COMPUTER SIMULATION OF SHIPBUILDING
PRODUCTION PROCESS MANAGMENT
Munitié Ante, Bakovié Tonko, Ramié DuSan and Simundié Slavko
MARITIME FACULTY DUBROVNIK and BRODOGRADEVNA INDUSTRIJA
SPLIT - YUGOSLAVIA
ABSTRACT: The business-production managements of shipbuilding-
PPBP, namely with one shipyard, in todays too complex busi-
ness conditions, is one of the most complex management orga-
nization systems. For this organization system, the intuitive-
collective management is not efficient enough especially today.
For the management of such complex systems it is necessary
today to applay the most contemporary metod of management with
obligatory computer support. In this paper, the authors are
going to present the results achieved in researching the ef-
ficiency of System Dynamics Computer Modelling of the Busi-~
ness-Production Shipbuilding Process-PPBP, which they did in
1988 and are continuing in the "BRODOGRADEVNA INDUSTRIJA SPLIT,
YUGOSLAVIA, one of the biggest shipyards in Yugoslavia.
PREFACE
System Dynamics computer simulation model of the Business-
Production Shipbuilding Process-PPBP aims at enabling the
Managers, i.e. the business-production structure of a ship-
yard, to check the behavior dynamics of the organization
system of the shipyard depending on the chosen business po-
licy, without jeopardizing the observed subject since the
managers will check all possible scenarios by means of their
personal computers before they adopt any of them. The PPBP
is a continuos model, so the entire structure of the shipbu-
ilding process will be presented by means of a verbal, stru-
ctural, mathematical and finally computer simulation model,
which will be expresed in advanced DYNAMO language, while
the simulation on a presonal computer will be done in SYSDYNS,
which is also an advanced language whose autor is Dr. Ante
Munitié.
The model is suitable for everyday use among managerial pe-
rsonnel so they may:
1. check the behavior dynamics of the system in relation to
historical data,
2. predict the future behavior of the observed system,
3. select the most suitable scenario for the future deve-
lopment of the PPBP-system.
812
System Dynamics '90 813
1. A CHARACTERISTIC OF THE BUSINESS-PRODUCTION SHIPBU-
ILDING PROCESS-PPBP
By applying two basic principles: abstraction, and aggre-
gation; it is possible to present the shipbuilding busi-
ness-production process by means of these phases;
1. SUPPLAY OF SHIPBUILDING CAPACITIES in the world shi-
pping-shipbuilding market. In this phase, it necessary to
have the information concerning supplay and demand, tehni-
cal documentation, and the information on the strength of
competitors and solvency of the ordering party. Also, one
researches the market of raw and production materials as
well as contractors and sub-contractors.
2. A SUCCESFULL CONCLUSION OF BIDDING, that is the signi-
ng of the contract with the consignee, which means conti-~
nuing the making of the tehnical documentation. Further-
more, one cpecifies materials and production materials,
signs the contract with contractors and sub-contractors,
sets delivery dates, stipulates the amount of material and
the dynamics of hiring sub-contractors. One also works out
a detailed plan of the building and fitting out of the ship
depending on the shipyard.
3. THE COMPLETION OF THE TEHNICAL DOCUMENTATION, comprises
the entire tehnical and executive documentation. Than the
production of the sections and the parts of the equipment
starts, with regard to this it is neccessary to provide the
reception-warehouse with the neccessary documentation.
4, THE START OF THE BUILDING OF THE SHIP ON A SHIPWAY,that
is a laying of the keel of the ship-PK, when the building
of the hull and its' gradual fitting out begins. In this
phase it is essential to make sure that the shipyard-ware-
house has the suitable documentation; transport and equi-
pment documentation.
5. THE LAUNCHING OF THE SHIP, when the final fitting out
of the ship begins and when it is neccessary to have the
equipment, the control'and the final documentation.
6. THE TRANSFER OF THE SHIP. For this, one needs the final
documentation in case of some last minute changes due to
possible shipowner's complaints.
7. THE GUARANTEE PERIOD OF THE EXPLOITATION OF THE SHIP
which ends when the stipulated guarantee period runs out.
On this basis of the verbal model of PPBP it is possible
to reach these conclusions:
814 System Dynamics ‘90
1. The PPBP is very complex, dynamics, time-consuming
(the construction of a ship can take up to 4 or 5 years),
continuous, non-linear, of high order, stohastical, and
open, which means that it is subject to the legislature
of the country to which it beloongs and the recession in
the world market.
2. The PPBP starts with the bidding and ends when the gu-
arantee period runs out.
3. The PPBP in Yugoslavia business conditions is subject
to a critical lack of high-grade financial resources, in
other words, it is affected by financial insolvency!
2. SYSTEM DYNAMICS APPROACH TO THE RESEARCH OF THE
BUSINESS~PRODUCTION SHIPBUILDING PROCESS-PPBP
The Sistem Dynamics methodology is extremely suitable for
the computer simulation of the behaviour dynamics of the
most complex organization systems to which the PPBP without ~
doubt belongs.
In accordance with the System Dynamics methodology we will
approach the PPBP as a whole, that is as a system consi-
sting of nine sub-systems:
1. Planned process of ship construction.
2. Cooperation, i.e. the flexibility of working capacities.
3. Basic Organizations of Associated Labour-BOAL that car-
riers out the scheduled plan.
4. Acquisition of the materials, production materials,
machines and equipment that will be built into the ship.
5. Level of financial claim and financial debit,
6. The transfer of the account balance, i.e. the inflow and
outflow of cash.
7. Gross income, nominal income, profit, costs of produ-
ctions, penalty, and stimulation.
8. Capital expenditure and investment in capital assets
and current assets.
9. Short-term and long-term loans, i.e. subsystems of the
financing of the building of the ship.
Among the above-mentioned sub-systems which represents the
highaly aggregated structure of the PPBP-system, there
exists a circulatory flow of materials, energy and info-
rmation. In fact, there is the circulatory flow of: steel
plates, production materials, auxiliary materials, machi-
nes and equipments that are built into a ship, labour pote-
ntials of the shipyard, and flexible labour potentials of
subcontractors, money, documentation, information about the
state of and any change in the elements of sub-systems and
of the system as a whole.
System Dynamics ‘90
815
IKLUPPB
THE INITIAL AND
CONTROL-LOGICAL
MANAGEMENT OF PPBP
2.FLEXIBLE LABOUR
CAPACITIES SUB-
CONTRACTORS
i.SCHEDULED PROCESS" OF.
SUTEBUILDING
4,PURCHASING DEPART-
MENT OF MATERIALS,
REPRODUCTION MATE-
RIALS AND SEMIFI-
NISHED GOODS,
EQUIPMENTS
i
3.BOAL-BASIC ORGANIZATIONS.
OF ASSOCIATED LABOUR
/ (ACCOUNTING AND SELF-
MANAGEMENT UNITS)
6.THE LEVEL OF
CASH (TRANSFER
5.THE STATE OF FINANCIAL
CLAIM AND DEBIT
&.CAPITAL EXPANDI~
TURE AND INVEST-
MENT IN CAPITAL
ASSETS AND CURR-
ENT ASSETS
7.GROSS INCOME,NOMINAL INCOME,
COSTS OF PRODUCTION, PENALTY,
STIMULATION; PROFIT
(ECONOMICAL RESULTS OF
SHIPBUILDING PROCESS)-
9.SHORT-TERM AND
LONG-TERM LOANS
“, SUB-SYSTEM OF
THE FINANCING
OF BUILDING 0.
THE SHIP
Figure 1 -Rudimentary structural model
of PPBP
816 System Dynamics '90
The rudimentary account of the PPBP could be presented by
the following model of the communication flow of materials,
energy and information among the relevant sub-systems (Fi-
gure 1).
The initial and control logical element of the shipbuilding
process actually represents the computer simulation of the
shipbuildings process managment. That means that the offer-
ed model has the characteristics of an "intelligent" model
because during that eight key periods (i.e. the completion
of the seven phases of ship construction) the IKLUPPB-
element controls everything and decides on the further co-
nstruction of the ship (i.e. on starting the next phase of
production). While making decisions, that same element
checks all the participants involved in the board of dire-
ctors. The checking and decision making process is identi-
cal to the way in which a directorial commitee operates.
In kase that IKLUPPB-element concludes that a participiant
has fallen behind schedule, it then decides to slow down
the execution of other tasks. If all patricipiants have
completed their tasks, then the IKLUPPB-element makes a
decision about commencing the next phase of ship constru-
ction.
It is possible to build in the regulative elements which
speed up the activity of certain work units, which reduces
the possibility of falling behind schedule and paying a
penalty to a shipowner.
The IKLUPPB-element initiative and control logical mana-
gment of the shipbuilding process consists of eight sta-
ges (Figure 2):
1. Signing of the contract-PU,
2. Commencement of the process-PO,
3. Laying of the keel of the ship-PK,
4. Launching of the ship-PB,
5. Fitting out of the ship-OB,
6. Building in of the main machine of the ship-IGSUB,
7. Acceptance of the ship to the owner-PPB,
8. Expiry of the guarantee period-IGR.
The ship construction is actually divided into seven phase,
so that the shipbuilding process commences with the initi-
ative element PU=1, which means that the contract is signed,
and that a series of work units can begin the execution of
their tasks in the first phase of work (i.e. the making of
documentation-ID).
The first phase of work ID ends with the PO-element comme-
ncement of the process, which has a double role; it controls
the execution of tasks and is, at the same time, a logical
manager, which will get the value of "1" (PO=1) if all
requirements are fullfilled.
The second phase of ship construction-PM-preliminary as-
sembly starts only if PO=1 and it ends with the control
element PK-laying of the keel of the ship if all tasks
which are the requiements for the continuation of the pro-
duction process are executed.
817
FLEXIBLE WORK ING
CAPACITY, COOPERATION
—
oO) tr oF PROoUCTION SHIP
PU Ton
Contract
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System Dynamics ‘90
818 System Dynamics ‘90
A third phase-GBNN-the construction of a ship on the ship-
way begins with the element PK=1 (which means the keel is
laid down on the shipway), and ends with the control and
logical element PB-launching of the ship. The PB-element-
the launching of the ship will become a logical unit on
condition that all participiants complete their tasks in the
GBNN phase.
The fourth phase OBI-the fitting out of a ship I-begins with
the logical element PB=1, and ends with the control and lo-
gical management element OB-fitting out of the ship. The fi-
fth phase OBII-the fitting out of the ship II-begins with
the condition of the element OB=1, and ends with the control
and logical management element UGSUB-building of the main ma-
chine of the ship.
The sixth phase OBIII-fitting out of the ship IlI-begins
with tje logical management element UGSUB=1, and ends with
control and the logical management element PPB-the transfer
of the ship.
The seventh phase GR-the guarantee period begins with the
control and the logical management element IGR-the expiry
of guarantee period.
3. PRESENTATION OF THE PPBP
DYNAMO was developed at MIT for the purpose of rendering
possible the continuous computer simulation of the most
complex management systems. However, DYNAMO is much more
then just computer language. It possesses special simbo-
lics by means of wich models can be presented by a graph of
circulatory flows, which is very convenient for determining
subsystems,elements, even the complete model.
The PPBP is very complex, so it is necessary to present
each subsystem (i.e. each part of the model structure sepa-
rately) in a gradual and unified way!
3.1. Sub-systems of shipbuilding process
The sub-system of the shipbuilding process is divided into
seven different parts which are all presented by unified
structural model (Figure 3).
Equations in DYNAMO are:
LA PU.K=1
PU-signing of the contract (without
dimension)
2,R BID, KL=NBID*SKL1 .K*PU.K
2.1,¢ NBID=913
BID-speed of the documentation produ-
ction ($/day)
NBID-normal speed of the documentation
production ($/day)
System Dynamics '90
819
3,L
3. 1,N DUI=0
SKL1-logical switch element which stops
the first phase of the documenta-
tion production (without dimension)
PU-signing of the contract (w.d.)
DUI, K=DUI. J+ (DT) * (BID. JK-4D, JK)
DUI-the production of the documentation
($)
BID-speed of the documentation producti-
on ($/day)
2D-speed of the realization of the do-
cumentation ($/day)
2D. KL=DELAY3 (BID. JK, VZKD) * (SKL1,K)
VZKD=30
2D-speed of the realization of the do-
cumentation ($/day)
BID-speed of the documentation produ-
ction ($/day)
VZKD-time of the realization of the
documentation (day)
SKL1-the logical switch element which
stops the first phase of the docu-
mentation production (w.d.)
S2ZD, K=S2D, J+ (DT) * (ZD. JK)
SZzD=0
SZD~state of the completed documenta-
tion ($)
ZD-speed of the realization of the do-
cumentation ($/day)
PO, K=CLIP(1,0,S102200. K+S102400.K +Si02100. K,SZD.K)*
*CLIP(1,0,S1SA- K,PS1SA) *CLIP(1,0,SZDK.K,NSZDK)
PS1SA=2159000
PO-commencement of the process (w.d.)
$102100-state of the completed works of
the BOAL-02100 in the ID-phase ($)
$102200-state of the completed works of
the BOAL 02200 in the ID-phase ($)
$102400-state of the completed works of
the BOAL 02400 in the ID-phase ($)
SZD-state of the completed documentation
in ID-phase ($)
S1SA-state of stacks in the "A"-warehouse
in the ID-phase ($)
PS1SA--planning the state of the stocks
in the "A"-warehouse in the ID-phase ($)
SZDK-stete of completed documentation
of the sub-contractors in the ID-phase
($)
NSZDK-planning the level of the completed
documentation of the sub-contractor in
the ID-phase ($).
System Dynamics '90
%
\
\
pur 4 SZD \
zB |
uh ian i
3 [NN 5 \
NI |
A Wa | /
oe \ a !;
a ViKD ii
ea /
ao ~~
we
oo 7
a /
a“ / !
7 /
cana) i j
PSIS "A"
Figure 3-Flow diagram of the ID-phase
7,8 SKL1.K=CLIP (0,1,SZD.K,NSZI)
7.1,C NSZD=17537
SZD-state of the completed documenta-
tion in the ID-phase ($)
NSZD-planned state of the completed do-
cumentation in the ID-ohase ($)
SKL1-logical switch element which stops
the ID-phase (w.d.)
3.2. Other sub-systems of the PPBP
All remaining phases of the PPBP are presented by analogous
structural models, and so are all other sub-systems in all
other phases. The overall number of elements of the PPBP
model is 1500, and the system has just as many equations,
250 of which are differential!
Considering that the complete System Dynamics model of PPBP
is very complex, the autors are not able to present it in
its entirety in this paper, but it will be presented in
detail to all interesed parties at their request during the
demonstration of the model.
821
System Dynamics '90
FVPL=1C days
Figure 4. The first scenario
+ K De = = = + = = = = = “Nt = PR - ee ee ee He He
600
oe
N+
N+
Nt
N+
Nt
Fe
N+
Ne
FE
-D---+--+----4 - =p - - NH He HH Ht
K
+ K
+ kK
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+
640
+
N
a
PON
FN
te eetest
te eeeese
MMMMEUM YY
tee eee
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Petes
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aaa
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+ K
760
aoa
aaa
+
++
F
e
+D
+D
+D
+D
+ D
System Dynamics ’90
822
PYPT=1 day
Figure 5. The second scenario
a a oa
600
tee test
eeegast
ZZzZz2z2+
eeetat
+N
+k
&
t+K- Dome tee ee RR NE Ot
640°
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Zz
+
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Zz
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te etre
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+
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eee teers
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F
FE
F
p
FE
FE
D
+D
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agaaat
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823
System Dynamics ‘90
FVPL=15 days
Figure 6. The third scenario:
-D- - - - + - NET Pe tee ee et
+ kK
600
+44
ana
MMM
ttt
N+
Ke
N+
N
Nt
+k
N+
+k
+E
p
aa
tet
+H
aA
Ke
t+
+
tee teers
te et eeete
@oad@taoaodn
Peete eee
aganaa
aaa
MMMMYY NYY
a
FE
Pp
FE
aa
+ Ke
+k
F
FE
F
++
aa
D+
Ke
+
a
+
+
F
FE
+
+
D+ N
D+ N
t+ -K = - - =D - - - N= - + - Pe ee tH HH Ht
Ee
K
+
+
760
+e ttet
ee teet
Booaoa
tee tet
+D
+D
+D
F
+ -k
800
824 System Dynamics '90
4, DEMONSTRATION OF THE BEHAVIOUR DYNAMICS OF THE
PPBP MODEL
The validity of the computer simulation model of PPBP
has been checked on computer of the MARITIME FACULTY
DUBROVNIK,CAMPUS OF SPLIT, YUGOSLAVIA, on the basis of
the data available from the SHIPBUILDING INDUSTRY in
Split, Yugoslavia.
In fact, the data used pertained to a patricular ship in
the SHIPBUILDING INDUSTRY-SPLIT, Yugoslavia, and so the
obtained results have confirmed the validity of the propo-
sed nodel.
In this paper the authors will present the behaviour of
the NNZR (level of cash)-variable which depends mainly on
the changes in the financial capacity of the bank.
PVPL-constant is the average time of the financial ada-
ptation of the NNZR(level of cash)-variable.
The first scenario is: PVPL=10 days, the second scenario
is PVPL=1 day, and the third scenario is PVPL=15 days.
The result of the simulation of those three scenarious
shows that the best cash liquidity of the PPBP is in case
when PVPL=1 day! This result is logical and valid. (Fi-
gure 4, 5 and 6)
Names of variables:
eect ee eeeeee LEVEL OF CASH ($)
++.GROSS INCOME ($)
++.NOMINAL INCOME ($)
+s+++.COSTS OF PRODUCTION ($)
+++2++PHASE OF PRODUCTION ($)
. LEVEL OF THE SHORT-
TERM DEBT ($)
TROI--T....
FAZA--P..
SKK--K...
5. CONCLUSION
The application of System Dynamics Computer Simulation
Modelling of the PPBP can:
1. reduce the uncertainty of the ship-builders future,
2. increase the stability of the business,
3. reduce the sensitivity of the business-production
shipbuilding process,
4. increase the flexibility and adaptibility of the shipbu-
ilding system,
5. reduce the fluctuation of labor,
6. increase the utility of production capacities,
7. improve ship-builders solvency, and
8. improve the management of the business-production
process.
The authors are available to all interested parties; they
will present the entire computer model "live' (l.e. ona
personal computer)and will simulate different scenario on
the same computer simulation model.
System Dynamics ‘90 825
LITERATURES
-Jay W. Forrester, completed book, MIT Press, Cambridge
~Edward B. Roberts, "MANAGERIAL APPLICATIONS OF SYSTEM
DYNAMICS", The MIT Press, Cambridge, U.S.A.
-Ante Munitié, "KOMPJUTERSKA SIMULACIJA UZ POMOC SISTEMSKE
DINAMIKE, BRODOGRADEVNA INDUSTRIJA SPLIT, SPLIT, YUGOSLA-
VIA:
Richardson and Pugh, "Introduction to System Dynamics
Modeling with DYNAMO", The MIT Press, Cambridge,U.S.A.
CC BY-NC-SA 4.0