Risk Modelling and Management Assignment (count 50% of the class total mark)
The assignment for this class draws on a group task.
Learning Outcomes
The assignment seeks to test you understanding of, and ability to reflect on,
experience relating to:
Modelling to support decision making
Modelling with Bayesian Networks and Influence Diagram
Using Genie to support Bayesian Network modelling and Influence Diagram
Creating fault and event tree models
Appropriate use of these models
Using Reliability Workbench to support modelling
Marking Criteria
Please see appendix for marking form.
Late Penalty
As per university policy!
Requirement
Working in groups you are required to provide one written 3000 words report,
a Reliability Workbench file and a Genie file of your models no later than 29th
March 2022 at 10:00 pm.
Scene Setting
Monroe Stahr is an inspiring leader within the short run parcel delivery industry. He
is Director of Operations for Tycoon Trips plc, which is an organisation that, amongst
other activities, collects parcels from Glasgow airport and delivers them by motor
vehicle to anywhere in Glasgow. This is a specialised business, where demand is low
and each delivery is expensive. Monroe believes that this could be a very lucrative
service to provide but currently is not operating in the most efficient way. He is very
charming, has taken you out for an extremely expensive lunch at a restaurant in
Glasgow city centre and has convinced you to act as an analyst on his behalf,
evaluate certain key business risks associated with the operations of Tycoon Trips
and recommend appropriate action to manage each. He has made you feel very
special and you want to do your best for him.
Description of Operations Provided Over Lunch By Mr Stahr
There are currently two people employed by Mr Stahr to deliver the parcels; Ronda
and Edgar. Ronda has been working as a delivery person for the past 5 years. During
this time she has been ill on 52 days and received 20 complaints from customers
about surly behaviour. Edgar has been working for the organisation for the past 10
years, but as a delivery person for the past year only. Over the past year he has
taken 40 sick days and there have been 80 complaints about Edgar’s surly behaviour
with clients. Each complaint costs Monroe £50 in compensation. This is twice as
likely to happen with Special Care clients, who are charged at a high rate for delivery
services, than with regular deliveries and three times more likely than with cheap
deliveries. If neither Edgar nor Ronda can deliver a package, then Monroe pays a
competitor to carry out the delivery at a cost of £200 per package. Edgar and Ronda
are paid the same rate, at £50 per day. Both work five days a week and are paid if
they are absent. There are no deliveries over the weekend.
There are two vehicles that are used to deliver the packages. It costs £100 per
delivery to hire a vehicle at short notice, if required due to breakdowns. It typically
costs £40-£60 to fix a vehicle when it breaks down. Repairs are completed within an
hour so will only affect one delivery per breakdown. Both vehicles break down as a
result of one of three problems; electrical, petrol or mechanical. The electrical
problem concerns the battery which can go flat during operation. Experience shows
that this problem occurs on 1 in every 100 days of operation. The petrol problem is
simply running out of petrol through the drivers forgetting to fill up the petrol tank.
This problem occurs on 1 in every 120 days of use. The mechanical problem concerns
a problem with the engine and occurs on 1 in every 200 days of use. Both Edgar and
Ronda have recently been trained to check the engine for the mechanical problem
and the electrical problem. Edgar and Ronda have good days and bad days. On good
days they always identify and rectify the mechanical problem but on bad days they
rectify it with probability 0.9. Bad days occur on half of all work days for each
delivery person.
Packages arrive at the airport for delivery at a rate of 25 a day on average, but on
95% of the days the number is between 15 and 35. Edgar and Ronda will work until
all of the packages have been delivered on any given day. A quarter of the packages
are labelled Special Care and Monroe charges £500 for delivery, although this is
completely refunded if an alternative delivery company has to be used for delivery.
Half of the packages are normal delivery and the client is charged £100 and the
remaining packages are charged at the cheap rate of £50 each.
Based on last years’ experience half of the clients pay in cash on delivery, (36% are
Special Care deliveries and 64% are Regular deliveries) a quarter pay with credit
cards (28% are Special Care deliveries, 52% are Regular deliveries and 20% are at the
cheap rate), which costs Monroe 5% in transaction costs, and the remainder delay
payment for 6 months to a year and then settle in cash.
The company is financed with a loan from a Building Society at 8% per annum.
Petrol costs are approximately £20 per day.
Decisions under Consideration
Monroe is considering hiring a third delivery person named Percy, at a rate of £30
per day. Currently Percy works in another division within Tycoon Trips and his rate
of sick days is half of that of Edgar. Monroe would have to hire Percy full-time.
Another consideration is the possibility of purchasing a third vehicle at a cost of
£5000, which would be just as reliable as the current vehicles. This would be kept as
a backup only; unless Percy was hired then he would require his own vehicle.
Alternatively, a major overhaul could be done on the vehicles at a cost of £2000,
which would remove the electrical problem.
Monroe is frustrated at the clients who delay payment. A potential solution to this
would be to sell the debt to a debt-collecting agency. He doesn’t know how much
this would be worth to him.
Your Task
Monroe wants a client report analysing his predicament. In particular, he wants
appropriate event and fault trees developed to model the current operations and
used to evaluate the various decisions he is considering. This analysis should
consider appropriate sensitively analysis. In addition, he would like you to model his
predicament with a Bayesian Network and make a comparison with the Event Tree
and Fault Tree approach to modelling. Please note that a very complex models will
likely confuse the client.
Appendix Generic Feedback Form
Department of Management Science
RISK ANALYSIS AND MANAGEMENT
ASSESSMENT AND FEEDBACK FORM
NAME OF ASSIGNMENT
No of group: Date: Mark Breakdown Excellent Very Good Good Okay
Not covered /
Mark
Awarded
Unacceptable
Comment
Part A –
Build Fault
Tree(s) &
Event
Tree(s)
Mark (out of 40)
Statement of
assumptions
5
Structure of
trees and
explanation
25
Analysis 10
Part B –
Build BBNs
and Influence
Diagram
Mark (out of 30)
Statement of
assumptions
5
Structure of
BBNs,
Influence
Diagram, and
explanation
15
Analysis 10
Part C –
Comparisons
between two
models
Mark (out of 20)
Statement of
the purpose,
structuring
stage of each
of them
5
Practical
examples
from your
analysis of
their
usefulness
and benefits
15
Part D –
Marks for
additional
work
Mark (out of 10)
Presentation 10
General
Comments
