Using Simulation in Understanding the Dynamic of Business Processes By Phinsuda Tarmy MBA 731 Fall 2007

Using simulation in Understanding the Dynamic of Business Processes - 2 What is Process Simulation ? The technique that allows representation of processes, people, and technology in a dynamic computer model The technique that allows representation of processes, people, and technology in a dynamic computer model Mimics the operations of the business by stepping through the events in compressed time Mimics the operations of the business by stepping through the events in compressed time Animates the activities Animates the activities Keeps track of statistics about model elements and performance measures Keeps track of statistics about model elements and performance measures Examples of simulation software: Examples of simulation software: Arena Arena AutoMod AutoMod Call$im Call$im GPSS GPSS OPNET Modeler OPNET Modeler Simulat8 Simulat8 SIMSCRIPT SIMSCRIPT

Using simulation in Understanding the Dynamic of Business Processes - 3 Why do we have to care? Processing times are highly variable Processing times are highly variable Arrivals are random and cyclical Arrivals are random and cyclical There are random events such as machine failures and employee absence in the system There are random events such as machine failures and employee absence in the system Using averages do not provide accurate picture of the system performance Using averages do not provide accurate picture of the system performance Simulation takes into account the variability in the system that affects performance over time Simulation takes into account the variability in the system that affects performance over time

Using simulation in Understanding the Dynamic of Business Processes - 4 Basic Concepts, Techniques & Deliverables Concepts: Concepts: The imitation of the process is produced using a computer program The imitation of the process is produced using a computer program The simulation is dynamic  modeling changes in the system or process over time The simulation is dynamic  modeling changes in the system or process over time The simulation is stochastic  having randomly varying performance The simulation is stochastic  having randomly varying performance Techniques: Techniques: Modeling Modeling Probabilities and Statistics such as random distribution, sampling, design of experiments, etc. Probabilities and Statistics such as random distribution, sampling, design of experiments, etc. Deliverables: Deliverables: Estimated performance measures of the modeled system or process Estimated performance measures of the modeled system or process

Using simulation in Understanding the Dynamic of Business Processes - 5 Benefits Deals with system that changes with time and involves randomness Deals with system that changes with time and involves randomness Analyzes potential effects of process changes without the cost of real implementation Analyzes potential effects of process changes without the cost of real implementation Reduces risk Reduces risk Scenarios and sensitivity analysis reduce the risk of the unknown Scenarios and sensitivity analysis reduce the risk of the unknown Proves concepts Proves concepts Helps sell the new design and ‘unfreeze’ current ways of doing Helps sell the new design and ‘unfreeze’ current ways of doing Animation can help understanding the process behaviors Animation can help understanding the process behaviors Forecasted performance measures can aid decision making Forecasted performance measures can aid decision making

Using simulation in Understanding the Dynamic of Business Processes - 6 Typical Questions Answered by Simulation Process Design Decisions What is the total process cycle time? What is the total process cycle time? What is the maximum throughput capability of the process? What is the maximum throughput capability of the process? What is the capacity of the service and waiting areas where the process is performed? What is the capacity of the service and waiting areas where the process is performed? What are the equipment and technology requirements to meet the service demand? What are the equipment and technology requirements to meet the service demand? How long do customers have to wait before getting serviced? How long do customers have to wait before getting serviced? How can workflow and customer flow be streamlined? How can workflow and customer flow be streamlined? Process Management Decisions What is the best way to schedule personnel? What is the best way to schedule personnel? What is the best way to schedule appointments for customers? What is the best way to schedule appointments for customers? What is the best way to schedule carriers or vehicles? What is the best way to schedule carriers or vehicles? Which customers or tasks should be serviced first? Which customers or tasks should be serviced first? What is the best way to deal with unexpected situations or emergencies? What is the best way to deal with unexpected situations or emergencies?

Using simulation in Understanding the Dynamic of Business Processes - 7Drawbacks Good model building requires special training and experience Good model building requires special training and experience Simulation results may be difficult to interpret Simulation results may be difficult to interpret Simulation modeling and analysis can be time consuming and expensive Simulation modeling and analysis can be time consuming and expensive

Using simulation in Understanding the Dynamic of Business Processes - 8 Implementation Steps 1.Identify and Map Processes 2.Collect data 3.Build model 4.Verify model 5.Validate model 6.Runs and analysis 7.Documentation and reporting

Using simulation in Understanding the Dynamic of Business Processes - 9Example Supply chain dynamics (from iThink simulation software)

Using simulation in Understanding the Dynamic of Business Processes - 10 Example (cont.)

Using simulation in Understanding the Dynamic of Business Processes - 11 References 1. J. Banks, J. S. Carson, II and B. L. Nelson, “Discrete-Event System Simulation”, (Upper Saddle River, NJ, 1996), 2. B. Gladwin and K. Tumay, “Modeling Business Processes With Simulation Tools”, in Proceedings of the 1994 Winter Simulation Conference, (Lake Buena Vista, FL, December 11-14, 1994), pp , 3. A. Greasley, “Effective Uses Of Business Process Simulation”, in Proceedings of the 2000 Winter Simulation Conference, (Orlando, FL, December 10-13, 2000), pp , 4. V. Hlupic and S. Robinson, “Business Process Modelling And Anailysis Using Discrete-event Simulation”, in Proceedings of the 1998 Winter Simulation Conference, (Washington, DC, December 13-16, 1998), pp , 5. K. Tumay, “Business Process Simulation”, in Proceedings of the 1995 Winter Simulation Conference (Arlington, VA, December 3-6, 1995), pp