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Example 6 (Demand for Soft Drink : Case Study L) When the real-world problem in this case study is viewed

as a system, one variable of importance is the periodic (weekly, monthly or yearly) demand for the product. If future demands are characterized solely in terms of past sales, then we view the system as a closed system. On the other hand, if one includes variables such as population changes, weather conditions, advertising etc., then we view the system as an open one, as shown in Fugure 3.3

Environment Population changes Weather conditions Advertising System Demand for soft drinks

FIGURE 3.3 System/environtment interface for Example 6 These examples show particular choices of system boundary which are satisfactory for the problems in question. Other boundaries could have been chosen but world have led to different characterizations. The selection of a system boundary is one component of the art aspect of mathematical modelling there is no universally correct divison between system and environtment. Novel and useful characterizations can follow from diffrent choices of system boundary.

4.1 Continuous Time vs Discrete Time In dynamic systems either some or all of the variable are changing with time. One may ask whether the changes take place continuously with time or whether they occur at discrete instants of time. Experimentally, it is not possible to establish that a variable is changing continuously with time, since we are restricted by some finite resolution of time for each observation. Thus, one has to make an a priori decision whether to treat the time element as continuous or discrete. If the time element is treated as being continuous, then the variables of the system need to be described for all time instants over the time interval of interest. On the other hand if it is treated as being discrete, then the variables need to be described only for the relevant time instants. A continuous time description is too detailed in many instances. In such situations one chooses a discrete time description by arbitrarily discretizing the time. If the interval of discretization is large one obtains a coarse description. As this interval becomes smaller the description becomes more refined and detailed, and ultimately approaches the continuous time description. The decision to treat the time element as continuous or discrete is often a subjective one, and once again involves the art aspect of modelling. However, in certain instances the data available are such that a discrete treatment of time is the most appropriate decision. We illustrate this point by a few examples.
Example 13 (Demand for Soft Drink : Case Study L) If one is interested in weekly demand, then the variables of the system characterization change weekly, and hence the time element is to be treated as discrete as opposed to continuous. Obviously, if the demand interval is mounthly, then the interval of discretization is large, resulting in an aggregate or coarser description.

6. System Characterization of Case Studies A L*


*Those reading the book for the the first time are advised to read Case Studies A, D, and E if they are interested in deterministic modelling, and Case Studies I and J if the interest is in stochastic modelling. In subsequent reading they are urged to read the remaining case studies.

In this section we carry out the system characterization of the real-world problems defined in Case Studies A L in Sectio 2 of Chapter 2. These system characterizations will be used later in Chapters 5 and 7 to build mathematical models.

6.12 Case Study L [Cont.] (Demand for Soft Drink) The demand for soft drink varies with time and is influenced by many factors price, advertising, competition, population changes, seasonal variactions, taste, conditioning, etc. The effect of some these factors on the demand is predictable, but for most it is uncertain. Since the demand changes dynamically, the time variable is important and can be treated as being either continuous or discrete. Discrete time characterization is more appropriate, for then we can characterize the problem in terms of demand over different time intervals or periods. A month is a convenient interval to use for characterization. A weekly description is too detailed whilst a yearly description is too coarse. The simplest characterization can be done in terms of a closed dynamic system involving a single variable, X(t), representing the demand for the soft drink in period t, and being composed of two terms: X(t)= D(t) + V(t) where D(t) is the deterministic part representing the effect of factors whose influence is predictable (e.g growth in population, seasonal variations) and V(t) the stochastic part representing the effect of factors whose influence is uncertain. Because of the dynamic nature of change, D(t) is a function of its past values and, similarly, V(t) is a function of its past values. As a result we can view X(t) as a function of its past values and of D(t) and V(t) and possibly their past

values. Since there is yet no theory to characterize the relationships, they must be obtained empirically using the historical data given in Table 2.7. The.

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