Acquisition policy design; An application of system dynamics for a heavy equipment dealer in Southeast Asia

Abstract

In this paper, a system dynamic model is developed to design a robust policy for heavy equipment acquisition, to improve the performance of the company by preventing the company from facing low liquidity while utilizing its capacity to grow. The performance of the company depends on the resources that the company uses such as the salesmen, the customers, the inventory and the cash level. A system dynamic model is built based on these resources in order to simulate the performance of the company. By running the Simulation model of the company under various scenarios, the management of the company can prepare itself to face possible changes in government regulations. Based on the model, an interactive learning environment has been developed to enable managers to observe the consequences of their decisions on the performance of the company.