BAN403 Simulation of Business Processes

• Topics

  Simulation, i.e., experimentation with a computer model of a real system in order to determine the effect of changes in the system, is the most widely used management science method in practice. The use of simulation in business has been increasing rapidly as the cost of doing calculations with computers has been reduced. Simulation is particularly useful when the actual problem is characterized by uncertainty, e.g., as regards demand, processing capacity, delivery times, future interest and currency rates, etc. Simulation is gradually replacing traditional analytical tools of operations research such as queuing theory, inventory theory and some project management methods. Applications of simulation include, e.g., manufacturing systems, service systems such as airlines, health care and banking, as well as transportation and logistics applications.

  We shall use a version of the most widely used simulation language, GPSS (General Purpose Simulation System), originally developed by IBM. The version used in this course is aGPSS (agpss.com), which is simple and easy to learn, yet powerful enough to analyze real business processes. Throughout the course we shall meet many practical examples of simulation, e.g. inventory systems, logistic systems, financial decisions, production planning, construction projects, etc. We shall in particular solve a larger problem, based on a real case, dealing with the inventory, production and pricing decisions of a furniture dealer.

  Towards the end of the course, the students will do a group-based simulation study of their own choice in a company or an organization. The modelling of the actual system and suggestions for improvements of the processes will provide insights of importance for the students¿ future work in business.

• Learning outcome

  By the end of this course the students are able to

  (Knowledge)

  • understand the characteristics of discrete event simulation (DES) models.
  • recognize practical situations where DES models can be used for improved decision making.
  • understand the structure and basic building blocks in a typical simulation language like GPSS.

  (Skills)

  • build their own simulation models in order to analyze business cases that have been discussed in the course, such as inventory systems, logistic systems, financial decisions, production planning, and construction projects.
  • plan and implement a simulation model of a real business process.
  • calibrate models based on observed data.
  • evaluate uncertainty in simulation estimates.
  • interpret simulation results and draw the necessary conclusions for business decisions.

  (General competence)

  • communicate results to specialists and non-specialists.
  • cooperate in a team-based research project.

• Teaching

  The teaching is based on lectures with computer exercises, as well as counseling sessions with groups in the initial phase of their project work. The project work will be based on proposals that must be approved by the lecturer, whereafter the groups have approximately 1 month to finish their projects.

• Credit reduction due to overlap

  Course identical to BUS423.

• Requirements for course approval

  During the course the students shall simulate the cash flow for a company using aGPSS and hand in a report. A written proposal for the exam project must also be handed in for approval.

  Note: There might be compulsory activities in the course prior to the registration deadline.

  Course approval from BUS423 is valid for BAN403.

• Assessment

  • Group-based project report (1-5 students in each group) and oral exam based on the report.
  • The project report grade will be published prior to the oral exam, and the oral exam will be used to adjust the initial grade. The adjustment is individual and can at most be one grade. The adjusted grade will constitute the overall course grade.
  • Parts of the exam cannot be taken independently of each other.

  This course is a continuation of BUS423 and the total number of attempts applies to the course (not the course code).

• Grading Scale

  A - F.

• Computer tools

  We will use the simulation program aGPSS (agpss.com), and, to a limited extent,  R (www.r-project.org).

• Literature

  Modeling Business Processes with aGPSS by Richard Born & Ingolf Ståhl, Beliber AB, 2013.