Modelling and simulation of production-marketing systems

Three aspects of complexity in a Production-Marketing System are identified, namely the Model, Decision-Making and Behavioural complexities. Control theoretic and other techniques are reviewed in the context of their contribution to the resolution of these complexities and the modelling and simulation of the PMS is also viewed in this light. Several analytical models of a consumer-durable marketing system are developed, reflecting various assumptions of market conditions ranging from the single-product constant-decision marketing system to the multiproduct variable-decision marketing system, the latter explicitly accounting for price, advertizing, distribution and quality decisions for each product, repeat purchase dynamics and the tastes, income and population of consumers. A production system model is also developed involving a multiple final product, multi-stage production process, permitting the backlogging of demand, variation of production rate by variation in workforce levels and overtime and subcontracting of manufacture of intermediate products. Computer simulatiors of the marketing system based on the models developed and using assumed data are carried out. An optimization routine is used to generate the variable decisions. The variable-decision marketing model is combined with the production model and the resulting limited capacity PMS is simulated using assumed data. The simulation results are presented graphically and attention drawn to their realism. The use of the PMS simulation programme as a nucleus for a comprehensive PMS simulation and control package is commented upon