A1.
By adding in a step in the customer orders in week 5 from 10000 to 12000, the inventory first
drops to a minimum of around 335000 widgets. This drop occurs due to the sudden increase
in demand. After the drop, the inventory starts to increase at a steady rate until equilibrium is
reached. This occurs around 60 weeks. The equilibrium is higher than the equilibrium when
the customer orders stay consistent at 10000.
,A2.
A.
∆ P roduction start rate = 12731 − 10000 = 2731
∆ orders = 12000 − 10000 = 2000
Amplif ication ratio = ∆ P roduction start rate/ ∆ orders = 2731/2000 = 1.3655 , which is greater
than 1. This means there is a greater change in the production start rate compared to the
customer orders.
B. Amplifications arise due to the changes made to the input of the model. In this case, this
is the customer order rate. Amplifications also occur due to changes in the variables, an
example includes cycle manufacturing time and WIP adjustment time.
C. The structural reasons for the amplification are caused by delay. This is as production can
not directly adjust. This means the production must compensate until the new equilibrium is
reached.
, A3.
All variables will be increased/decreased with 50% of the initial value.
Variable Increase decrease
Inventory
adjustment
time
WIP inventory and inventory When Inventory adjustment time is more
decrease as a result of extremely decreased (as seen below) an
increasing inventory adjustment oscillation begins to form.
time.
WIP
adjustment
time
The higher the WIP Adjustment
Time, the more extreme As the WIP adjustment time is lowered,
oscillations become. Only show the inventory becomes a more constant
oscillations when extreme increase, hence the initial drop in
changes occur. With a slight inventory decreases.
change, the initial minimum in
inventory becomes lower.
Safety
stock
coverage
An increase in safety stock
coverage decreases the A decrease in safety stock coverage
inventory. The function is shifted decreases the inventory. The function is
downwards, the equilibrium level shifted down, the equilibrium level
drops from 60,000 to 50,000 increases from around 50,000 to 40,00
with a 50% increase. The with a 50% decrease. The increase in
increase in inventory is steeper. inventory is more gradual. The WIP
The WIP inventory peak inventory peak decrease as the safety
decreases as the safety stock stock coverage increases. The
coverage increases. The equilibrium level slightly drops.
By adding in a step in the customer orders in week 5 from 10000 to 12000, the inventory first
drops to a minimum of around 335000 widgets. This drop occurs due to the sudden increase
in demand. After the drop, the inventory starts to increase at a steady rate until equilibrium is
reached. This occurs around 60 weeks. The equilibrium is higher than the equilibrium when
the customer orders stay consistent at 10000.
,A2.
A.
∆ P roduction start rate = 12731 − 10000 = 2731
∆ orders = 12000 − 10000 = 2000
Amplif ication ratio = ∆ P roduction start rate/ ∆ orders = 2731/2000 = 1.3655 , which is greater
than 1. This means there is a greater change in the production start rate compared to the
customer orders.
B. Amplifications arise due to the changes made to the input of the model. In this case, this
is the customer order rate. Amplifications also occur due to changes in the variables, an
example includes cycle manufacturing time and WIP adjustment time.
C. The structural reasons for the amplification are caused by delay. This is as production can
not directly adjust. This means the production must compensate until the new equilibrium is
reached.
, A3.
All variables will be increased/decreased with 50% of the initial value.
Variable Increase decrease
Inventory
adjustment
time
WIP inventory and inventory When Inventory adjustment time is more
decrease as a result of extremely decreased (as seen below) an
increasing inventory adjustment oscillation begins to form.
time.
WIP
adjustment
time
The higher the WIP Adjustment
Time, the more extreme As the WIP adjustment time is lowered,
oscillations become. Only show the inventory becomes a more constant
oscillations when extreme increase, hence the initial drop in
changes occur. With a slight inventory decreases.
change, the initial minimum in
inventory becomes lower.
Safety
stock
coverage
An increase in safety stock
coverage decreases the A decrease in safety stock coverage
inventory. The function is shifted decreases the inventory. The function is
downwards, the equilibrium level shifted down, the equilibrium level
drops from 60,000 to 50,000 increases from around 50,000 to 40,00
with a 50% increase. The with a 50% decrease. The increase in
increase in inventory is steeper. inventory is more gradual. The WIP
The WIP inventory peak inventory peak decrease as the safety
decreases as the safety stock stock coverage increases. The
coverage increases. The equilibrium level slightly drops.
