Designing Effective Operations: Balancing Multiple Business Objectives Using Simulation Models

Abstract

All businesses need to balance a number of different and often competing imperatives. For a business to be sustainable it must balance two prime objectives: to maintain cash flow today for survival and at the same time to evolve, to ensure its future. Supporting these prime objectives are second-order objectives such as the ability to maintain business stability under various conditions. An example is the maintenance of customer service levels in the event of unexpected surges in demand or problems in supply. Managing these parallel demands is very complex, involving decision-making in different areas of the organisation, the results of which interact with each other on a range of timescales. New modelling techniques give us the ability to simulate the business behaviours which result from these interactions. They provide important evidence-based insights which improve decision-making in complex organisations.