Abstract – A system dynamics study models and analyzes a complex system, having an inherent property of strong interaction with self. The models provide an assessment of the operation and functionality of the elements of the system.[1] For this paper the system chosen is “an Outsource Catering Service”.
Index Terms – System Dynamics, Jay Forrester, Stock-Flow diagrams, Feedback loops, Urban Dynamics, STELLA 9
I. SYSTEM DYNAMICS
System dynamics was created during the mid-1950s by Professor Jay W. Forrester of the Massachusetts Institute of Technology.[2] In the next decade, the field of system dynamics developed, and SIMPLE and DYNAMO modeling languages came up. In 1961, Forrester published his first book titled "Industrial Dynamics", which is still a classic.
After this till the late 1960's, System Dynamics was exclusively used in corporate or managerial problems. But in 1968, Forrester came in contact with John Collins, former mayor of Boston. They used to have regular conversations about the problems of cities and how System Dynamics could be used to address them. Thus came about a book "Urban Dynamics", which presented a very controversial model wherein many well-known urban policies of the government were shown ineffective and in some cases making the problem worse. Urban Dynamics covered basic planning parameters, and understanding the process of planned-development inside-out.
A second such change came in 1970, when “World Dynamics” was published. Since then the system dynamic approach of modeling has been applied in many complex systems covering topics ranging from economical, industrial policies to population and public planning.
II. WHY SYSTEM DYNAMICS
What makes System Dynamics different from other approaches to studying the complex systems is the use of feedback loops and stocks and flows. System Dynamics is a group approach and helps in bringing out all the aspects of a system. System Dynamics models represent the ideas and knowledge of the group as a whole and improve communication between members of the groups. These models also facilitate refining and striking out the irrelevant and redundant ideas that would just increase the complexity of the system and assist our analysis in no way. These models support us in simplifying and describing systems which may display baffling non linearity.
III. SYSTEM DYNAMICS APPROACH
"Systems dynamics is an aspect of systems theory as a method for understanding the dynamic behavior of complex systems. The basis of the method is the recognition that the structure of any system — the many circular, interlocking, sometimes time-delayed relationships among its components — is often just as important in determining its behavior as the individual components themselves."[3]
The approach incorporates “Stock-flow” diagrams and “Feedback” loops. ‘Stocks’ are the quantities, amounts in which the change is observed, and ‘flows’ are the activities that cause change in stock, positive or negative. The diagrams and loops create a relationship model between the elements of the system, and realizes how they affect one-another. These diagrams give rise to time-delay equations, which provide the back-drop of simulation.
IV. CHOOSING A SYSTEM
It is necessary to determine all the crucial relationships and roles within the system, and that the functioning and design of the system be clear as a whole. This paper does not capture all the interactions, possible and existing, in this system. The basic aim of the project is to understand system dynamics, the approach and how a system can be understood using modeling. Also the ‘system’ is to be operated over a large period of time scale, and thus there might be changes trends developing at a later stage. Elaboration of all the existing additional parameters and relations and planning about the further changes is beyond the scope of this project.
During the first attempt at the study, the system that was chosen was “Growth of a planned residential township”. But during the course of modeling, the acquiring of data seemed a hindrance for the latter part of the project that of validation and simulation. So with due consideration with the mentor a new system was chosen; that of An Outsource Catering Service. It makes data acquiring much easier considering such services at this institution and also gives a first-hand interaction with the system.
V. UNDERSTANDING THE SYSTEM
Outsourcing is a major part of service industry; big and small companies outsource many of the customer-end services to BPO firms, call centers, human resource, backup services, and maintenance outlets. Catering Service is one such branch of it. Medical institutions, educational institutions, corporate offices, and even regional places outsource their daily mess and canteens to singular or multiple catering companies.
The various parameters involved in the understanding of the system are:
Raw Material
Daily Costs
Maintenance
“Thaali”
Menu
Customer Order
Items Sold
Daily Sales
Weekly Costs
Monthly Costs
Employee – Manager, Cooks
Schemes/Discounts provided to potential buyers.
Customer Satisfaction.
The mentioned parameters affect the behavior of the system and other variables of the system. The affects can be positive as well as negative. This intrinsic cause-effect relationship is modeled using stock-flow diagrams and feedback loops.
VI. PROPERTIES OF THE SYSTEM
After due conversations with the management staff of three services, following properties came out about the system:
1. The daily sales consist of ‘thaali’s, customer orders and sold items (packed).
2. The daily expenses consist of poultry, bakery, cold-drinks, vegetables which do not vary much over a given period.
3. The weekly expenses consist of packed retail items sold at their fixed M.R.P.’s and also have a fixed cycle.
4. The monthly expenses consist of electricity, employee salaries, and ‘kirana’
5. The irregular expenses consist of maintenance, and also depends on availability of goods.
6. The number of customers is affected by quality and availability.
7. The menu is decided by the manager and the cook, and depends on availability of goods and past menus.
8. The retail goods are kept till their expiry dates after which they are replaced.
9. The orders placed by the customer at counter depends on number of options available, availability of goods and also on time of preparation i.e. how many orders are in the queue.
10. The employees consist of managers, cooks, helpers and housekeeping.
VII. MODELING THE SYSTEM
In order to determine the stocks and flows, it is important to determine which variables of the system define its state (stock) and which variables define the change in states (flow). Stocks do not disappear if time is (hypothetically) stopped (i.e., if a snapshot were taken of the system); flows do disappear if time is (hypothetically) stopped. The dynamic behavior of the system arises due to the flows into, and out of, the stock.[4]
Also, there are some parameters called as auxiliary variables, which actually change the volume of the flow or combine two or more variables consistently.[5]
Stocks:
Sales
Kitchen Stock (Raw Material)
Retail Goods
‘Thaali’
Flows:
Cash flow
Preparation
Order goods
Sold goods
Customer order
Weekly order
Auxiliary Variables:
Target
Daily Order
Monthly Order
•Maintenance
•Number of options
•Average time of preparation
•Employee Salary – Manager, Cook, Helper, housekeeping
VIII. SIMULATION RUNS
Using the data acquired from “Brajvasi Caterers”, the system was explored for inconsistencies. Due to the few unfixed amounts of work that is undertaken, the system does vary a bit because of non-consideration of different sales and expense patterns on Sundays and a few holidays.
A simulation run incorporating a new parameter, like that of waiter service can be added and studied for the effects it causes on sales and expenses.
IX. ACKNOWLEDGMENT
I thank Prof. Samaresh Chatterji for all the help and guidance provided in the course of the project.
X. REFERENCES AND LITERATURE
[1] Miller, Joe, E., “TRIZ solutions for System Dynamics Models of a Small Community Downtown Revitalization Project”, proceedings of TRIZCON2004, the meeting of the Altshuller Institute, April 26-7, 2004, Seattle WA USA
[2] “Origin of System Dynamics” , http://www.albany.edu/cpr/sds/DL-IntroSysDyn/origin.htm
[3] “System Dynamics- Overview” http://en.wikipedia.org/wiki/System_ Dynamics
[4] “Stocks and Flows” http://www.systemdynamics.org/DL-IntroSysDyn/stock.htm
[5] Takahashi Y., “Translation from Natural Language to Stock Flow Diagrams”, School of Commerce, Senshu University, 2003
[*] Diane, Fisher M. Modeling Dynamic Systems, Lessons for a first course, 2005
[*] Richmond, Barry An Introduction to Systems Thinking, 2004
[*] Forrester, Jay W. The beginning of System Dynamics, System Dynamics Society, Germany, July 13, 1989
[*] Forrester, Jay W. System Dynamics and the Lessons of 35 years, 1991
[*] Forrester, Jay W. Counterintuitive Behavior of Social Systems, 1995
[*] Forrester, Jay W. Designing the Future, Universidad de Sevilla, December 15, 1998
[*] Forrester, Jay W. Economic Theory for the New Millenium, International System Dynamics Conference, New York, July 21, 2003
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