REPLY Meaning of Stock/Level (SD6931)

[SDMAIL Jean-Jacques Laublé]

Posted by  Jean-Jacques Laublé <jean-jacques.lauble at wanadoo.fr>

High Jay

You write
> Jean-Jacques' logic
>of striving to make the soft variable dependent on hard variables strikes
>me as an appropriate ambition.

I try to make 'soft variable' dependant on hard one's. But it is not always
possible.
And there is not only the quantification of the soft variable that is
difficult, but how much and how it influences the hard one's.

This is why I insist on the consideration of the utility of adding soft
variable or any other variable even hard.

I do not like theories unless grounded on practical examples.

I have just finished a small model that explores the following problem.
I rent vans and trucks primarily. I have the possibility that the supplier
of new cars buys back at a predefined price the vehicle he has sold. I can give back the
vehicle after a time ranging from 18 months to 36 months. I do not pretend to solve the
problem taking into consideration all the factors of the reality, but I build generally
exploratory models much simplified that enlightens my understanding of the problem and may help
define a policy on a improved grounding than the one I use presently.

In the model I built in about a week time, I took into consideration most of
the main hard factors, the basic demand with the seasonality, the average
revenue by day of renting, the relation of the number of vehicles and the percentage of utilization
possible, maintenance costs etc. But I did not include an important soft variable. Clients prefer
to rent a new car than an old one. If I renew the vehicles in 36 months instead of 18 months,
they will be two times older. It will have an effect on the demand. But how do I evaluate
that effect?
I can use a variable factor and test the sensitivity of the model behaviour
relative to that factor.
But if I add that soft factor, my original model that has 8 loops, will
increase to 13 loops.
Going from 8 loops to 13 loops, will make my model at least twice more
difficult to manage.

I am sure that I can find some more factors and I will finish with a model
that has 100 loops.
I will be very pleased as a modeller, but as a user?

My first model with the 8 loops shows clearly that it is better to renew in
18 months.
If I add the soft variable, increased interest of the client by newer cars,
it will reinforce the result, as it will be even more interesting to renew in 18 months.
So adding that important soft variable does not add anything relative to the
objective assigned to the model.
I wanted to illustrate the fact that the inclusion of soft or hard variable
is always relative to the original objective. Exploratory simplified models help clarify the
problems.
It is too often necessary to reduce the pretension of the objective so as to
reduce the complexity and have a model that helps you a bit but with certitude than
one that might help you a lot, but will fail to do it.
Regards.
Jean-Jacques Laublé Eurli Allocar
Strasbourg France.
Posted by  Jean-Jacques Laublé <jean-jacques.lauble at wanadoo.fr>
posting date  Tue, 15 Apr 2008 17:44:14 +0200