Reference no: EM133048194

ELE 3744 Business Dynamics

"The Blame Game"

The CEO of QUESTCOM (Inge Jan Bjørnland) manages the entire organization by using two indicators.

1. The desired number of survey-projects in execution. He always wants to have 100 survey-projects in execution. When the real number of survey-projects falls below target, he first estimates how many extra sales agents he needs to hire to close the gap. After these sales agents are hired, he expects that more survey-projects will be sold and consequently, that the real number of survey-projects in execution will increase. When

the real number of survey-projects is above target, he will fire some sales agents. Please note that the success percentage is not used in the decision to hire/fire sales agents.

2. The desired execution rate of survey-projects. Because organizations expect survey- projects to be executed in 1 year, the desired execution rate of survey-projects is determined by the number of survey-projects and the average execution time (1 year). For example, when the number of survey-projects in execution is 100 projects, the desired execution rate of survey-projects is 100 projects/year, and when the number of survey-projects in execution is 90 projects, the desired execution rate of survey-projects is 90 projects/year, etc. The desired execution rate of survey-projects is used to determine how many survey-consultants are required. Compared to the number of consultants that are already working for QUESTCOM this means either hiring or firing (or doing nothing).
Hiring and firing sales agents and survey consultants takes on average 3 months (0.25 years).

Some more details about QUESTCOM

1. Survey-projects can be in two different states: either they are in acquisition, or they are in execution.
2. Survey-projects enter the state of "survey-projects in acquisition" through the acquisition start rate which is determined by the number of sales agents in QUESTCOM (initially 25 sales agents) and their productivity (remember that this was 5 projects/consultants/year)
3. Not every survey-project in acquisition actually leads to a survey-project in execution. Sales agents sometimes fail to sell a survey-project. The average success percentage of these sales agents is 80%, so 80% of the survey-projects that are in acquisition become survey-projects in execution. The average acquisition time is 1 year.
4. The survey-project execution rate is determined by the number of survey-consultants in QUESTCOM and their productivity (remember that this was 2 projects/consultant/year). It takes on average 1 year to execute a survey-project (regardless of the productivity of individual survey-consultants).
5. Initially, there are 125 survey-projects in acquisition, 100 survey-projects in execution, 25 sales agents and 50 survey-consultants.
6. The initial time is the year 2018, final time is the year 2028.

Questions

The following six questions need to be answered.

Question 1 Make a causal loop diagram of QUESTCOM with the main variables and feedback loops, loop and link polarities. Name and number your loops. Show the causal loop diagram in your paper. Describe the loops in your paper: describe what kind of loops they are and what the expected behavior of the system is based on these loops (no simulations necessary, just a generic description of the expected behavior).
(max 10 points)

Question 2 Develop the stocks and flows structure (i.e., a system dynamics model) of QUESTCOM
a. Make a copy of the stocks and flows diagram in your paper. Provide a list of the equations for all the stocks in your report.
b. Run the model for 10 years (2018 to 2028). Include the graphs for survey-projects in execution and the graph for survey-consultants in your paper. Describe these graphs, is the behavior similar to what you were expecting based on the causal loop diagram?
c. Show a graph of the total profit in your report. What is the total profit during these ten years?
(max 25 points)

Question 3 We all know that COVID-19 had an impact on many organizations in 2020 and 2021. Although QUESTCOM's employees were used to working from home anyway, the pandemic made it much more difficult to acquire and execute projects. As a result, the productivity of both sales agents and survey-consultants dropped during these two years. To model the effect of COVID-19, change the equations of productivity as follows:
Sales agent productivity = 5 - STEP(1,2020) + STEP(1,2022)
Survey-consultant productivity = 2 - STEP(0.25,2020) + STEP(0.25,2022)
"STEP" is a standard function in VENSIM that allows you to change the value of a variable at a specific point in time. For example "- STEP(1, 2020)" means that the productivity of sales agents is reduced by 1 as of year 2020.
Make these changes and run the model again. Show the graphs of sales agent productivity, survey-projects in execution, and survey-consultants in your report. Explain the behavior your see. What is happening to the profit during the COVID-19 period (years 2020 and 2021)?
(max 15 points)

Question 4 We make a trip to the future. In the beginning of 2027, CEO Inge Jan Bjørnland is fired because of yearly profits that have been decreasing for a long time, and to such an extent that QUESTCOM is making a loss. Inge Jan tries to defend his position and says that he is blamed for something that was out of his control. He claims that the negative results are a consequence of COVID-19. What do you think about this claim? Who is to blame? Inge Jan Bjørnland or COVID-19?
(max 10 points)

Question 5 Hilde Henjesand takes over as a new CEO in the beginning of 2027. She wonders if QUESTCOM could have done things differently in the past, to recover faster and better from COVID-19. She was told that QUESTCOM had a stable workforce before COVID-19, but that the pandemic started a process of repeatedly hiring and firing people. She wonders

what would have happened if no one was fired or hired at all during these 10 years. What would be the profit of QUESTCOM during the pandemic and what would be the total profit over this period of 10 years? Would it be better of worse than with a flexible workforce?
(max 15 points)

Question 6 Another idea Hilde Henjesand is thinking about is multitasking. Survey-consultants normally need to be fired because there are not sufficient projects in execution. But, what if the survey-consultants who are "idle" (that is: survey-consultants without a project to work on), start helping sales agents in the acquisition process? Survey-consultants are of course not so good in sales as sales agents, so the success% will be decreased. To simulate this idea, you will need to:
• Calculate how many survey-consultants are "idle"
• Calculate the ratio of experienced sales agents in the new sales team (consisting of sales agents and idle survey-consultants)
• Calculate the new success% of the acquisition process: 0.8*the ratio you calculated earlier
• Make sure sales agents and survey-consultants can not be fired anymore, but they can still be hired when necessary
• You can assume that all these changes happen at the start of the simulation in 2018. COVID-19 is still a part of your model.
Discuss the results this idea in your report. In addition, please put the entire simulation model you used to answer this question in a separate ZIP-file and upload this ZIP-file as an attachment to your term paper, so that your model also can be evaluated.
(max 20 points)

Question 7 You have now simulated three scenarios (the scenarios discussed in question 4, 5, and 6). Which scenario/policy would you recommend Hilde Henjesand to use in the next years? Motivate your recommendation. (max 5 points)

Attachment:- Business Dynamics.rar