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Arena Newsletter and Blog

Delivering on Promises

Posted by Gail Kenny on Jan 23, 2017 10:43:00 PM

How can you determine if your system can deliver what has been promised? There may be contractual obligations you must meet relating to cost, throughput, or staffing requirements. How can you be confident that you can meet cost expectations as proposed? Can your system meet throughput requirements with the proposed changes to product flow? Do resources supplied by vendors perform as expected? If you increase customer demand, how does this impact your staffing requirements?

Since Discrete Event Simulation can consider the variability and interaction of the many aspects of your system, it becomes the tool of choice for helping you deliver on your promises.

Simulation is used to evaluate three primary performance metrics:

  1. Throughput 
  2. Utilization of resources
  3. Queueing statistics

These metrics vary as to how they are used in specific modeling projects. All three may be used when evaluating the contractual obligations that a company has with outside vendors or partners. In many instances, the company is interested in the throughput that a vendor can accommodate. In addition, the number of resources required may need to be examined, since this will more than likely be the most expensive part of any contract.

To be more specific, let’s take a look at two particular projects:

  1. An insurance company was using contractors to process various types of claims. A single vendor supplied these claims specialists to the insurance company. This vendor specified that 50 claims specialists were required to fulfill the insurance company’s requirements. Since the insurance company had formerly performed these tasks in-house and had experience with staffing claims specialists, they felt that the tasks could be performed with fewer claims specialists than what the vendor was proposing. To settle the question of how many claims specialists were required, the insurance company used Arena to develop a model of the vendor’s proposed operation using the vendor’s data. The model showed that the vendor could meet the claims demand using fewer claims specialists than they had proposed.
  2. An agricultural producer needed to determine the impact of dividing management of their business into regional business units. During this change, they needed to determine the number of partners (local farmers) required within each business unit to meet customer demand. They also needed to understand the impact on transportation costs and contracted feed mill requirements. To answer these questions, Arena was used to model production and test various regional assignments of the farms in order to determine the optimal number of farms to contract within each region. The model determined that dividing the overall business into four business units would be the best solution.

So, as you can see from the above examples, simulation is an excellent tool to help you meet your contractual obligations.

If you would like to learn more about how our team can help you to deliver on your promises, our Consulting Services and Support team would be happy to talk with you.

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