Resource allocation SD models

[Jim Hines]

Fabian,

John Morecroft and I wrote a paper some years ago looking at how one
policy for dividing up sales/marketing resources could cause
oscillations in product sales (and escalating marketing costs).

The paper was based on some work that John Morecroft had done for a
large telecommunications company that had just implemented the policy.
In brief the policy involved each division offering "points" to the
salesforce which ultimately got translated into salary. The company
found the analysis compelling, and on reflection believed that they were
seeing the initial stages of the oscillations suggested by the analysis.

I believe that Morecroft and Paich had another paper based on the same
study. The papers are M.I.T. working papers. I dont have the numbers
off-hand, let me know and Ill get it for you. If John Morecroft is
listening, he might care to comment.

Regards,
Jim Hines
jimhines@interserv.com

[Fabian "H." Szulanski]

Hello.
Im Fabian Szulanski, now at the University of Bergen, attending a
Masters Program in System Dynamics.
Id like to know if you have some reference to already developed SD
models related to the problem of resource allocation for Sales and
Marketing, thats how to slice the anual Sales & Marketing budget
among the marketing of several products within different markets of
the same corporation.
In general, managers use spreadsheets for that purpose, but I believe
that there might be some additional endogenous impacts coming from
those decisions, therefore needing a SD simulation model for testing
alternative policies.
Thank you in advance.
Best Regards.
Fabian.

Ing.Fabian Szulanski
Master Student in System Dynamics
University of Bergen, Norway
fabians@ifi.uib.no

[Jose Ignacio Berbeci]

Dear Fabian:

I read you message in the Systems Dynamics mailing list, and I would like to
get information about your Master Program in System Dynamics at the
University of Bergen, is there any web page? and I would like to heard your
opinion about this program.

Thanks in advance,
Jose Ignacio Berbeci

["JOHN MORECROFT"]

The paper Jim Hines refers to is called "Strategy and the
Representation of Structure", MIT Sloan School of Management Working
Paper WP-1721-85, and MIT System Dynamics Group Working Paper
D-3773-1. The paper describes how the time allocation policy
followed by a professional salesforce leads to unintended variations
in customer orders as a result of feedback through policies for sales
management and compensation planning. The paper contains a complete
set of diagrams and equations in a rather early version of STELLA -
maybe the very first version!

John Morecroft



John Morecroft, London Business School
Sussex Place, Regents Park, London NW1 4SA UK
tel +44 171 262 5050 x3252 fax +44 171 724 7875
e-mail J.MORECROFT@LBS.LON.AC.UK