ASSIGNMENT

The University of Liverpool Management School

2020 – 2021
(Semester 1)
EBUS504 (Postgraduates)
Operations Modelling and Simulation

DEADLINE: October 11th, 2021

Lateness Penalty: Five percentage points shall be deducted from the assessment mark for
each working day after the due date up to a maximum of five working days; however, the
mark will not be reduced below the pass mark for the assessment (50%). Work assessed at
below 40% will not be penalised for late submission of up to five working days. Work received
more than five working days after the submission deadline will receive a mark of zero.
Cheating: You are encouraged to discuss your general understanding of the exercise with
colleagues of other groups, but, you must write up your project report based on the work
done by yourself only. University regulations about cheating – especially COLLUSION and
PLAGIARISM (copy from sources without acknowledgement) – apply.
Hand-in procedure: Hand your work electronically by submitting a copy through the turnItin
link on VITAL. If your work is late for medical or other good cause, attach a copy of your
certificate and/or explanation.

Notes:
You must submit:
● One electronic copy (doc, docx or PDF) through CANVAS
(EBUS504_SMITH_20091234.doc)
● an electronic copy of the witness, vensim and excel models developed through on
CANVAS (all in one zip or rar file with your name and ID as filename e.g.
EBUS504_SMITH_20091234.zip)

Questions to: Dr. Jorge Hernandez – jorgehh@Liverpool.ac.uk

1. Practical questions: Operations modelling (40 Marks)
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

Input
Inter arrival time Arrival lot size
Raw material A 2 2
Raw material B 10 5

Processing
Product I Sequence M1 M2 M4
Setup time 0 2 2
Production time 4 2 6
Input material 1 pc A 1 pc B 2 pcs A + 1 pc B
Product II Sequence M2 M3 M4
Setup time 3 0 1
Production time 5 2 4
Input material 1 pc B 1 pc A 2 pcs B + 1 pc A
Product III Sequence M2 M3
Setup time 2 1
Production time 2 4
Input material 1 pc B 1 pc B

In addition, 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:

a. 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. (25 marks)
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. (15 marks)

2. Practical questions: System Dynamics (30 Marks)

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

Questions to: Dr. Jorge Hernandez – jorgehh@Liverpool.ac.uk

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).

a) Draw the Causal-loop diagram, put the sign (positive or negative) for the whole model and write
equations for variables. (10 Marks).

b) 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. (15 Marks).

- 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.

c) 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. (5
Marks).

3. Practical questions: Multi-Criteria Decision-Making (30 Marks)

On organisation in Liverpool is looking at improving their performance. In this context, the
organisation has identified the following main criteria to support this goal: maximise profit, improve
working conditions and minimise environmental impacts. Considering several focus groups, the
following relationships situations where found:

Focus Group1

• Maximise profit is four times less important than improve working conditions and five
times less important than minimise environmental impacts.
• Improve working conditions is three times less important than minimise environmental
impacts.

Focus Group2

• Maximise profit is 9 times more important than improve working conditions and 3 times
more important than minimise environmental impacts.
• Improve working conditions is 2 times more important than minimise environmental
impacts.

Focus Group3

• Maximise profit is equally important than improve working conditions and two times less
important than minimise environmental impacts.
• Improve working conditions is nine times less important than minimise environmental
impacts.

In this context, the Random index table is as follows:

Questions to: Dr. Jorge Hernandez – jorgehh@Liverpool.ac.uk

Regarding to this information please elaborate an MCDM excel matrix to support your answers to the
following questions considering each focus group:

a) Elaborate the hierarchical tree and identify each Weights for each criteria. Based on the
results, what are the most desirable aspects a project should consider? (10 Marks).

b) Calculate the consistency ratio. Analyse the result. (5 Marks).

c) Each focus group has to decide which alternative could be the best for them considering the
following: (15 Marks).
• Alternative 1 - Produce natural colours and externalise production, which only considers
Maximise profit and minimise environmental impacts. The cost is: £40.000
• Alternative 2 – Produce everything internally, which considers: maximise profit, improve
working conditions and minimise environmental impacts. The cost is: £90.000
• Alternative 3 – Reduce production to the half and use chemical colours, which considers
maximise profit and improve working conditions. The cost is: £85.000

Questions to: Dr. Jorge Hernandez – jorgehh@Liverpool.ac.uk