Presentation given to Jigsaw Consultants network during January 2011. Gives a background of DSE Consulting, Simulation and the AnyLogic software

1. Technology Demonstration for JIGSAW consultants network Business & Operations Simulation in AnyLogic

2. "although we're not new to modelling risk, the models developed by dseConsulting have created unique insights into the market we trade in. The agent-based approach used by David means that we can apply simulation to complex areas of decision making, and we are now working hard to ensure that modelling is included at each step in the strategic planning process." Anders NilSsonVP Business strategies Volvo Aero "the AnyLogic tool has allowed enabled me to model unique levels of complexity that would not have been possible with traditional simulation tools. I have used SD applications to model DC flows but they are limited and modelling complex interactions become so difficult they boarder on intractable - the combined modelling approach incorporating ABM removes the need to take a helicopter view of the world and concentrate on what actually happens.” PHILIP GREENING CRANFIELD SCHOOL OF MANAGEMENT Customer INSIGHTS

3. dseConsulting LTD Launched Jan 08 Simulation Modelling Consultancy Software sales Training Project management Simulation consultancy UK’s leading practitioner for ABMS consultancy And in the quieter times… Excel automation Optimisation Operations Strategy & Management

4. dse Case studies Volvo Aero Strategic investment decision ABMS Rolls-Royce Forecast and capacity planning Mixed ABMS / DE Agusta Westland Strategic Asset Management SD & Mixed ABMS / DE Tesco ‘Space’ strategy optimisation ABMS Cranfield Eng School: Commercial partner SoM: Development partner UNOTT Comp Sci: Mentoring & Project Management

5. CS2: Airline Market Economics Volvo Aero (cSeries entry)

6. STRATEGY LAYER Economic conditions Oil Market OEM LAYER AIRBUS BOMB-ARDIER BOEING Launch Airframe programme AIRCRAFT LAYER 737 737 A320 A320 737 737 A320 A320 AIRFRAME PROJECTS NSR Y1 cSeries NSR A320 737 AIRLINE LAYER SECOND HAND MARKET a a a a a a b Assess cost efficiency of fleet

8. CS 1: Asset lifecycle Management Agusta Westland (Fleet planning under alternative strategic plans)

9. STRATEGY LAYER GEO-POLICITCAL POLICY MISSION PLANNER SCHEDULE MISSION BASES (AIRCRAFT + AIRCREW) TYPE 1 TYPE 2 TYPE 3 PILOT 3 TYPE 2 PILOT 1 TYPE 1 PILOT 2

11. ANylogic

12. the first “Simulation development environment” Designed to overcome the limitations of ‘shrink wrapped software’ that Quickly run out of power and scope when faced with large and complex applications You can mix approaches meaning that analyst can focus on the nature of the problem and not the technique they know Only partially driven by point click using pre-defined objects Object Orientation programming language Based in the eclipse DE Completely scalable and can be integrated into traditional business IT systems Pricing Professional C. £12k Standard C. £4.5k

13. “Simulation: the key to business success” Gartner Research 2010 Arena Extend Simul8 AutoMod PROMODEL Enterprise Dynamics FlexSim eMPlant … MATLAB VisSim LabView Easy 5 … [Academic software:] Swarm RePast VenSim PowerSim iThink ModelMaker SD DE AB DS

15. Models are very easy to re-use

16. You can mix approaches

18. Discrete event simulation

20. Queuing theory based on

21. arrival rates, delays and resource utilisation#

22. Basic structure applicable to 100s of situations

24. Strategic Questions where DE alone cannot help How do people interact with the system? Why is the arrival rate X? Why does it take X for my resource to process the order? What are consumption trends and how will these affect demand? What will the competitors response be? How will connected systems be affected? Most problems are comprised of a system of systems..

25. System dynamics

26. Intrinsic to Systems Thinking “Sales are poor (effect)…because sales staff are not highly motivated (cause & effect)…because salaries are low (cause)” Whole systems modelling A structured approach to modelling a complex world Causal loop diagrams & Feedback Structure Systems that change continuously over time using the principle of stock and flows Highly aggregated, highly abstract representations Modelling tends to be explanatory Based on a mental model Stock and flow can be difficult to put together and data availability is always a problem Some very famous examples that illustrating reasons behind a trend Beer Game, Bass-Diffusion, “Limits to growth” (Club of Rome)

27. Base Diffusion model B B R Adoption Rate PotentialAdopters Adopters + + TotalPopulation + Adoption fromAdvertising Adoption from Wordof Mouth + - AdoptionFraction + + + + AdvertisingEffectiveness ContactRate

28. In AnyLogic this looks like… Type: Flow Aux Variable … = : Adoption from Advertising + Adoption from Word of Mouth PotentialAdopters Adoption Rate Adopters Type: Stock Variable d(…)/dt = : - Adoption_Rate Initial value: 10,000 Type: Stock Variable d(…)/dt = : Adoption_Rate Initial value: 0 AdvertisingEffectiveness TotalPopulation Type: Parameter Initial value : 10,000 Adoption fromAdvertising Adoption from Wordof Mouth Type: Parameter Initial value : 0.015 AdoptionFraction Type: Parameter Initial value : 0.015 Type: Flow Aux Variable … = : Potential Adopters * Advertising Effectiveness ContactRate Type: Parameter Initial value : 0.015 Type: Flow Aux Variable … = : Contact Rate * Adoption Fraction * Potential Adopters * Adopters / Total Population

29. Agent-Based Modelling & Simulation

30. “Macro from Micro” Used where Large populations of things Human centric or human influenced systems Agents… autonomous decision makers interacting with the local environment interacting with each other live in a dynamic environment Its ‘bottom up’ modelling agents, decisions, states Examples Inter firm competition Strategy & market dynamics

31. When to use ABMS.. Your markets are fragmented and there are multiple groups or segments within a population that may behave differently The past is no prediction of the future, but surprises can often be explained with the power of hindsight Your problem is complex and it is difficult to predict how the system will evolve Any element of strategic behaviour or co-operation exists Learning or behaviour is important Your population has a natural representation of an agent and system performance is significantly related to this agent Estimations of inputs are missing, unavailable or not sufficiently realistic Structural elements are the result, rather than an input to, your model There is a geo-spatial element to your model You are uncomfortable with the huge assumptions required by Discrete Event Simulation (DES), System Dynamics (SD) or spreadsheet based models * With thanks to Charles Macal whose thoughts during 2010’s OR conference inspired this list.

32. Key Agent building blocks - States States can govern Deciding between strategy

33. Bass diffusion agent based PotentialAdopter “Buy!” Guard: randomTrue(AdoptionFraction) Rate:AdEffectiveness Adopter Rate: ContactRate <random agent>.”Buy!”

34. Doing more with ABMS

35. Opportunities to find out more…? dave@dseconsulting.co.uk www.dseconsulting.co.uk http://uk.linkedin.com/in/dseconsulting 0121 288 0503 Training options Cranfieldshort course programme: 2 day short course covering all three techniques 3 days official AnyLogic training (March 2011, London) OR Society training: 2 day course covering ABMS only in collaboration with UNOTT (December 2011, Birmingham)