ORGA LAB CASE 6

ORGDECI
Case 6: Mango Case

1. Identify the problem, point of view and boundaries of the problem.
   1. Problem – The problem identified in the case is that there is an increase in operational costs that the plantations are experiencing.
   2. Point of View – The point of view for the model to be developed is for the owners of the mango plantation.
   3. Boundaries – The model will be bounded from the development of the mango trees until they are sold to the market. Costs associated with the development of the mango will be also included in the model, such as the chemicals and pesticides used. The boundary is shown in the causal loop below.

1. Identify the major level variables and their corresponding rates.
   1. Physical transformation – In physical transformation, this includes the mangoes that are in the trees which are the yield of the mangoes, the stock will be the supply of mangoes, and the outflow will be the mangoes that were sold in the market which is sold in the market.
   2. Information levels – The information levels in the model will be the expected demand, mango supply, cost of living, and profit. Demand is information since the price of mango will be dictated by how many people are willing to buy. Mango supply also affects mango price and is also dependent on operational cost. Cost of living is the information on the increase of commodities per time period, this accumulates through time. Profit as information is dictated by the cost of living since, operational costs is affected thus reducing profit and for the demand could increase the sales of mangoes thus increasing the profit.
   3. Perceptions – Perceived price changes for mangoes will be presented through the concept of supply and demand. As demand increases, the change in price also increases whereas when supply increases the price change decreases.

1. Identify the basic relationships between these levels by identifying the auxiliary variables. Complete the stock flow diagram. Make sure there are feedback loops.

The stock flow diagram shows how each factor interacts with one another. The diagram shows how the demand for mangoes affects the prices and how the change in prices affect the sales revenue. It also show how the supply of mangoes also affects the price. The diagram also shows how the cost of living and transportation affects the salary and how the salary affects the operation cost.


Develop the formal model (with equations) on Stella.
Shown below are the equations used in simulating the model.

Cost_of_Living(t) = Cost_of_Living(t - dt) + (Increase_in_Prices) * dt
INIT Cost_of_Living = 1

INFLOWS:
Increase_in_Prices = 5
Demand(t) = Demand(t - dt) + (Demand_Increase - Demand_Decrease) * dt
INIT Demand = 1

INFLOWS:
Demand_Increase = Perceived_Mango_Price/Adjustments
OUTFLOWS:
Demand_Decrease = Perceived_Price_Change
Infected_Trees(t) = Infected_Trees(t - dt) + (Infection_Rate - Rehabilitation) * dt
INIT Infected_Trees = 1

INFLOWS:
Infection_Rate = Infected_Trees*.1
OUTFLOWS:
Rehabilitation = Number_of_Pesticides_Used
Mangoes_in_Trees(t) = Mangoes_in_Trees(t - dt) + (Yield - Harvest_Rate - Rotten_Mangoes) * dt
INIT Mangoes_in_Trees = 10

INFLOWS:
Yield = Fertilizer_Use+1-(Infected_Trees*.5)
OUTFLOWS:
Harvest_Rate = 1
Rotten_Mangoes = 1
Perceived_Price_Change(t) = Perceived_Price_Change(t - dt) + (Increase_Due_to_Demand - Decrease_Due_to_Supply) * dt
INIT Perceived_Price_Change = 1

INFLOWS:
Increase_Due_to_Demand = Demand
OUTFLOWS:
Decrease_Due_to_Supply = Supply*.2
Profit(t) = Profit(t - dt) + (Sales_Revenue - Operational_Cost) * dt
INIT Profit = 1

INFLOWS:
Sales_Revenue = Perceived_Mango_Price*Demand
OUTFLOWS:
Operational_Cost = Fertilizer_Use+Number_of_Pesticides_Used+Salary+Tax
Supply(t) = Supply(t - dt) + (Harvest_Rate - Consumption) * dt
INIT Supply = 1

INFLOWS:
Harvest_Rate = 1
OUTFLOWS:
Consumption = Demand
Transportation(t) = Transportation(t - dt) + (Increase_in_Transportation_Cost) * dt
INIT Transportation = 1

INFLOWS:
Increase_in_Transportation_Cost = Increase_in_Prices*0.05
Adjustments = 2
Adjustment_Delay = 5
Expected_Yield = Demand-Supply
Fertilizer_Use = Expected_Yield/Adjustment_Delay
Number_of_Pesticides_Used = Infected_Trees
Perceived_Mango_Price = Operational_Cost+Perceived_Price_Change
Salary = Cost_of_Living+Transportation
Tax = 1

1. Run the model. You should get the behavior pattern above for the three variables.

The result of the model made, yield the following graph:


It is seen that it is similar to the figure given in the case as shown below. This validates that the model can show the behavior that the mango price undergoes. Although it is seen that the oscillation in the proponents model has a shorter peak compared to the reference mode, it still follows an increasing patter with regards to the price of the mangoes.