How to allocate budget to different rates?

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anjomshoae
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How to allocate budget to different rates?

Post by anjomshoae »

Hi everyone,

what is the best way to allocate a certain amount of a "stock" to different inflow rates?

I am trying to allocate a stock called "total available budget" to two other stocks:

1- total inventory budget
2- total training budget

I am not sure that the formulation of my model is correct. Can someone check the enclosed model and let me know this formulation is correct?

any help is highly appreciated.

Regards
Aria
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Budget allocation.mdl
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LAUJJL
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Joined: Fri May 23, 2003 10:09 am
Vensim version: DSS

Re: How to allocate budget to different rates?

Post by LAUJJL »

Hi

You should try to study the Vensim user guide seriously before wanting to model even very simple problems!

It is for instance a good practice to put units in the equations!

Joined a simplified model.

Regards.

JJ
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Budget allocation_2.mdl
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Administrator
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Re: How to allocate budget to different rates?

Post by Administrator »

There is a whole section in the Vensim documentation on allocation,
http://www.vensim.com/documentation/ind ... ations.htm

Do you want to replicate the real world (then do what is done in the real world), or experiment. If you want to experiment, then what kinds of experiments do you want to do?

I'd suggest the budget allocated to training/inventory should have an effect somewhere else in the model (for example, on inventory). Then you could experiment with the percentage of budget devoted to inventory.
Advice to posters seeking help (it really helps us to help you)
http://www.ventanasystems.co.uk/forum/v ... f=2&t=4391

Units are important!
http://www.bbc.co.uk/news/magazine-27509559
anjomshoae
Member
Posts: 46
Joined: Thu Oct 23, 2014 1:08 pm
Vensim version: DSS

Re: How to allocate budget to different rates?

Post by anjomshoae »

Hi everyone,

many thanks for the comments and input. I'm trying to do an experiment based on my knowledge of the real world.

so here is the experiment:

a non-governmental organization (NGO) receives money from the donors and spends this money for buying inventory or training of its staff. The NGO sends inventory (food item) to people who affected by a disaster. I want to suggest some improvement policies for organizations regarding how to spend the money.

as you suggest, the budget for inventory should be used for buying actual inventory and delivering that inventory to the beneficiaries. I tried to model this but I have problems with formulations of rates and units. attached is my model. I have a problem with how to formulate the equations for spending the money for buying inventory. I did a formulation for this but not sure its correct. I appreciate if you can check the enclosed model and let me know my mistakes.


Regards
Aria
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Model.mdl
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LAUJJL
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Vensim version: DSS

Re: How to allocate budget to different rates?

Post by LAUJJL »

HI

As your purpose is to help spending the money, you should concentrate on your purpose and not on how to increase the number of donors.

Joined a simple model on only the spending.

Your donor part does not make sense anyhow.

Look at the units in the model joined.

Regards.

JJ
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Model (2).mdl
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anjomshoae
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Posts: 46
Joined: Thu Oct 23, 2014 1:08 pm
Vensim version: DSS

Re: How to allocate budget to different rates?

Post by anjomshoae »

HI

Thanks for the corrections the units are now A.O.k.., but I have a few questions about your changes to the model:

- What “TIME STEP” does in the formulation of the rate “deliveries to beneficiaries”? Why do we need to divide “Relief inventory” to “TIME STEP” in this rate formula?

- Why do you keep the variable “Time to spend the inventory budget”. Shouldn’t be removed? I think this variable doesn’t exist in the real world, so I am not sure why you have kept this variable in the model? My understanding is that this variable is added for the unit conversion from the “Inventory spending” which is “Dollar/Day” to the “relief items buying rate” which unit of measure is “Kit/Day”.



Regards,
Aria
LAUJJL
Senior Member
Posts: 1421
Joined: Fri May 23, 2003 10:09 am
Vensim version: DSS

Re: How to allocate budget to different rates?

Post by LAUJJL »

Hi

- What “TIME STEP” does in the formulation of the rate “deliveries to beneficiaries”? Why do we need to divide “Relief inventory” to “TIME STEP” in this rate formula?

It is to prevent the level going negative. At each time step, you can only deliver the amount of kits in the level and this amount is equal to the relief inventory divided by the time step per day.

Run the model and see what happens at every time step.

If for instance there are only 4 kits left, the level divided by the time step is equal to 4 / (¼) = 16 kits per day. A delivery of 16 kits per day allows a delivery of 4 kits per time step or a quarter of a day and this is the number of kits in the level at the start of the step.

You can add the variable number of kits left that can be delivered in a time step equal to 'relief (inventory / time step) * time step' to verify that it is equal to the relief inventory.

You must remember that at each time step, the output is equal to the inventory multiplied by the time step.

You must run multiple runs, varying the parameters with the synthesim, and try to understand the behaviour of the model each time.

You can save the runs too and compare them.


- Why do you keep the variable “Time to spend the inventory budget”. Shouldn’t be removed? I think this variable doesn’t exist in the real world, so I am not sure why you have kept this variable in the model? My understanding is that this variable is added for the unit conversion from the “Inventory spending” which is “Dollar/Day” to the “relief items buying rate” which unit of measure is “Kit/Day”.


What happens in the real world is found by living in the real world.

I personally think that modelling a problem from the outside, without any experience of the real world is problematic. If you want to truly help your NGO, then spend some time working with them.

I have added the constant 'time to spend the inventory budget' to describe that the funds raised are not spent immediately. The total inventory budget is in fact the cash available to buy kits and the time constant is the average time before a fund is used. It is possible to use a more realistic formulation, but having no information about the reality, I chose this one.

Regards.

JJ
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