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A flow model of corporate activities with quality assurance

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  • Zhang, Hong
  • Akuamoah, Saviour Worlanyo
  • Georgescu, Paul

Abstract

We model a multi-divisional firm as a queueing system consisting in interconnected nodes, each project passing through queues, processing and quality assurance checks. It is assumed that the uptake of projects into processing is delayed by the availability of resources and by the size of the queue. The costs of delays are linearly dependent on queue lengths, assumption which is appropriate for short to medium stretches and instantaneous factors are assumed to account for the most significant costs, as opposed to long term discounting. Sufficient conditions for the existence, uniqueness and stability of the steady state, respectively, are determined via a matrix theory argument. We then find the optimal capacities, determining in the process an easily interpretable version of the optimality condition. Finally, the model is validated against real data from Damco Logistics Ghana Ltd. and it is seen that the profit would be maximized when the aggregate excess capacity is 71.8% of the aggregate optimal capacity during the data acquisition time.

Suggested Citation

  • Zhang, Hong & Akuamoah, Saviour Worlanyo & Georgescu, Paul, 2020. "A flow model of corporate activities with quality assurance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 549(C).
    • Handle: RePEc:eee:phsmap:v:549:y:2020:i:c:s0378437120301825
    DOI: 10.1016/j.physa.2020.124447
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    References listed on IDEAS

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