Gloucester Community Development Corporation

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Gloucester Community Development Corporation
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Challenges

• You cannot build a model without a good
  understanding of the system you are going to
  simulate
• Jim Hines 2002

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Purpose of Todays 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?

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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

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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

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Gloucesters 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.

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Surimi?
A substitute for crab meat.
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Surimi Market

• Total market 760,000 metric tons, growing at 10
  20 per year
• Japan represents 60 of the market
• Desired output for Gloucesters surimi factory is
  10,000 metric tons

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Phase 1 Learning

• 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

• 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

• 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

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Phase 2 Reflection

• Meeting with client to confirm problem statement
  and initial reference modes

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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

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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

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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

• F2 Lack of throughput
• No Market
• Delays in takeoff
• Competition from other communities or
• Fish stock takes longer to renew

1992 2002 2012
t
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Key Variables
Key Variables
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Phase 3 Agreement

• Presentation of dynamic hypothesis
• Definition for the scope of the project

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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
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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
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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

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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
B1
B1
R1
R2
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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

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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!!

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Resource Sector
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Community Sector
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Operations Sector
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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
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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
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Basic model Behavior

• Basic Demand
• Step demand increase towards 15000 Surimi in the
  10th month
• Resource Depletion
• Same case, with a lower fertility of pelagis

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Basic Demand Factory Capacity
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Basic Demand Pelagic Throughput
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Basic Demand Resource Dynamics
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Lower Resource Fertility Resource Depletion
Dynamics can be very sensitive to resource
parameters
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Learnings along the way

• Insights
• A clear problem statement can act itself as true
  insight
• QuoteOpportunities 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 kick-off meeting(s) and being
  in the driver-seat
• Early involvement of true-stakeholders /
  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

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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?