FIT5094 - IT For Management Decision Making Assignment 2 - Monash University

Assignment Task

Objective

The objective of this assignment is to gain a critical understanding of a software application for personal decision support. A key aspect of the assignment is an insight into the role of a systems analyst in a DSS engagement.

Overview

This is a group assignment that requires the collaborative efforts of 2 students per group. Students must form their group within the same applied class and elect a group leader to coordinate this assignment. The group leader must inform the tutor during Week 7 applied class (or latest by Week 8) of the group members. Once confirmed, no change of group member is allowed without prior approval from the FIT5094 lecturer.

About half an hour will be allocated at the end of each of Week 7, 9, and 10 applied classes for group members to come together to discuss and work on the assignment. Every student in the group is required to actively participate and will be included in the 5% participation marks and would also be used as a basis for marks adjustment for the final score (if necessary).

Software

The assignment requires the use of Stella Architect software from ISEE Systems Inc. (Stella Architect (iseesystems.com)). Stella Architect is a continuous simulation package that has been used for decision support in a number of industries. The ISEE website has a considerable amount of tutorials (Tutorials (iseesystems.com)), and case study examples (isee Exchange™ (iseesystems.com)) that will help you understand systems dynamics.

In addition to using Stella Architect via Monash MoVE platform (Citrix Receiver (monash.edu)) or in the Monash laboratories, a 30-day free trial version of the software can be downloaded from Stella Architect Trial (iseesystems.com). To obtain the trial version you will have to create and sign into an ISEE Systems account. The trial version is useful for prototyping or for familiarisation before using the Monash MoVE/lab version but the models built on the free trial version might not be compatible with the Monash MoVE/lab Stella Architect software. It is recommended that you complete your assignment simulation models using the Monash MoVE/lab Stella Architect software.

Assignment Tasks

1. Use Stella Architect to build a model (with a user-friendly and interactive interface) that will support decision-making regarding the creation of the Innovation Lab at the Large Supermarket Chain (LSC). The overview of the decision scenario is available on the unit Moodle site.

2. You are required to prepare system documentation for your model that will allow another DSS analyst to understand your model to the extent that they can modify and maintain it.

3. After you have submitted your model and documentation you are required to make an appointment to perform a walk-through of your The assessor will be the tutors of FIT5094. The assessment sessions will be held in Weeks 11 and 12 so that you can get feedback by the end of the Swot Vac. Session times can be booked with your class tutors in Week 9. Sessions cannot be booked by email . Students who do not make an appointment in Week 9 will be allocated a time by the lecturer. Your assessor will role-play the LSC CEO and will ask you to explain your model and to make modifications of your model to cater for new requirements and information.

Assignment 2 Scenario – Creation of Innovation Lab

The Large Supermarket Chain (LSC) is one of the largest and oldest supermarket, retail and consumer services chain in Australia, with market capitalisation close to 22 billion AUD. Headquartered in Melbourne, Australia, it has over 2,500 retail outlets nationally and over 120,000 staff.

In January 2024, a new Chief Executive Officer (CEO) was appointed at LSC. Unlike the previous CEO, the new and much younger CEO conceived and sold to the Board of Directors the “accelerate by innovation strategy”; and an Innovation Steering Committee (chaired by the CEO) was formed to champion and oversee the delivery of the strategy. One of the initiatives the Committee proposed is the creation of an Innovation Lab. Through the Innovation Lab, LSC is going to invest in new ideas and develop proprietary solutions to fundamentally change the supermarket’s products, services, processes, competencies, and business models to be more agile, customer-centred, innovative, streamlined, efficient and effective.

You have been employed as a DSS analyst by the LSC CEO to help the Committee plan the establishment of the new Innovation Lab. While the LSC Committee executives have made what they think are sound judgments of the various factors surrounding the Innovation Lab, they want a DSS that will allow them to easily vary these estimates in order to see the impact of different assumptions on the Lab’s operation. A meeting has been held with the executives of the LSC Innovation Steering Committee where they outlined the nature of the Innovation Lab’s operation to you. The area that the Committee wants help with is forecasting the innovation projects and profit scenarios for the first five years.

To simplify the scenario, the Committee is planning at a quarterly level, rather than monthly or weekly. There are four types of projects for the Innovation Lab:

• Proposed Projects – projects that are proposed by any business unit in LSC and are submitted to the Committee for assessment;
• Approved Projects – projects that are approved by the Committee after assessment (in terms of costs and benefits, viability, strategic alignment in the light of budgetary and resources requirements) and are to be developed by the Innovation Lab;
• On-going Projects – projects that are under development; and
• Completed Projects – projects that have been completed by the Innovation

To establish the Innovation Lab, LSC will put in 12.5 million AUD from the corporate budget for the first year. And it is expected to increase in line with the Australian Consumer Price Index (CPI), which is forecasted about 3.0% per year. In addition to the financial commitment, LSC will also transfer and recruit a total of 420 staff working at the Innovation Lab full-time for the first year. With a prospect of growth, it is expected the full-time personnel will increase at a rate of 5.5% per year.

There are six business units in LSC that are eligible to propose new innovation projects. However, in the beginning, it is expected that the number of proposed projects from each business unit will be low. The Committee estimates that it would be 2.5 proposed projects per business unit on average in the first quarter. But that number will be increased by 1.5% per quarter. In addition, the Committee thinks that the number of proposed projects will fluctuate during the year, as shown in Table 1 below.

According to the innovation project proposal guidelines established by the Committee, the proposed project has to have a duration of 3 to 6 months, and with a budget up to 200K AUD. But on average, the Committee thinks that an innovation project will last 4 and a half month (approximately 135 days) and cost 150K AUD. Given this scope of the innovation project, it will need three and a half staff working full-time equivalent on the project to ensure it can be completed on-time and within budget. As LSC is pushing its “accelerate by innovation strategy” at the moment, the proposed project approval rate will only be subjected to the financial and human resources constraints.

Not all the approved projects will start. The Committee estimates that one in every hundred approved projects will be cancelled before it even commences due to reasons like senior personnel change. In addition, not all the projects under development will finish. It is estimated that 5% of the on-going projects will be suspended before its completion.

On the other hand, some of the completed projects will be very successful, and the same innovation project will be carried out in other business units in LSC that have similar business needs. The Committee thinks that approximately two in every hundred completed projects will be undertaken in more than one business unit with direct approval. In addition, some of the completed projects will initiate new or further innovation projects. It is estimated that 1% of the completed projects will trigger new project proposals. The CEO of LSC would like to understand the forecasted innovation projects scenario in relation to the budgetary and human resources constraints.

As any other businesses, LSC requires its Innovation Lab’s revenues to be higher than its costs to be profitable. In addition to the project cost that is covered by the approved budget, there is personnel cost. The average full-time Innovation Lab staff salary is 100K AUD annually. The Committee also estimates that the average revenue for each completed innovation project will be 850K AUD. The CEO of LSC would like to understand the forecasted financial position of the Innovation Lab in terms of its profit per quarter.

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