MG5580 Business Modelling and Simulation in Supply Chains Assignment Brief 2025-26 | BUL

MG5580 Main Objective of the Assessment 

You are required to complete three tasks that assess your understanding of recent developments in theory related to supply chain management and successful applications of simulation in real life. 

Task 1: Essay on A Model From A Seminal Research Paper

In this task, the goal is to write an essay on a model or simulation used in one seminal paper about a supply chain topic. This needs to be done by looking at one highly cited paper in the literature. The paper must have been published in the last five years and from a top-ranked and highly respected journal such as:

• Management Science 
• Operations Research 
• Manufacturing and Service Operations Management 
• Production and Operations Management 
• European Journal of Operational Research 

You are free to choose the topic and paper on your own but it is strongly advised that you confirm your choice with the module 

Your essay should briefly contain the motivation for the subject, a literature review, insights from the results, and directions for future research. As the main part and most importantly, your essay should explain in the appropriate level of detail the main modeling and solution approach used in the paper. It must be conveyed clearly in your essay that you have a very good understanding of the model. If you use a numerical example to elaborate on the model (which is highly recommended) all calculations and explanations should be done clearly.  

TASK 2: Report on a Real-Life Application of Simulation

In this task, your goal is to write a short essay reporting on a successful application of simulation techniques in one area of supply chain management. Your report must briefly explain the details of sthe imulation used in that context. The advantages of using the simulation must also be clearly conveyed. You are free to use non-academic as well as academic sources including, but not limited to, white papers, news articles, documentaries, etc. You are free to use a combination of different sources as well. However, referencing must be done accurately thought out.

TASK 3: THREE PROBLEMS (each 10% - total 30%)

PROBLEM A: A LINEAR PROGRAMMING PROBLEM

Four products are processed sequentially on three machines. The following table gives the pertinent data of the problem:

a)Formulate the problem as a linear program.
b)Use Excel Solver to solve your linear program
c)Write a report explaining the steps you take in approaching the above problems, and interpret your solution.

PROBLEM B: AN INVENTORY MANAGEMENT PROBLEM

In the following problem, find the best ordering policies:

A company that sells a single product would like to decide how many items it should have in inventory for each of the next 13 months. The company receives a lump-sum demand for every month in advance so the company knows the demand in the next 13 months as follows:

Given that the information for demand is known in advance, the company can decide how many items to order from its supplier in which month. If the company orders 𝑍 items, it incurs a cost of 𝐾 + 𝑖𝑍, where 𝐾 = £35 is the setup cost (transportation, administrative, etc) and 𝑖 = £4 is the incremental purchase cost per item ordered. (If 𝑍 = 0, no cost is incurred.) When an order is placed, the time required for it to arrive (lead time) is 1 month. (Therefore, the order placed at 𝑡 = 1 will arrive at the beginning of 𝑡 = 2).
The company cannot incur backlog, that is, it needs to make sure that there is always enough inventory to satisfy the demands. The demand of each month occurs at the beginning of the month and that is the time when last month order arrives. There is holding costs for keeping inventory. Let 𝐼(𝑡) be the inventory level at the end of month t [note that 𝐼(𝑡) can be positive, or zero but not negative]. We assume the company incurs a holding cost of ℎ = £1 per item per month held in (positive) inventory for a month. Assume that the initial inventory level is 𝐼(0) = 50 and that no order is outstanding.

a)Determine the best ordering policy.
b)Write a report explaining the steps you take in approaching the above problems.

PROBLEM C: A SIMULATION PROBLEM

Use simulation techniques to solve the following problem on inventory management:

Consider the company in Task 3 planning its inventory system over the next n months. The sizes of the demands at each point of time, 𝐷(𝑡), are IID random variables (independent of when the demands occur), and distributed uniformly within the range [0, 100]. At the beginning of each month, the company reviews the inventor level and decides how many items to order from its supplier. As before, if the company orders 𝑍 items, it incurs a cost of 𝐾 + 𝑖𝑍, where 𝐾 = £35 is the setup cost and 𝑖 = £4 is the incremental cost per item ordered. (If 𝑍 = 0, no cost is incurred.) When an order is placed, the time required for it to arrive (lead time) is 1 month.
The company uses a stationary (𝑠, 𝑆) policy to decide how much to order, i.e.,
𝑆 − 𝐼(𝑡)    if    𝐼(𝑡) < 𝑠𝑍(𝑡) =
0    if    𝐼(𝑡) ≥ 𝑠

Where 𝐼(𝑡) is the inventory level at the beginning of the month 𝑡.

When a demand occurs, it is satisfied immediately if the inventory level is at least as large as the demand. If the demand exceeds the inventory level, the excess of demand over supply is backlogged and satisfied by future deliveries. (In this case, the new inventory level is equal to the old inventory level minus the demand size, resulting in a negative inventory level.) When an order arrives, it is first used to eliminate as much of the backlog (if any) as possible; the remainder of the order (if any) is added to the inventory.

There are two types of costs, holding and shortage costs. Let 𝐼(𝑡) be the inventory level at time t [note that 𝐼(𝑡) can be positive, negative, or zero], let 𝐼+(𝑡) = max{𝐼(𝑡), 0} be the number of items physically on hand in the inventory at time t [note that 𝐼+(𝑡) ≥ 0], and let 𝐼−(𝑡) = max{−𝐼(𝑡), 0} be the backlog at time t [note that 𝐼−(𝑡) ≥ 0]. We assume the company incurs a holding cost of ℎ = £2 per item per month held in (positive) inventory. Similarly, suppose that the company incurs a backlog cost of 𝑝 = £7 per item per month in backlog.
Assume that the initial inventory level is 𝐼(0) = 60 and that no order is outstanding.

a) Simulate the inventory system for 𝑛 = 120 months and use the average total cost per month (which is the sum of the average ordering cost per month, the average holding cost per month, and the average shortage cost per month) to compare the following nine inventory policies:

(b)

c)Suppose an alternative system where the holding cost is ℎ′ = £3, and backlog cost is 𝑝′ = £1. Compare the above nine policies in this case.

d)Write a report explaining the steps you take in approaching the above problems.

Referencing: In-text citations and reference list should follow Harvard referencing. For more details about how to cite and reference academic journals, books, book chapters. lease note that the practice of taking someone else’s work or ideas and passing them off as your own is considered as act of plagiarism, which has severe consequences (see ‘Academic Misconduct, Plagiarism and Collusion’ below). To avoid plagiarism, make sure you cite sources accurately, and you use quotation marks (“…”), when extracting a direct quotation from a source while include the page number in the citation (i.e. Bourdieu, 1993, p.73).

Grades: PG mark bands and grade point bands [Senate Regulation 3] are:

 MG5580 Marking Criteria:

The following marking criteria will be applied for the assessment of the coursework.