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MODUL 0
INTRODUCTION OF SYSTEM MODELLING AND SIMULATION

1.1 Practicum Objective


1. Practicum participants will be able to understand system and modelling concept.
2. Practicum participants will be able to understand various type of simulation.
3. Practicum participants will be able to describe the general step in conducting all type of
simulations.
4. Practicum participants will be able to choose the type of simulation as the solution of
related problem.
5. Practicum participants will be able to describe and explain formulation or problem scoping
i.e. summarize problem situation, identify problem for analysis, and describe relevant
system.

1.2 Theoretical Basis


Here are several brief theories that form the basis for doing laboratory work as described
in the next section.

1.2.1 System
The formal definitions of system concept are:
1. System is an organized assembly of components.
2. The system does something.
3. Each component contributes towards the behavior of the system and its own behavior
is affected by being the system.
4. Groups of components within the system may by themselves have properties.
5. System has an environment.
6. System has been identified by someone to be of special interest for a given purpose.
From the formal definition of system, it can be known that the crucial components of
system are components, the relationships between the components, the behavior or the
activities of the system, its relevant environment, the inputs from the environment, the
outputs to the environment, and the special interest of the observer.
System can also be defined as a collection of elements that function together to achieve a
desired goal (Blanchard 1991). Key points in this definition include the fact that a system

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consists of multiple elements, these elements are interrelated and work in cooperation, and
a system exists for the purpose of achieving specific objectives. Types of system are:
1. Discrete system: The status of the system changes instantly in a separate time
(example: ATM queueing system)
2. Continuous System: The status of the system changes continuously (example:
Chemical factory process).
3. Deterministic: The behavior of the system can be predicted with all detail (example:
Sequential system of traffic light).
4. Stochastic: Not all the behavior of the system can be predicted. Some behavior may
be influenced by random input.
5. Open System: The system interacts with the environment by receiving input and
providing output to the environment, is also a stochastic system
6. Closed System: The system does not have or do not interact with the environment, is
also a deterministic system (example: biological experiment)

1.2.2 The Art of Modelling


Model has various meanings. In Webster’s Collegiate Dictionary, model is defined as ‘a
description or analogy used for helping to visualize something (as an atom) that cannot be
directly observed.’ Therefore, a system model is a representation of all essential parts of a
system. As a system is an abstract mental construct (a personal conceptualization and hence
not independent of that person), so a model is another abstraction at a different level. It is
not the real thing (Daellenbach & McNickle, 2005).
Modelling means that modeler has to be highly selective about which aspects system to
include in a model. All aspects that are not absolutely essential or that contribute little to
its ‘accuracy’ or ‘predictive power’ should be excluded. A good model is as parsimonious
as possible in terms of the variables included. In other words, a good model should be
simple (Daellenbach & McNickle, 2005).

1.2.3 Solution Methods


Based on Taha (2007), there are two classifications of solution method that can be used in
solving problems. It depends on the characteristics of the problems. The following are the
classifications of solution methods:
1. Optimization techniques
Optimization techniques include all type of exact methods for solving problems. “Exact

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methods are guaranteed to provide a globally optimal solution for the underlying
discrete optimization problem” (Hertwig & Pachur, 2015). Example of this methods
are linier programming, integer programming, dynamic programming, network
programming, and non linier programming (Taha, 2007). For small problems, this can
be accomplished using exhaustive enumeration of all possible solutions, whereas
partial enumeration strategies such as dynamic programming and branch-and-bound
are often feasible for large problems (Hertwig & Pachur, 2015).
2. Non optimization techniques
a. Approximation procedures
“Approximation procedures do not afford the guarantee of globally optimal
solutions, yet they often provide globally optimal solutions for small problems and
remain scalable for larger ones (Hertwig & Pachur, 2015).” This type of solutions
will be used when some mathematical models may be so complex. In those cases, it
may be necessary to abandon the search for optimal solution and simple seek good
solution using heuristics or rule of thumbs (Taha, 2007). Examples of this
procedures are simulated annealing, genetic algorithm, etc.
b. Queuing and Simulation models
The two models are dealing with the study of waiting lines. They are not
optimization techniques.
In this following sections and modules, we will study simulation as the main focus of
the practicum.

1.2.4 Simulation
Simulation is as a way “to reproduce the conditions of a situation, as by means of a model,
for study or testing or training, etc.” (The Oxford American Dictionary, 1980). The
purposes are reproducing the operational behavior of dynamic systems. Simulation can also
be defined as “the imitation of a dynamic system using a computer model in order to
evaluate and improve system performance” (Harrell, 2004). We can gain insights about the
behavior of the actual system by studying the behavior of the model.

1.2.4.1 Type of Simulation


The way simulation works is based largely on the type of simulation used. There are many
ways to categorize simulation. Some of the most common include:
a. Discrete Event Simulation: A discrete event simulation is one in which changes in

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the state of the simulation model occur at discrete points in time as triggered by events
b. Agent Based Simulation: Agent based modeling and simulation (ABMS) applies the
concept of multi agent systems to the basic structure of simulation models. The core
idea of ABMS is that instead of merely describing the overall, global phenomenon, this
phenomenon can be rather generated from actions and interactions of the multi agent
system. Thus, Agent based is suitable for the analysis of complex adaptive system and
emergent phenomena in social sciences, traffic, biology, and others (Klugl and Bazzan
2012).
c. System Dynamics Simulation: System dynamics is a computer-aided approach to
policy analysis and design. It applies to dynamic problems arising in complex social,
managerial, economic, or ecological systems literally any dynamic systems
characterized by interdependence, mutual interaction, information feedback, and
circular causality.

1.2.4.2 How to Conduct the Simulation


In this practicum, we will conduct the simulation by adopting the Hard OR Methodology.
In particular, it does not assume that the problem is presented in a fully defined form, and
the next is ready for simulation, but must first be extracted and identified from the problem
situation. Methodology hard OR is not a linear process, it is starting with ‘summarizing the
problem situation’ and ending in ‘following up solution use’.
Based on figure 1.1, in the hard OR methodology there are three main phases, such as:
formulation or problem scoping, modeling, and implementation of recommendations. In
formulation or problem scoping there are several steps that must be fulfilled, such as,
summarizing the problem situation, identifying problems, and finally describing the
relevant system. After the problem has been formulated, the next process is build
mathematical model, find solutions, test and validate the model, and sensitivity analysis. If
the problem owner has agreed, the project will enter to the final phase. It is the solution
and implementation, there are also several step that must be fulfilled.

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Figure 1.1 Hard OR Methodology

However, in the modeling simulation there are several differences that are adjusted
to the type of simulation, such as discrete event simulation, agent-based simulation, and
dynamic system simulation. The following is a guide to modeling for each type of
simulation:

Figure 1. 2 Type of Modelling and The Steps

Discrete Event Simulation : one in which changes in the state of the simulation model
occur at discrete points in time as triggered by events
Agent Based Simulation: a class of computational models for simulating the actions and

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interactions of autonomous agents (both individual or collective entities such as
organizations or groups) with a view to assessing their effects on the system as a whole.
(Klugl dan Bazzan 2012).
System Dynamic Simulation: is the use of a computer program to model the time varying
behavior of a system. It applies to dynamic problems arising in complex social, managerial,
economic, or ecological systems literally any dynamic systems characterized by
interdependence, mutual interaction, information feedback, and circular causality.
(COYLE, 1996)
a. Discrete Event Simulation
Simulation is much more than building and running a model of the process. Successful
simulation projects are well planned and coordinated. There are no strict rules on how to
conduct a simulation project, the following steps are recommended:
Step 1: Define Objective, scope, and requirements. Define the purpose of the simulation
project and what the scope of the project will be. Requirements need to be defined
in terms of resources, time, and budget for carrying out the project.
Step 2: Collect and analyze system data. Identify, gather, and analyze the data defining the
system to be modeled. This step results in a conceptual model and a data document
on which all can agree.
Step 3: Build the model. Develop a simulation model of the system.
Step 4: Validate the model. Debug the model and make sure it is a credible representation
of the real system.
Step 5: Conduct Experiments. Run the simulation for each of the scenarios to be evaluated
and analyze the results.
b. Agent Based Simulation
Agent-based models discuss simulation that constructed out of individual objects and
simple rules for their movement of behavior, and interaction. There are five stage approach
how to conduct Agent Based Modeling:
1. Agents
Identify the agent types and other objects (classes) along with their attributes.
2. Environments
Define the environment the agents will live in interact with
3. Agent Methods
Specify the methods by which agent-to-agent interactions or agent interactions with
the environment.

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4. Agent Interaction
Add the methods that control which agents interact, when they interact, and how they
interact during the simulation.
5. Implementation
Implement the agent model in computational software.
c. System Dynamics Simulation
System Dynamics are systems that have no starting and end points, or can be called
looping. This dynamic system is used as in the population (COYLE, 1996). There are five
stage approach how to conduct System Dynamics Modeling:
Stage 1: Problem Recognition. Recognize the problem and to find out which people care
about it, and why.
Stage 2: Problem Understanding and System Description. Description of the system by
means of an influence diagram, sometimes referred to as a causal loop diagram.
Stage 3: Qualitative Analysis. The term simply means looking closely at the causal loop
diagram in hope of understanding the problem better. The analyst draws on so called bright
ideas and theories. The former arise from experience with other problems. If qualitative
analysis does not produce enough insight to solve the problem, work proceeds to Stage 4.
Stage 4: Simulation Modelling. the causal loop diagram and the simulation model are two
versions of the same model; one written in arrows and word, the other in equations and
computer code.
Stage 5: Policy Testing and Design. Results based on quantitative analysis start to emerge.
1.2.4.3 Formulation or Problem Scoping
In this module we will focus on formulation or problem scoping. The purpose of
formulation problem and scoping is to identify the issue to be analyzed and define a
relevant system for it. The level of depth, the detail, and the level of resolution of this
definition depend on a number of factors prior knowledge about the problem, its
complexity, and the relationship between problem owner and problem analyst.

Figure 1. 3 Formulation or Problem Scoping

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Based on the picture above, it can be seen that there are several steps in formulation
and problem scoping, i.e. summarize problem situation, identify problem for analysis, and
describe relevant system.
Scope the problem means identifying the nature of the problem and analysis could produce
and whether its likely costs justify its likely benefits. The relevant system is only defined
in broad terms by identifying the major subsystems and delineating its boundaries. The
boundaries system can be defined by system Hierarchy.
The purpose of systems Hierarchy is viewing something as a system affects what aspects
should be included as part of the system and what aspects are more appropriately placed
into the relevant environment; in other words, where to place the boundary of the system.
A. Summarize Problem Situation
The problem situation is the context within which the problem occurs:

Figure 1. 4 Problem of Situation

Summarizing problem situation will give an output which is a rich picture


wherein the twelve problem situations can be described. A rich picture is a drawing
of a situation that illustrates the main elements and relationships that need to be
considered in trying to intervene in order to create some improvement. The
elements of rich picture are:
a. Element of Structure
All aspects or components of the situation that are relatively stable or
change only very slowly in the time frame implied in the situation. This
would include all physical aspects, like physical structures, buildings and
equipment, and products involved, but also logical, functional, or
intellectual structural aspects and their properties, possible alternatives,
advantages and disadvantages, departmental divisions, information and
data, rules of how things are and could be done, or services rendered.

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b. Element of process
All dynamic aspects that undergo change or are in a state of flux, like
activities that go on within the structure, flow and processing of material or
information, and any decision making that goes on.
c. Relationship of element
Relationship between element of process and element of structural.
B. Identify Problem for Analysis
To identify the problem for analysis, the stakeholder must first be pointed out.
Afterwards, the six elements of problem can be identified. The output of identify
problem for analysis step is to identify the six elements of problem.
1. Stakeholder
Stakeholder or roles of people in systems the decision maker, other parties affected
but without any control over the situation and the analyst. They all assume various
roles.
Problem Owner: Who are the persons exercising control over certain aspects of
the problem situation, in particular over the choice of action to be taken. they are
also the decision makers.
Problem User: Who use the solution or execute the decisions approved by the
problem owners or decision makers.
Problem Customer: Who are the beneficiaries or victims of the consequences of
using the solution.
Problem Analyst: Who analyses the problem and develop a solution for approval
by the problem owners.
2. Six Element of Problem
Decision Maker: Has control over some aspects of the problem situation that affect
the extent to which goals, objectives, or target can be achieved.
Objective: The end point that is used as the direction of an effort, goals, point of
an action.
Decision criterion: Standards are used as the basis for evaluating how well the
objectives have been achieved.
Performance measurement: assessment of how well the objectives have been
achieved.
Control input: Alternative combination that can be carried out to achieve the goal.

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Context: Limitations regarding the discussion of the problem.
C. Describe Relevant System
System is seen as a Black Box because what happens in the system is not exactly
known. What is known is the input and output of the system. The purpose of viewing
something as a system affect what aspects should be included as part of the system
and what aspects are more appropriately placed into the relevant environment; where
to place the boundary of the system. The input and output described in the input-output
diagram below:

Figure 1. 5 Input - Output Diagram

a. Controllable Input
Controllable input is called decision variables because the decision maker
(experimenter) controls the values of the variables.
b. Uncontrollable Input
Uncontrollable input might be the time to service a customer or the reject rate
of an operation.
c. Output
Output is the process of shipping the products to the customer
The output of describe relevant system is a influence diagram of the problem.
Influence Diagram
A formal version of a causal loop diagram that shows the system transformation
process from uncontrollable and control inputs to system outputs, via system
variables. It delineates the system boundary. Meaning and Symbol of Influence
Diagram:

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Table 1. 1 Influence Diagram Symbol and Meaning

1.3 Labwork Discrete Event Simulation


This section explains about study case of discrete event simulation that will be used in the
next module of the practicum.

1.3.1 Study Case Discrete Event Simulation


Simbi Corporation is a assembly company that sell a Stirling Machine. The company do
the assembly process of components separately, and it will be assembled into a stirling in
the last process. The assembly components are Lower Platform Assembly Package,
Machine, Fuel Container, and Upper Platform. In order to make a lot of product variations,
Simbi Corporation produce 2 color variations. The color variations are Blue Stirling
machine, and Red Stirling machine. Simbi Corporation sell the 2 color variations for the
same price Rp750.000,-/unit. The following is the picture of Stirling on Simbi Corporation:

Figure 1. 6 Stirling Machine

Production process begun by the arrival of Lower Platform Assembly Package with data
as follows:

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Table 1. 2 Arrival of Lower Platform Package

Lower Platform Assembly Package consist of 2 pieces part that are lower platform, and
clock. Lower Platform Assembly Package every arrival there is a group with 85 units.
After its arrival, The Lower Platform Package then enters the Separator Machine with a
distribution time U (0.55, 1.6) minutes. At the same time, The Fuel Container also enters
the other separator machine after arriving with data as follows:
Table 1. 3 Arrival of Fuel Container Package

The Fuel Container Package every arrival there is a group with 95 units. After processed
by Separator Machines, Fuel Container Package and Lower Platform Package brought to
Installation Machine with distribution of time N (1.5, 0.05) minutes to be Half Finished
Stirling Machine through the Queue Lower Platform Package and the Queue Fuel
Container Package. Besides that, Upper Platform Package come with data as follows:
Table 1. 4 Arrival of Upper Platform Package

The Upper Platform Package every arrival there is a group with 90 units. Upper Platform
is consisted with two colors, there are Blue and Red with the percentage of production is
respectively 70% and 30%. After its arrival, Upper Platform Package enters Separation
Machine with distribution U (0.55, 1.6) minutes. At the same time, Stirling Machine
Package also enters the other Separation Machine after arriving with data as follows:

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Table 1. 5 Arrival of Stirling Machine Package

The Stirling Machine Package every arrival there is a group with 85 units. After
processed by Separator Machines, Half Finished Stirling Machine, Upper Platform
Package and Stirling Machine Package brought to Assembly Machine for all components
with distribution of time N (2.7, 0.7) minutes to be Finished Stirling Machine in Blue
Color and Red Color through the Queue Half Finished Stirling Machine, the Queue Upper
Platform Package and Stirling Machine Package. Then Finished Stirling Machine in Blue
color and Red Color will be brought to the Inspection area.
In the Inspection Area, Finished Stirling Machine in Blue Color and Red Color will be
inspected by 1 operator of quality control with distribution of time U (1.4, 2.3) minutes.
The operator of quality control will get Rp25.000,-/hour for salary.
Inspected Stirling machine in Blue color and Red color will be moved to the warehouse
through the queue of blue stirling machine and the queue of red stirling machine.
The following bellow is Operation Process Chart of Stirling Machine:

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The following is the breakdown of the cost of purchasing component for each unit:
Table 1.6 Cost of purchasing component

No Component Cost

1 Lower Platform Assembly Package (85 units) Rp30.000,-/unit

2 Fuel Container (95 units) Rp130.000,-/unit

3 Upper Platform (90 units) Rp25.000/unit

4 Machine (85 units) Rp30.000,-/unit

The following is the cost needed for each workstation:


Table 1.7 cost needed for each workstation

No Workstation Cost

1 All Separation Machines Rp100.000,-/unit

2 Installation Machine Rp150.000,-/unit

3 Assembly Machine Rp275.000,-/unit

4 Inspection Area Rp75.000,-/unit

Working hours in the company lasts for 9 hours, start from 08.00 AM until 17.00 PM for
5 working day (Monday - Friday). Hours of rest for one hour, which is between 12.00 PM
- 13.00 PM. Throughout the production process that has been carried out by the operator,
Sales Manager of Simbi Corporation records the unfulfilled order which is as many as 12
stirlings on average.
Table 1. 8 Target and Realization

No. Target Realization

1. 178 160

2. 178 173

3. 178 162

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4. 178 169

5. 178 174

6. 178 168

7. 178 162

8. 178 161

9. 178 165

10. 178 174

11. 178 160

12. 178 164

The CEO of Simbi Corporation need your help as industry analyst to find and give a
solution that will be used to decide what will be done to face the problems that occur in the
company with Hard OR Methodology, and also you need to do a production system
simulation with a consideration of working shift or amount of machine to maximize the
total output and company profits.

1.3.2 Formulation of Problem Scoping


A. Summerize Problem Situation

a. Element of Structure
Table 1. 6 Element Structure

Simbi Corporation Upper Platform Assembly Machine

Stirlling Machine Blue Stirling Machine Inspection Area

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Lower Platform Red Stirling Machine Warehouse of Finished
Assembly Package Products

Machine Separation Machine Industry Analyst

Fuel Container Installation Machine Operator

b. Element of Process
Table 1. 7 Element of Process

Production Assembly Installation

Purchase Sale Separation

Salary Payment Inspection Optimization Analysis

c. Relationship of Element
1. Simbi Corporation is a manufacture company and the company sell Stirling,
2. Simbi Corporation do the assembly process of Stirling components purchased by
other companies,
3. The assembly components are Lower Platform Assembly Package, Striling
Main Engine, Fuel Container, and Upper Platform,
4. Simbi Corporation produce 2 color variants of the Stirling Machine, there are Blue
Stirling Machine and Red Stirling Machine,
5. Simbi Corporation sell all variants of Stirling Machine with price
Rp750.000,/unit,
6. Simbi Corporation purchase Lower Platform Assembly Package with price
Rp30.000,-/unit,
7. Simbi Corporation purchase Machine with price Rp130.000,-/unit,
8. Simbi Corporation purchase Fuel Container with price Rp25.000,-/unit,
9. Simbi Corporation purchase Upper Platform with price Rp30.000,-/unit,
10. Each operator is given a salary of Rp25.000,-/day,
11. The operating cost of Separator Machine is Rp100.000,-/day,
12. The operating cost of Installation Machine is Rp.150.000,-/day,
13. The operating cost of Assembly machine is Rp275.000,-/day,

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14. The operating cost of Inspection Area is Rp75.000,-/day,
d. Creation of Rich Picture

Figure 1. 9 Rich Picture

1.3.3 Identify Problem for Analysis


a. Stakeholder
Problem Owner : Simbi Corporation, Owner
Problem User : Operator
Problem Customer : Simbi Corporation, Customer
Problem analyst : Industry Analyst

b. Six Element of Problem


Decision Maker : The CEO of Simbi Corporation
Objective : Increase profits by reducing lost sales/backorder
and increase the number of outputs
Decision criterion : Maximize the amount of output and profit of the
company
Performance measurement : Reduction between incomes and cost
Control input : Number of shift operator work / amount of machine
Context : Workstation

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1.3.3.1 Describe Relevant System
For this case, our system hierarchy is defined as below:
Narrow system : Workstation
Wider system : Simbi Corporation
Environment : Engine Sales Industry

Engine Sales Industry

Simbi Corporation

Workstation

a. Input – Output Diagram

Figure 1. 10 Input-Output Diagram of Problem

Note:
A = Products Produced/week
B = Labor cost/week

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b. Influence Diagram

Figure 1. 11 Influence Diagram

Mathematical Model
Total Labor Cost = Total hours of working shift x Working days x Number of workers
x Labor cost/person per hour
Total Machine Cost = Cost of machine/ day x Total Number of machines x working days
Total Unfulfilled Order (UFO) Cost = Number of Unfulfilled Order x Cost of Unfulfilled
Order
Total Queue Cost = Queuing cost/unit x Number of Work in Progress (WIP) queuing
Total Revenue = Number of products produced/hour x price of product/unit
Profit = Total Revenue - Total Labor cost - Total Machine Cost - Total UFO Cost - Total
queue Cost

1.4 Labwork Agent Based Modelling


In this section there is study case for agent-based simulation that will be used in the next
module of the practicum.

1.4.1 Study Case Agent Based Modelling


There was 4000 people who don’t use iPhone X. Simbi Corporation will advertise iPhone
X for lead them to purchase it. So, Simbi Corporation want to know what happened to the
advertisements given to these people. In fact, Advertising influence consumer demand by

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effecting certain percentage of population to become interested in purchasing in a given
day. We assume that Advertising effectiveness = 1% of population during a given day.
Note: the solution will be explained in the next module.

1.5 Labwork System Dynamic Simulation


In this section there is study case of system dynamic that will be used in the next module
of the practicum.

1.5.1 Study Case System Dynamic Simulation


PT. SIMBI is a company that produces and sells frames to support automobile production
needs at factory A. PT. SIMBI runs quite well, but there are some obstacles in overall cost
in production process. When production occurs, the goods are not immediately sold.
Instead, they are stored in inventory until sales occur, when it is removed from the
inventory. In general, there will be inventory or some combination of inventory and
backlog then separating production from sales. In the short term many people are hired and
if necessary, shift production will be added. More people will make more products, so we
add Workforce levels.
Matters affecting Workforce are hiring, layoff, dismissal and retire. these are combined
into a net hire rate. Net hire rate can increase or decrease Workforce. Production is
influenced by Workforce and productivity. Proportionality of productivity is constant.
Also, net hire rate is dependent on the value of Workforce. The net hire rate is the net
number of people hired.
Time to adjust workforce represents the time required for management to agree on a change
in the workforce level and screen potential applicants or notify workers to be laid off.
Target workforce is the number of people you need to produce the amount you want to
produce. The Level Workforce is initialized at this value. The target production is
connected to the target workforce. The target production is set on the basis of sales.
Here are the purposes about how the business works:
1. To know the production frame of the PT. SIMBI
2. Understand to use the Vensim software in the simulation system.
3. To know the optimal amount of frame production and workforce during the lifetime.
The full equation set for this model follows:

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Table 1. 8 The Equation of The Model

FINAL TIME = 100 Production = workforce*productivity


Units: Month Units: Frame/Month

INITIAL TIME = 0 productivity = 1


Units: Month Units: Frame/Month/Person

TIME STEP = 0.25 sales = 100 + STEP (50,20)


Units: Month Units: Frame/Month

SAVEPER = TIME STEP target production = sales


Units: Month Units: Frame/Month

Inventory = INTEG (production-sales,300) target workforce = target production /


Units: Frame productivity
Units: Person

net hire rate = (target workforce - Workforce) / Workforce = INTEG (net hire rate, target
time to adjust workforce workforce)
Units: Person/Month Units: Person

Time to adjust workforce = 3


Units: Month

Note: the solution will be explained in the next module.

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