auxiliary_146 Auxiliary_149 Auxiliary_146
standard plus Copy of Copy of
additional Auxiliary_143 Auxiliary_143
Copy 2 of Copy 3 of
Copy 2 of Copy 3 of
Auxiliary_147 Copy 2 of Auxiliary_147 Copy 3 of
Auxiliary_152 Auxiliary_152
Auxiliary_150 Auxiliary_150

Copy 2 of Copy 3 of
Copy 2 of Auxiliary_143 Copy 3 of
Auxiliary_143 Auxiliary_145
Auxiliary_145 Auxiliary_148
Auxiliary_148 Copy 2 of Copy 3 of
Auxiliary_151 Auxiliary_151

The higher the complexity, more time is

needed to complete the process.
Complexity impacting cycle time
Auxiliary_159
Copy of
Auxiliary_159 Auxiliary_174
Auxiliary_160 Copy of
Auxiliary_160
Auxiliary_173

Auxiliary_161 Copy of Probability

Auxiliary_155 Copy of
Auxiliary_161
Auxiliary_155
Auxiliary_165 Copy of
Auxiliary_156 Auxiliary_165
Auxiliary_115 Copy of
Auxiliary_162 Auxiliary_115
Auxiliary_156 Copy of
Auxiliary_162 Copy of Auxiliary_38 Auxiliary_38
Auxiliary_172
Auxiliary_157 Copy of
Auxiliary_157
Auxiliary_163 Copy of
Auxiliary_163
Auxiliary_158 Copy of
Auxiliary_158
Auxiliary_164
Copy of
Auxiliary_164

Copy of Auxiliary_168 Auxiliary_170

Auxiliary_165 Auxiliary_37 Copy of Auxiliary_37
Auxiliary_167

Auxiliary_172
Auxiliary_38 Copy of Auxiliary_38
Auxiliary_115 Auxiliary_115
Auxiliary_171
Auxiliary_165 Auxiliary_166

Auxiliary_169
standard cycle time
standard plus
additional

standard plus The higher the complexity, more time is

standard cycle time additional Auxiliary_176 needed to complete the process.
Complexity impacting cycle time
Auxiliary_175

Auxiliary_116 Copy of
Auxiliary_116 Probability

Copy of
Auxiliary_117 Copy of Auxiliary_117
Auxiliary_117
Auxiliary_102 Auxiliary_102 Auxiliary_117

Figure 15: The next or future stage of procurement model developed using system dynamics methodology.
14 Advances in Operations Research

model produces total number of days involved in completing

procurement process.
Level_1
Rate_1 Rate_2

Figure 16: Water tank model developed using system dynamics Conflicts of Interest
methodology.
There are no potential conflicts of interest in the study.

100 Acknowledgments
Level_1 (Liter)

50 The author would like to thank Roswidah Mat Lui of Telekom

Research & Development Sdn Bhd for providing invaluable
0 insight into procurement process.
0:00 6:00 12:00 18:00 0:00
01
References
Figure 17: The behavior of Scenario A.1’s Level 1.
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be explained by the following (mathematical) formula: resources provision policy for multi-unit maintenance pro-
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& 3rd International Conference on Utility Management & Safety,
{ 10 (𝑡 − 0) ; 𝑡 = 1, 2, . . . , 10 pp. 1–12, 2013.
{
{
{
Level 1 = {10 (𝑡 − 10) ; 𝑡 = 11, 12, . . . , 20 (A.1) [6] A. Sadreddin, R. Sawan, and A. Schiffauerova, “Using system
{
{ dynamics approach to model cost of quality in the procurement
{. ..
. process of the construction industry,” in Proceedings of the First
{. .
Asia-Pacific System Dynamics Conference of the System, Tokyo,
Japan, 2014.
Scenario A.2. The following are the equations used in water
[7] K. Ross-Smith and M. Yearworth, “Dynamics of operational
tank model: Rate 1 = 10 Liter/Hour; Level 1 = 0 Liter (at the
procurement: systems modelling for performance tracking
beginning); Rate 2 = Level 1 Liter/Hour. Over a period of 24 and auditing,” in Proceedings of the The 29th International
hours where the water tank is empty at the beginning, water Conference of the System Dynamics Society, Washington, USA,
flows into the tank at the rate of 10 Liters per hour. Water 2011.
in the tank increases exponentially until it reaches stationary
[8] S. Croom and R. Johnston, “E-service: Enhancing internal cus-
level at (approximately) 10 Liters. The behavior of Level 1 tomer service through e-procurement,” International Journal of
as shown in Figure 18 could be explained by the following Service Industry Management, vol. 14, no. 5, pp. 539–555, 2003.
(mathematical) formula:
[9] A. C. Marquez and C. Blanchar, “The procurement of strategic
−𝑡 parts. Analysis of a portfolio of contracts with suppliers using
Level 1 = 10 (1 − 𝑒 ) , 𝑡 = 1, 2, . . . . (A.2) a system dynamics simulation model,” International Journal of
Production Economics, vol. 88, no. 1, pp. 29–49, 2004.
Additional Points [10] J. Mula, F. Campuzano-Bolarin, M. Dı́az-Madroñero, and K. M.
Carpio, “A system dynamics model for the supply chain pro-
Highlights. (i) Using system dynamics methodology, a pro- curement transport problem: Comparing spreadsheets, fuzzy
curement model is developed; (ii) two scenarios are incor- programming and simulation approaches,” International Jour-
porated into the said (procurement) model; (iii) the said nal of Production Research, vol. 51, no. 13, pp. 4087–4104, 2013.
Advances in Operations Research 15

[11] M. Marinkovic, Designing outcome based performance manage-

ment systems through system dynamics modeling to frame cor-
ruption behavior in public procurement [Ph.D. thesis], Universita
Degli Studi Di Palermo, 2015.
[12] J. W. Forrester, Some basic concepts in System Dynamics, Sloan
School of Management, Massachusetts Institute of Technology,
Cambridge, UK, 2009.
[13] B. W. Silverman, Density Estimation for Statistics and Data
Analysis, Chapman & Hall, London, UK, 1986.
[14] L. Sachs, Applied Statistics: A Handbook of Techniques, Springer-
Verlag, 2nd edition, 1984.
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