Decision Support for Management
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What is Simulation?
Simulation is an emulation of reality using a mathematical model.
ASSIGNMENT ON CHEMICAL LABORATORY COMPANY
A Chemical laboratory company is losing its customer because of a lack of equipment the company is lacking in terms of practical work whenever the analysis is been carried out. The laboratory is losing its customer number because of a lack of equipment because the customers are not satisfied. At this time, some high operating cost is required to implement enough space for keeping chemical equipment like Atomic Absorpic spectrophotometer, hydrometers etc., and Electricity, security and laboratory technicians.
Decision Support for Management (PROBLEM 1)
The chemical laboratory company has finally agreed to create an inventory system which may be important to them in deciding which equipment and chemicals the customer will require against their analysis or practical work demand. Therefore to enable them to avoid arranging their equipment in a linear way in which the customers will prefer it in a standard form. During gaff time, the laboratory involves in high need of resources from the customers. However, it leads to the storage of chemicals which meet the customer requirements too high. Whenever customers come in for practical work for their projects or work and realize that some equipment or chemicals are not in stock, they will be very angry and leave the laboratory and search for an option laboratory that has their requirements.
Decision Support for Management (PROBLEM 2)
The chemical laboratory company can possibly keep chemicals that may not be in demand for a specific length of time may, due to this result it will require possession of more space for storage and outlay of capital which is an idol or not making progress. In this case, it has led to cost, which has affected the business’s growth. Because of the competitive gain, it is wise that the business a method for managing decisions which will eliminate in the steady state between organisation aim or facts and customer quality that attracts their attention within the company.
What are the things the chemical laboratory company needs to purchase that will meet their customer’s demand and maintain their company productivity?
What particular time do the chemical laboratory company need to request more equipment that in any case affects the minimum level of stock needed by the customer within a period of time? It will also make sure that the company’s cost of storage is less at the rate of profit increase.
APPLICATION RATIONALE OF THE SYSTEM DYNAMICS
The chemical laboratory company needs to watch and generate its behaviour and gain if the issues are meant to be resolved. Although seldom, which has been a normally rational, a system capability must provide analysis for the whole month and yearly account. However, it should leave for data to be produced within a process within a period of specified time by the organisation for record use. However, while constructing and designing the data laboratory house, knowing what data should be useful for decision-making is necessary. On other hand we have to analyse the problem concern and use system dynamics that will help in identifying significant elements that will help in good control of the laboratory, to enable us to form the basis needed, we need to understand the idea of what information the data laboratory storehouse must grasp.
Regarding analysing the use of chemicals during practical work, the chemical laboratory company desires to add into deliberation each element which influences the usage and sales of chemicals in the laboratory. The AAS which is known as the Atomic Absorpic spectrophotometer will be used in summing whole information within a substantial report that the group will need to analyse and plan a strategy from the data gotten in the data warehouse. According to Dennis Lock (1996), it strives to achieve the customer’s performance and quality requirements at the lowest cost, resulting in a deal that benefits both companies. It’s useful in knowing the pattern of the system and let the modelling problem of sale or usage analysis, rather than the whole system. Seeing that this relay on the usage of equipment and chemical analysis problems, it provides an edge to the modelling method and allows relevant thought for only the system variables related to the problem in emphasis. Giving information to the organisation will be needed to know how to design their system, thereafter and how this help in representing, and analysing data which are meaningful regarding their performance in the laboratory.
BASIC CONCEPTS RELATED TO THE PROBLEM SELECTED
The major components in the chemical laboratory company are all indicated in the figures in the Appendix and are well identified in illustrating the organisational general problem in making choices. In various places, the component’s signal is also an area of the problem faced in this study. Many components affect the systems being analysed, to enable this model to be easy, the business performance will be examined by the relevant components used in the analysis and have already been measured during the study. A few factors which could have been recognised such as competitors, cost of items, and strategy in finance, equipment and policy are components which may have an effect on usage and sales in the laboratory. Analysing usage and sales of the laboratory, stocks have already been identified as inventory, outlet demand, usage data (sale data) and laboratory warehouse data. Its flow constant is made up of usage or swale rate, AAS information, operational data moving in one mass into the data warehouse, organised data from the base and good performance analysis.
KEY ASPECTS OF SYSTEM DYNAMICS MODELLING TO THE PROBLEM STATED
It is necessary and important that system dynamics identify stocks and flow. The flows are beyond the circle’s boundary, and the elements impact the system balance. To analyse sales or usage, its consumption demand is examined as stock because its appearance shows that the chemical laboratory company show concern for its business. The requirements are the basic effectiveness usage or sales the chemical laboratory gets. The laboratory’s present stock of chemicals and equipment is identifying the inventory. However, it described their stock level and was considered a collection. The laboratory data house would take every data that might be important to the chemical laboratory company in making choices and strategic plans. Meanwhile, the flow gives an illustration of the influence rate. It has order rate, usage or sales rate, and the demanding rate which all have an impression on the ability of balance of usage or sale, inventory and the sales or usage in which their rate is been created. The chemical usage or sales issue consists of the issues the chemical laboratory company is having and has already been mapped out in illustrating how to use system dynamics to analyse a system. In conclusion, the sale or usage chemicals are part of the different problems the laboratory will encounter in its operation, and decision-making is the problem.
SYSTEM DYNAMICS METHOD OF APPLICATION IN THE PROBLEM
System dynamic methods need hypotheses to be formulated and models generated to symbolize the excepted system components’ performance. However, it also needs to perform a simulation and test the model to be correct. This system dynamics method chosen for this issue shows that the typical plan is always the best contest for leaders. They must evaluate their system, which is always controlled with comprehensive approaches. If applied correctly, it doesn’t have any disadvantage on the system; when not applied correctly, the result will be wrong.
DEMAND RATE- This refers to the daily sales recovered from running of a project in the laboratory.
HOLDING COST- money used for storing equipment and chemical
SET UP COST & LEAD TIME- Indicates the time it takes to plan an order and when exactly the order is received.
To reduce the organisation’s amount spend developing another storage room in the laboratory.
Knowing how to maximize gain and in the end, the customers are satisfied and happy.
DEMAND RATE: minimum equipment average is put in place in the laboratory that is not to be passed its valid purpose (if we assume it is 60 units, and then let it be 60 units which will be the re-order level.
The amount of a particular collection to be brought is secured over a given period of time, therefore, no variation in level should influence the sales.
To eliminate the high storage cost; orders must be put monthly.
The holding cost for one item is placed as 0.02
Lead time is given as 30 days with 25 days rotation
NOTATIONS ARE TO BE USED BELOW IN THE GIVEN MODEL.
B= Daily sale rate of demand from work in the laboratory.
H= Holding cost.
K= Set up cost.
Y= Order Quantity
Day-by-day laboratory requirements are given as 300 units with £200 as a fixed cost anytime the order is placed. However, we need to get the cost of units to order when the lead time is 30 days with a 25 days rotation.
Amount to order(Y) = 2KB/H
TCU EACH DAY
=K/Y/B+H*Y/= 200/2449/300+0.02 (2449/5)
=K/Y/B+H*Y/= 200 / 2449 / 300 + 0.02 (489.8)
The above calculated provides and shows the amount the laboratory has to order between a limit times. However, the calculation helps the laboratory keep a good and correct amount of chemicals and equipment within a specific duration, and will help the minimum cost of equipment or chemical to be maintained without reducing below their needed items and also avoid increasing above-needed equipment or chemical to be used.
MINIMUM USE PER DAY=250
NORMAL USE PER DAY= 280
MAXIMUM USE PER DAY=300
REORDER LEVEL= MAXIMUM USAGE * MAXIMUM LEAD TIME
=300*30 = 9000
MINIMUM LEVEL= Reorder level – Average usage for average lead time
= 9000 – (300 * 27.5)
MAXIMUM LEVEL = Reorder level + Order quantity – minimum anticipated usage over lead time
= 9000 + 2449 – 250 * 25
=9000 + 2449 – 6250
Using this revised model will always help the chemical laboratory company have the correct and accurate number to be kept each time to avoid item overrun. Here the minimum equipment and chemical which is to be retained each time are given as 750, and the laboratory must not be below that and will help them in managing their items by avoiding wastage of good which comes in(much order to be made and notice of low order in the laboratory should be exempted). The maximum cost to be reliable at each given time is indicated as 5199, due to this the laboratory will have a reproductive amount in their account of maximum equipment or chemical necessary at each time and leading the company to the low reduction of loss of items in the organisation, therefore helping the chemical laboratory company in making a high profit and reducing its storage cost.
DEMAND RATE: The laboratory will ensure its less stock level has been placed, which will not exceed at any particular point (if it’s 60 units, it should be the re-order level).
ORDER LEVEL: this is the aspect in which the company need to control the item to avoid surpassing in minimum quantity.
ORDER QUANTITY i.e., Amount of items the laboratory is required to get for their customer’s interest.
LEAD TIME= 8wks
AVERAGE DEMAND= 900
UNIT PRICE= £10
STOCK LEVEL= average lead time + 2 * average lead time demand
= 200 * 8 + 2 * 200 * 8
REORDER QUANTITY = 40 * Average lead time demand/Unit price
=405500/10 = 938
The simulation model can be defined as a technique used to determine the system behaviour during business operations in locating contests that may affect the objective in business achievement. Its simulation model requirement for this problem point to analysing its circumstance by applying an analytical model and using different parameters needed by integrating a simulation approach to grasp its problem to help technicians in decision making. The above figures are a real figure of a method that shows the organisation saving much money while storing goods. Reduction throughout storing of goods will help reduce the amount involved. In this case, incomes from businesses will be increased constantly.
This work shows that the inventory model can be used in an organisation to prevent the business from acquiring its aim. The analytical model analyses the way of proceeding with current conditions so that it will show some areas that need enrichment. Simulation model helps to grasp the behaviour meaning of the system and gives the future life setup that can be used in changing the work effectiveness and making better managerial in decision-making.
Dennis Lock.,(1996)’, Nature and Organisation of Project Management; Project Management Organisation: Project Management.
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