Gloucester Community
Development Corporation
1
Challenges
• “You cannot build a model without a good
understanding of the system you are going to
simulate…”
Jim Hines 2002
2
Purpose of Today’s Presentation
• Share some insights in using SD for client projects
• Ask you for a peer-group review, i.e. which part of
the following presentation could lead into a
publishable paper?
3
The Team
Our Client:
Dr. Carmine Gorga, Executive Director GCDC
Dr. Steve Kelleher, Marine Institute Massachusetts
Dr. Damon Cummings, a former Professor of hydrodynamics
and control theory at MIT
Joe Sinagra, Fishermen
MIT:
Jeroen Struben, PhD Student MIT
SangHyun Lee, M.S Student Intelligent Engineering MIT
Peter Otto, PhD Student UAlbany
4
Agenda
• Introduction to the Project
• A Step-by-step approach towards a model
– Decomposition of the system
– Reflection of current situation and Problem Definition
– Key Variables
• Scope and understanding
– Dynamic Hypotheses
– Overview on the different Sectors
• Model initiation: building one Dynamic hypothesis
– Model Components
– Base model Behavior
5
Gloucester’s Business Goal
To establish a commercialized fisheries operation Gloucester
Fish, Inc. that utilizes a novel process that extracts fairly
pure protein from underutilized fish species to potentially
increase their value in an effort to revitalize the present
fishing industry in Gloucester.
6
Surimi?
A substitute for crab meat….
7
Surimi Market
• Total market: 760,000 metric tons, growing at 10 – 20%
per year
• Japan represents 60 % of the market
• Desired output for Gloucester’s surimi factory is 10,000
metric tons
8
Phase 1: Learning
Demand
•
Potential market-size
•
Product attractiveness
•
Unit price
Product characteristics
•
Marketability
•
Product quality (grade)
•
Product diversity
•
Unit costs
Competition
•
Barriers to entry
•
Number of competing
ports
•
Total competing capacity
•
Accessibility of cross
waters
Fishing fleet
•
# Fishermen
•
# boats needed for Surimi
•
Total # boats
•
Attractiveness of other fishing
targets
•
Total fishing capacity
•
Willingness to join
•
Earnings per Fisherman
•
Area utilization
•
Effectiveness
•
Total catch
•
Cost per trip
•
Equipment extension cost
Resources
•
Water availability
•
Water costs per unit
•
Water pollution
•
Perceived fish stocks
•
Actual fish stocks
•
Sustainable Yield
•
Community concerns
Launch and operate
•
Desired capacity
•
Startup costs
•
Total Capacity
•
Extendibility
•
Marketing efforts
•
Total labor provision
•
FDA approval time
•
Total Sales
•
Diversification
•
Profitability
Finance and Community,..
•
Total value added
•
Directional
•
Private investor fraction
•
Risk of disintegration
•
Employee involvement
•
Reinvestment fraction
•
Government taxes
•
Community acceptance
9
Phase 2: Reflection
• Meeting with client to confirm problem statement and
initial reference modes
10
Problem Statement
“Objective”
• The decline of traditional fish species and the curtailing of
fishing efforts by the Government require the fishing
industry of Gloucester to identify alternative resources to
sustain their industry…
…A Surimi factory – harvesting fast renewable fish stock –
should compensate for the missing revenues from
traditional white fish until their stock returns to a
sustainable level…
11
Problem recognition
… a response to a downward spiral…
• Dynamics of “Total Potential for harvesting” is defined by the
combined availability of and capacity for dark and white fish
Total Revenues
Revenues from
White Fish
Revenues from
Surimi
1996
2002
2005
2012
t
12
Problem Statement
• Sustainability of Community depends on total revenues, stability,
spread of revenues
Community QoL
H: Enough renewable resources
(both white and dark)
• Reinvestment in plant
• Rising stability reinforces happiness
F1: Too much success
• Increasing revenues,
• Increasing competition,
• Stock depletion,
•Unequal/unfair profits
1992
2002
F2: Lack of throughput
• No Market
2012 t
• Delays in takeoff
• Competition from other communities or
• Fish stock takes longer to renew
13
Key Variables
Operations Sector
Community Sector
Potential Factory Output
Revenues from Fishing
Potential Demand
Sustainability of community
Potential Return on
Investment
Attractiveness to Join
Co-operation
Resource Sector
Fleet Composition
Total allowable Catch (TAC)
# Fleet Days at Sea
14
Phase 3: Agreement
• Presentation of dynamic hypothesis
• Definition for the scope of the project
15
Dynamic Hypothesis
• Potential Factory output: The potential factory output should be
determined by the availability of fish stock. Pushing the system based
on the attractiveness will finally limit the factory output.
Potential factory
output
+
Potential factory
output
Desired factory
output
Reinvest in factory
+
-
+
Fishing rate
large boats
+
B
Total catch
Limitation through
natural constraints
+
+
t
Revenues from
factory
Regeneration time
of fish stock
Large boats in
harbor
+
+
R
Attractiveness
drives output
Acctual factory
output
+
Available fish stock
Fleet days at sea
-
+
Attractiveness
+ for pelagic
Perceived fish
stock
16
Dynamic Hypothesis
• Revenues per boat: If operating profit of the factory is positive, it can
reinvest in equipment and processing capabilities to increase
attractiveness and effectiveness, which could cause too much pressure
on the fish stocks.
Revenues
per boat
Curtailing from
government
Pressure on stock
+
Operating
profit
R
-
Revenues per
small boat
Revenues per
large boat
+
Pressure on fish stock
+
+
R
Available stock
-
t
R
Attractiveness
Attractiveness for
in-shore fish
Influence from
government
+
Total revenues
+
Effectiveness
+
+
+
Pressure on
fish stock
+
+
+
Regeneration time
of fish stock
Effectiveness of
large boats
Operating profit
Processing
capabilities for in
shore-fish catch
+
B
Fraction to reinvest in
equipment and factory
17
Dynamic Hypothesis
• Revenues from fishing: Revenues can go up and remain high at
sufficient re-investment in the plant, in order to maintain diversity in
input and output. External partners might lead to high volume low
quality through put
Potential
+ Local Surimi
Surimi
Market
Total Revenues
from fishing
+
B3/R5*)
R4
Diversification
Dark Fish
Catch
Attractiveness
for Surimi
Byproducts
B1
+
+
Surimi
Supply
+
+
Surimi
Troughput
+
B2
R4
Capacity
2002
+
Attractiveness
for Dark Fish
R1-3
1992
Demand
R3
2012 t
Expansion Drift
+
Revenues from
Surimi Plant
Revenues
per Partner
-
+
+
B1
Decreasing
Marginal
Revenues
Joining
Partners
+
+
Attractiveness
to Join FI
18
Dynamic Hypothesis
• Sustainability of Community: Too much success of the plant, can bring
some revenues, while many have to fish for the low-stock white fish
+
B2
Community
QoL
Financial
Entranc
Barrier
B1
R2
+
Inequality
-
Dark Fish
Attractiveness
+
B1
R1
R2
2002
R1
+
Dark Fish
Catch
Increasing Scale
+
B1
1992
Changeovers to
Dark Fish
2012 t
White Fishermen
Revenues
+
Surimi
Revenues
+
Dark and White
Balance
White Fish
Yield
+
Surimi
Throughput
-
White Fish Stocks
White Fish
Catch
+
B2
Depletion
19
Phase 4: Conceptualizing the model
• First draft was presented to the client to:
– Confirm the causal loop diagram
– Focus on sensitive variables and parameters
– Re-define scope of the model
20
The Dynamic Hypotheses around the key
variables have been merged into three sectors
• Resource Sector
• Community Sector
• Operations Sector
Variables and links in Dynamic hypotheses themselves,
generally cover more sectors!!
21
Resource Sector
Curtailing from
government
Total
allowable
catch
-
+
Available pelagic
stock (quota)
Fishing rate white
fish (days at sea)
Potential factory
output
+
+
Fraction to
reinvest in factory
-
+
R1
+
Fishing rate
(days at sea)
Regeneration time
white fish
-
+
+
-
Regeneration time
pelagic stock
Desired factory
output
Available white fish
stock (quota)
Operating profit
+
B3
+
+
+
-
Effectiveness of
pelagic boats
Pelagic fish
stock
B2
+
-
B1
+
B5
+
# Large
boats fishing
white fish
Attractiveness
white fish
+
-
+
-
+
Total catch
pelagic
# Large
boats fishing
pelagic
+
+
White fish
stock
Catch per
pelagic boat
Catch per boat
-
Attractiveness of
pelagic stock
-
Pressure on white
+ fish stock +
+
Number of
small boats
+
B6
+
Attractiveness for
in-shore fish
-
B4
Total catch
white fish
+
Pressure on
pelagic stock
+
Processing
capabilities for
in-shore fish catch
+
Total catch from
small boats
22
Community Sector
Diversification
+
Reinvestment to
Incubator
+
Attractiveness
for Surimi
Byproducts
+
Job
Provision
R
Value
Added
+
+
Plant
Capacity
Operation
Costs
Total
Partners
+
+
External
Attractiveness to
Join
+
+
+
-
+
+
Revenues per
Partner
Desired
Capacity
+
+
Revenues from
Surimi Plant
Co-operatio
n Fishermen
+
-
B
-
Relative
Attractiveness For
Fishermen to Join
Financial Barrier
to Adapt Boat
Financial Barrier
to Join
+
-
Boat
Effectiveness
Individuals
Surimi
Fishermen
Revenues
+
+
Private White
Fish Catch
+
+
-
Co-operation
Boat
Changeover
Costs
+
-
White Fish
Stocks
+
+
White Fish
Yield
Boat
Effectiveness
Partners
+
Pelagic
Attractiveness
+
+
R
-
+
+
+
+
Private
Fishermen
+
+
Surimi
Troughput
Entrance
Investment
Revenues
per Private
Fisherman
+
-
+
R
+
+
-
R
+
Revenues per
Co-operation
Fisherman
+
Local Surimi
Demand
+
Co-operation
Fishermen White
Fish Catch
Pelagic
Catch
+
-
Pelagic
Stocks
-
+
23
Operations Sector
White fish
attractiveness
Changeover to pelacig fish
+
+
+
+
-
Revenues from
white fish
+
+
Pelagic fish
Pelagic fish catch
attractiveness
+
+
+
+
Desired factory
Pelagic fish stock
output
+
Processing
capabilities for
in-shore fish catch
White fish catch
+
Actual factory output
+
Actual demand
+
+
+
+
Factory
revenues
Pressure on
pelagic fish +
+
Fishing rate for
white fish
Resource supply
+
+
+
+
Reinvest in fishing
equipment
+
+
Reinvest to product
Fishing rate pelagic
Potential demand
+
+
Product
attravtiveness
Potential factory
output
+
+
+
Reinvestment in
factory
Factory capacity
+
Potential return on
investment -
+
+
Operating cost
Effectiveness of
large boats
24
We have used the “Potential Factory Output”
hypothesis as a starting point for the model
The model of the hypothesis is built up of three main loops:
• Factory Capacity and Output
• Fleet Capacity
• Resource Dynamics
Other hypotheses will be constructed on top of this
25
Dynamic Hypothesis
• Potential Factory output: The potential factory output should be
determined by the availability of fish stock. Pushing the system based
on the attractiveness will finally limit the factory output.
Potential factory
output
+
Potential factory
output
Desired factory
output
Reinvest in factory
+
-
+
Fishing rate
large boats
+
B
Total catch
Limitation through
natural constraints
+
+
t
Revenues from
factory
Regeneration time
of fish stock
Large boats in
harbor
+
+
R
Attractiveness
drives output
Acctual factory
output
+
Available fish stock
Fleet days at sea
-
+
Attractiveness
+ for pelagic
Perceived fish
stock
26
Reinvestment
Fraction
Reinvestment in
Factory
+
Reinvestmen
t Funds
+
Capacity Growth per Invested Dollar
+
Desired Surimi
Production Capacity
+
Surimi
Demand
Factory Revenues
+
+
+
Funded
Capacity
+
+
Capacity
Shortage
-
Reinvestment
Rate
+
Production
Capacity
Growth
B
Surimi
Sales
+
Factory
Surimi
Capacity
+
R
Time To
Expand
Increasing
Returns to Scale
Surimi Price
per Unit
+
Maximum Surimi
Factory Output
Actual Factory
Output
+
+
Surimi
Production
+
27
Reinvestment
Fraction
Reinvestment in
Factory
+
Reinvestmen
t Funds
+
Capacity Growth per Invested Dollar
+
+
Surimi
Demand
+
+
+
Funded
Capacity
+
Desired Surimi
Production Capacity
Factory
Revenues
Reinvestment
Rate
Surimi
Sales
+
Capacity
Shortage
-
+
+
B
+
+
Production
Capacity
Growth
Factory
Surimi
Capacity
Time To
Expand
Demand
Multiplier
Surimi Price
per Unit
R
Increasing
Returns to Scale
Actual Factory
Output
+
+
+
Maximum Surimi
Factory Output
+
Size of Pelagis
Fleet
Actual Boat
Efficiency
+
Pelagic Need per
Year
Surimi
Production
+
R
+
+
Pelagic Capacity
per Year
Throughput
Matching Capacity
+
Pelagic
Harvest
Rate
Required
Capacity
Utilization
+
Working Days p
Year
Maximum Days
per Year
+
+
+
Allowed Boat
Utilization
+
Actual Capacity
Utilization
Pelagic Fleet
+ Capacity at Sea
+
28
Reinvestment
Fraction
Reinvestment in
Factory
+
Reinvestmen
t Funds
+
Capacity Growth per Invested Dollar
+
+
Surimi
Demand
+
+
+
Funded
Capacity
+
Desired Surimi
Production Capacity
Factory
Revenues
Reinvestment
Rate
Surimi
Sales
+
Capacity
Shortage
-
+
+
B
+
+
Production
Capacity
Growth
Factory
Surimi
Capacity
Time To
Expand
Demand
Multiplier
Surimi Price
per Unit
R
Actual Factory
Output
+
Increasing
Returns to Scale
+
+
Maximum Surimi
Factory Output
+
Size of Pelagis
Fleet
Actual Boat
Efficiency
+
Pelagic Need per
Year
Surimi
Production
+
+
+
+
Pelagic
Harvest
Rate
Required
Capacity
Utilization
+
Working Days p
Year
Maximum Days
per Year
+
+
+
Allowed Boat
Utilization
Available
Pelagic
Stock
Throughput
Matching Capacity
+
+
Actual Capacity
Utilization
B
+
+
R
Pelagic Capacity
per Year
Fractional
Death Rate
Pelagic
Natural
Deaths
+
+
Pelagic
Births
+
+
Pelagic Fleet
+ Capacity at Sea
+
Relative
Density
B
+
Fractional
Birth Rate
B
Yield
+
29
Basic model Behavior
1. Basic Demand
– Step demand increase towards 15000 Surimi in the
10th month
2. Resource Depletion
– Same case, with a lower fertility of pelagis
30
Basic Demand: Factory Capacity
Capacity Utilization
20,000 MTO/Year
600 MTO/(Year*Month)
8M $
15,000 MTO/Year
450 MTO/(Year*Month)
6M $
10,000 MTO/Year
300 MTO/(Year*Month)
4M $
5,000 MTO/Year
150 MTO/(Year*Month)
2M $
0 MTO/Year
0 MTO/(Year*Month)
0 $
0
6
12
Surimi Demand : BaseDemand
Factory Surimi Capacity : BaseDemand
Capacity Shortage : BaseDemand
Funded Capacity : BaseDemand
Production Capacity Growth : BaseDemand
Reinvestment Funds : BaseDemand
18
24
30
36
42
48
54 60 66
Time (Month)
72
78
84
90
96
102 108 114 120
MTO/Year
MTO/Year
MTO/Year
MTO/Year
MTO/(Year*Month)
$
31
Basic Demand: Pelagic Throughput
Pelagic Throughput
20,000 MTO/Year
20 M $/Year
15,000 MTO/Year
15 M $/Year
10,000 MTO/Year
10 M $/Year
5,000 MTO/Year
5 M $/Year
0 MTO/Year
0 $/Year
0
6
12
18
Surimi Demand : BaseDemand
Pelagic Fleet Capacity at Sea : BaseDemand
Pelagic Harvest Rate : BaseDemand
Surimi Production : BaseDemand
Surimi Sales : BaseDemand
24
30
36
42
48
54
60
66
Time (Month)
72
78
84
90
96
102
108
114
120
MTO/Year
MTO/Year
MTO/Year
MTO/Year
$/Year
32
Basic Demand: Resource Dynamics
Pelagic Resource Control
4,000 MTO/Month
800,000 MTO
2 Dmnl
3,000 MTO/Month
700,000 MTO
1.75 Dmnl
2,000 MTO/Month
600,000 MTO
1.5 Dmnl
1,000 MTO/Month
500,000 MTO
1.25 Dmnl
0 MTO/Month
400,000 MTO
1 Dmnl
0
6
12
Pelagic Harvest Rate : BaseDemand
Available Pelagic Stock : BaseDemand
Relative Density : BaseDemand
18
24
30
36
42
48
54
60
66
Time (Month)
72
78
84
90
96
102
108
114
120
MTO/Month
MTO
Dmnl
33
Lower Resource Fertility: Resource Depletion
Pelagic Resource Control
4,000 MTO/Month
600,000 MTO
2 Dmnl
3,000 MTO/Month
450,000 MTO
1.5 Dmnl
2,000 MTO/Month
300,000 MTO
1 Dmnl
1,000 MTO/Month
150,000 MTO
0.5 Dmnl
0 MTO/Month
0 MTO
0 Dmnl
0
12
24
Pelagic Harvest Rate : LowBirthRate
Available Pelagic Stock : LowBirthRate
Relative Density : LowBirthRate
36
48
60
72
84
96
108 120 132
Time (Month)
144
156
168
180
192
204
216
228
240
MTO/Month
MTO
Dmnl
Dynamics can be very sensitive to resource parameters
34
Learning’s along the way
Insights
•
A clear problem statement can act
itself as true insight
•
Quote:“Opportunities for inshore
fishing?!”
•
•
Quote: “Looking ahead to
understand potential pitfalls has
never been done before”
Quote: “Visualizing the connections
between the variables helped us to
better understand the dynamics in
the system”
Comments / Issues
•
•
•
A clear, true problem statement is
crucial. This implies effective kickoff meeting(s) and being in the
driver-seat
Early involvement of truestakeholders / knowledge experts is
crucial for a good (mental) model
Using reference modes and causal
loop diagrams makes it much easier
for the client to understand the
problems and dynamics
35
Your Task
• Which part of this project would be of interest for
a broader SD community, i.e. do you think we
could hit a placement in the SD Review?
36