CASE STUDY OF COMBINED AGENT BASED SIMULATION WITH SYSTEM DYNAMIC MODEL SIMULATION IN ANYLOGIC
The assumptions we make about the market are similar to ones of the classical models of product/innovation diffusion, e.g. of Bass model with discards and replacements. We will however consider two competing products instead of one.
- There are two alternative products A and B manufactured by different (and competing) companies.
- The products are equivalent, i.e. can replace each other. The product prices are equal and therefore do not matter.
- Consumers (there are Total Population = 1000 of them) initially are not using any products but all are potentially interested (are potential users).
- Consumers are sensitive to advertizing and to word of mouth.
- Advertizing generates the demand for a product among the potential users. Advertizing Effectiveness = 0.011 is the percent of potential users that become ready to buy a particular product (A or B) during a day. Both companies do advertizing.
- Consumers contact each other. A consumer contacts on average a Contact Rate = 5 other people per day.
- During those contacts the users of products may influence potential users. If a user of e.g. A contacts a potential user, the latter will want to buy A with probability Adoption Fraction = 0.015, same for B.
- Any product discards in Discard Time = uniform(17,23) days and generates the immediate need to buy a replacement of the same brand.
- If a person wants to buy e.g. A, but A is not available for Maximum Waiting Time = 2 days, he becomes ready to buy anything that is available (A or B), same for B.
Each company (A and B) has its own supply chain that delivers products to the end consumers. The supply chains are very simple and work as follows:
- The product can be purchased by a consumer only from the retailer stock, initially holding a certain amount (Initial Retailer Stock = 100) of product.
- The product is manufactured by a producer. A producer makes Production Rate products per day, and this rate may vary, e.g. it can be adjusted according to the demand (which is known to the producer)
- The finished products are delivered to the retailer within Delivery Time = 2 days.
The output of the model should include the market shares for A and B, the demand (i.e. the number of people who want to buy while the product(s) are not available) and the inventory levels in the supply chains.