Trading commission: to be, or not to be, that is the question; A system dynamics model

In public institutions, for the purchase and sale of all kinds of goods or services, there is usually a trading regulation that is notified by the shareholders and the general assembly as a duty, and a legal inspector is appointed as one of his duties to control it. One of the commissions of this regulation is the trading commission in the field of purchasing goods, whose members are known and they meet and make decisions about purchasing from the best supplier. The mental model that exists in public institutions is that the trading commission is considered to prevent fraud and corruption in the purchase of goods. But in this project, we intend to show with the approach of system dynamics and modeling with causal loops that this mental model not only does not prevent corruption, but also leads to a sharp increase in the time of procurement of goods i.e. lead-times, and finally, it is against the general benefits of the relevant institution and its stockholders.

Keywords:

Trading commission , Material requirements planning , Inventory control system , Supply chain , Lead time