1. There is no problem statement and its dynamic behavior.
2. Without the reference mode behavior, how will you know if your model is correct? What basis will you make the validation?
3. Next time, make sure that the graphs are not placed as attachments.
4. It seems that oscillations are part of the commodity cycle? Are they good or bad? Do you need to manage them? Can these be managed? Why and how?
I. Present System
The main element in the model of the sale of pork is the invnetory of pork maintained by butchers. When hogs are sluaghtered on the farm, the pork products are added by the to the inventory kept by the buthcers: when pork is sold, the pork is taken from the inventory. In general, the amount of pork people buy depends on the price of pork; the price of pork, in turn, depends on the size of the pork inventory. When inventory is high, price falls; when inventory is low, price rise.
Assume that the number of hogs slaughtered each month is an exogenous constant-- 4 million hogs per month. Hogs weigh 250 pounds each, and the "dressed yield" of pork is 60%.
On the average, each person consumes 3 pounds of pork per month. If a constant population of 200 million people is assumed, the total amount of pork normally consumed each month is 600 million pound of pork per month. But when the price is relatively high to the normal price of pork, people usually consume somewhat less than 3 pounds each month. When prices are low, they consume somewhat more
The price of pork depends on the price of hogs, and the price of hogs depends on supply and demand. Assume that butchers try to keep on hand about two weeks worth of the amount of the pork products they usually sell. When the available pork runs low, relative to thier normal inventory, butcghers, are willing to pay higher prices to get hogs. When the buthcers inventory of pork is high, buthcers are less willing to buy and price of hogs falls.
As seen in the causal loop diagram there are 3 loops, 2 negative loops and 1 positive loop. The first negative loop is the relationship between number of hogs and the number of butchered hogs. As the number of hogs increases there are more hogs that will be butchered, but as the number of butchered increases, the hogs decrease. The second loop explains the relationship between the pork inventory, price of pork, and pork consumption. As stated in the present system when inventory is high price falls, when it is low, price drops. If the price of pork is high it will lessen the pork conumption. If the pork consumption is high, the inventory of pork decreases. The last loop is the positive loop, this discusses the relationship between the pork inventory and demand for hogs. As the demand for pork increases, the inventory decreases but if the demand for pork decreases the more inventory there will be.
The stock flow diagram shows the flow of the pork. It starts of as hogs, then the hogs are sluaghtered and turned into pork inventory. The pork is then sold to the consumers.
IV. DYNAMO
Equations used in the DYNAMO
DYN File
NOTE PORKIN.K=PORK INVENTORY
NOTE SLAUGH=HOGS SLAUGHTERED
NOTE SOLD=PORK SOLD
NOTE PORKP=PORK SELLING PRICE
NOTE PPRICE=PRICE OF PORK DEPENDING ON THE INVENTORY LEVEL/HOG PRICE
NOTE DEMAND=DEMAND FOR PORK DEPENDING ON THE SELLING PRICE OF PORK
NOTE A=CONSTANT NUMBER OF PORK PRODUCTS AVAILABLE MONTHLY
C A=600000000
N PORKIN=300000000
L PORKIN.K=PORKIN.J+DT*(SLAUGH.JK-SOLD.JK)
A PORKV.K=420000000/(PORKIN.K-60000000)
A PORKP.K=PORKV.K + .5
A DEMAND.K=TABLE(CONS,PORKP.K,0,2,.5)
T CONS=2/1.5/1/.5/0
R SLAUGH.KL=A
R SOLD.KL=DELAY1((DEMAND.K)*A,2)
SPEC DT=.5/SAVPER=.5/LENGTH=150
NOTE Time is in MONTH
SAVE PORKIN
The figure above shows that the inventory of pork is oscillating the first few years, this is when the initial inventory is set at 300 million which is as stated in the problem that the butchers keep two weeks worth of inventory. Having known that the slaughtered hog is 4 million and that only 60% of it is converted to pork products and that the average weight of pork is 250 pounds, then it is computed that the constant supply of pork is 600 million pounds worth of products. The pattern observed is an oscillating pattern but begins to goal seek after 70 months from start of simulation. The oscillating behavior could be contributed by the variables price of pork and demand of pork. These two variables have an effect since when the pork inventory is high the prices tend to be low and people will be consuming more pork products, but when the inventory decreases the price becomes high and people have a tendency to buy less pork products and so the cycle continues until reaching an equilibrium. The initial inventory could have been near 500 million worth of pork products since the behavior tends to be at equilibrium at an inventory near 500 million.
The proponents tested to replace the initial value with 490 million and found out that the behavior is already at equilibrium from the start. Testing if the behavior would change with exogenous disturbances such as the constant pork that is available, it was seen that there was no change at the behavior at all.
To test the response for the year long 10% reduction in the hog slaughter rate, the proponents changed the rate for the slaughter. The rate will now be not equal to the constant of 600 million but rather this equation; R SLAUGH.KL=(4000000*250*.6)+STEP(60000000,0)+STEP(60000000,12). The behavior of the graph will have a large discrepancy during the first 10 months, this is due to the reduction of the hog slaughter. But will be back to normal after 40 months. This could be due to the FMD scare which could lead to the high inventory levels during the first five months and then after realizing that the FMD was false alarm, the demand began to grow again and the butchers were not aware of this that’s why there was a steep slope downwards after 5 months.
Comments:
1. There is no problem statement and its dynamic behavior.
2. Without the reference mode behavior, how will you know if your model is correct? What basis will you make the validation?
3. Next time, make sure that the graphs are not placed as attachments.
4. It seems that oscillations are part of the commodity cycle? Are they good or bad? Do you need to manage them? Can these be managed? Why and how?
I. Present System
The main element in the model of the sale of pork is the invnetory of pork maintained by butchers. When hogs are sluaghtered on the farm, the pork products are added by the to the inventory kept by the buthcers: when pork is sold, the pork is taken from the inventory. In general, the amount of pork people buy depends on the price of pork; the price of pork, in turn, depends on the size of the pork inventory. When inventory is high, price falls; when inventory is low, price rise.
Assume that the number of hogs slaughtered each month is an exogenous constant-- 4 million hogs per month. Hogs weigh 250 pounds each, and the "dressed yield" of pork is 60%.
On the average, each person consumes 3 pounds of pork per month. If a constant population of 200 million people is assumed, the total amount of pork normally consumed each month is 600 million pound of pork per month. But when the price is relatively high to the normal price of pork, people usually consume somewhat less than 3 pounds each month. When prices are low, they consume somewhat more
The price of pork depends on the price of hogs, and the price of hogs depends on supply and demand. Assume that butchers try to keep on hand about two weeks worth of the amount of the pork products they usually sell. When the available pork runs low, relative to thier normal inventory, butcghers, are willing to pay higher prices to get hogs. When the buthcers inventory of pork is high, buthcers are less willing to buy and price of hogs falls.
II. Causal Loop
As seen in the causal loop diagram there are 3 loops, 2 negative loops and 1 positive loop. The first negative loop is the relationship between number of hogs and the number of butchered hogs. As the number of hogs increases there are more hogs that will be butchered, but as the number of butchered increases, the hogs decrease. The second loop explains the relationship between the pork inventory, price of pork, and pork consumption. As stated in the present system when inventory is high price falls, when it is low, price drops. If the price of pork is high it will lessen the pork conumption. If the pork consumption is high, the inventory of pork decreases. The last loop is the positive loop, this discusses the relationship between the pork inventory and demand for hogs. As the demand for pork increases, the inventory decreases but if the demand for pork decreases the more inventory there will be.
III. Stock Flow Diagram
The stock flow diagram shows the flow of the pork. It starts of as hogs, then the hogs are sluaghtered and turned into pork inventory. The pork is then sold to the consumers.
IV. DYNAMO
Equations used in the DYNAMO
DYN File
NOTE PORKIN.K=PORK INVENTORY
NOTE SLAUGH=HOGS SLAUGHTERED
NOTE SOLD=PORK SOLD
NOTE PORKP=PORK SELLING PRICE
NOTE PPRICE=PRICE OF PORK DEPENDING ON THE INVENTORY LEVEL/HOG PRICE
NOTE DEMAND=DEMAND FOR PORK DEPENDING ON THE SELLING PRICE OF PORK
NOTE A=CONSTANT NUMBER OF PORK PRODUCTS AVAILABLE MONTHLY
C A=600000000
N PORKIN=300000000
L PORKIN.K=PORKIN.J+DT*(SLAUGH.JK-SOLD.JK)
A PORKV.K=420000000/(PORKIN.K-60000000)
A PORKP.K=PORKV.K + .5
A DEMAND.K=TABLE(CONS,PORKP.K,0,2,.5)
T CONS=2/1.5/1/.5/0
R SLAUGH.KL=A
R SOLD.KL=DELAY1((DEMAND.K)*A,2)
SPEC DT=.5/SAVPER=.5/LENGTH=150
NOTE Time is in MONTH
SAVE PORKIN
DRS File
PLOT"Pork Inventory"
<PORKIN "Pork Inventory">
The figure above shows that the inventory of pork is oscillating the first few years, this is when the initial inventory is set at 300 million which is as stated in the problem that the butchers keep two weeks worth of inventory. Having known that the slaughtered hog is 4 million and that only 60% of it is converted to pork products and that the average weight of pork is 250 pounds, then it is computed that the constant supply of pork is 600 million pounds worth of products. The pattern observed is an oscillating pattern but begins to goal seek after 70 months from start of simulation. The oscillating behavior could be contributed by the variables price of pork and demand of pork. These two variables have an effect since when the pork inventory is high the prices tend to be low and people will be consuming more pork products, but when the inventory decreases the price becomes high and people have a tendency to buy less pork products and so the cycle continues until reaching an equilibrium. The initial inventory could have been near 500 million worth of pork products since the behavior tends to be at equilibrium at an inventory near 500 million.
The proponents tested to replace the initial value with 490 million and found out that the behavior is already at equilibrium from the start. Testing if the behavior would change with exogenous disturbances such as the constant pork that is available, it was seen that there was no change at the behavior at all.
To test the response for the year long 10% reduction in the hog slaughter rate, the proponents changed the rate for the slaughter. The rate will now be not equal to the constant of 600 million but rather this equation; R SLAUGH.KL=(4000000*250*.6)+STEP(60000000,0)+STEP(60000000,12). The behavior of the graph will have a large discrepancy during the first 10 months, this is due to the reduction of the hog slaughter. But will be back to normal after 40 months. This could be due to the FMD scare which could lead to the high inventory levels during the first five months and then after realizing that the FMD was false alarm, the demand began to grow again and the butchers were not aware of this that’s why there was a steep slope downwards after 5 months.