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Desired Bed Capacity = Bed tourist ratio*(Annual Tourism)

Adjust SC = (desired SC – Supply Chain)/ Supply Chain adjustment time

Desired SC = desired acquisitions*acquisition lag

(8) (9) (10)

Hence, the decision rules structure of the SCM sector for both hoteliers and manufacturer is firmly grounded on the theory of bounded rationality developed by Cyert & March (1963) and Simon (1982).6 Additionally, the procurement process modeled with its delays, capacity constraints, and negative feedback loops will exhibit the large oscillations and instability typical of SCM systems. Oscillation, typical of the bullwhip- effect, requires both that time delays exist in decision structures controlling a system and that SCM fails to account for them.7

Labour Market Sector The labour force for the accommodation sector is aggregated into a single stock which is increased by the hiring rate and decreased by the attrition rate (see Eq. 11). The attrition rate includes voluntary quits and retirements and is modeled as a first-order process in which employees remain with the industry for the average duration of employment (see Eq. 12). Similarly, hiring is captured as the rate at which the sector converts vacancies into positions within the industry (Eq. 13).

Labour Market (t) = Labour Force (t–dt) + (Hiring Rate –Attrition Rate)*dt where Attrition Rate = Labour/ Average Duration of Employment Hiring Rate = Vacancies/ Time to Fill Vacancies


(12) (13)

6 The agents in this model do not have perfect foresight or perfect information i.e. they do not know how many tourists will come next year. Instead they are boundedly rational, having to make decisions under uncertainty using various heuristics.

7 Managers often ignore the supply change of corrective actions that have been initiated but which have not yet had their effect.


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