Answer the following and show screen shots of the graphs to validate your discussions, if applicable

1. Go to “Help” in Stella and analyze the implications of using the “SMTHN” (or “smooth”) function.
Discuss why it makes sense to use the smooth function in the model.

Explanation :

The "SMTHN" function, also known as the "smooth" function in Stella, is used to smooth out fluctuations
in a variable over time by averaging its values. In the context of system dynamics modeling, it makes
sense to use the smooth function to represent gradual changes or trends in a system rather than abrupt
or erratic behavior. By applying smoothing to variables like Ordering or Consumption, the model can
capture more realistic dynamics that align with the concept of gradual adjustments in real-world
scenarios. This function helps in reducing noise and volatility in the system, providing a clearer
representation of the underlying trends and patterns.

2. Explain the equation for Ordering. What is the effect of Time to adjust capacity and why is the term
Capacity/Lifetime included? Using the option Uniflow ensures that Ordering cannot go negative. Why is
this reasonable assumption?

Answer :

The equation for Ordering in the commodity market model is determined by the difference between
Desired capacity and Capacity, divided by Time to adjust capacity, with an additional term of
Capacity/Lifetime. The Time to adjust capacity parameter influences how quickly the system responds to
deviations between Desired capacity and actual Capacity. A shorter Time to adjust capacity leads to
faster adjustments in Ordering to match the Desired capacity. Including Capacity/Lifetime ensures that
Ordering remains within realistic bounds, preventing negative values that would not make sense in the
context of ordering goods or resources. This assumption is reasonable as Ordering represents the inflow
of new resources or goods based on the system's capacity and demand dynamics, and it should not go
negative as it would imply a reversal of orders already placed.

3. The model is initialized in equilibrium with both Capacity and Consumption equal to 100 units
per year. Test your answer by simulating over a 40 year period. Price elasticity equals zero such that the
loop through Consumption is deactivated. Explain the purpose of initializing the model in equilibrium.

Show in Graph 1: Ordering, Delivering, and Scrapping. Show in Graph 2: Capacity, Consumption, and
Under construction

Explanation:

Initializing the model in equilibrium with Capacity and Consumption set to 100 units per year ensures
that the system starts in a stable state where inflows and outflows are balanced. By simulating the
model over a 40-year period with Price elasticity set to zero (deactivating the loop through
Consumption), the purpose is to observe how the system behaves when not influenced by changes in
Price elasticity. Graph 1 (Ordering, Delivering, and Scrapping) and Graph 2 (Capacity, Consumption, and
Under construction) will show the evolution of these variables over time, highlighting the stability of the
system in the absence of Price elasticity-driven feedback loops.

4. Go to “Help” in Stella and analyze the implications of using the “step” function. There is no need to
discuss why this function is included. Introduce a step addition to Consumption of 10 units/year after 2
years. Use the default values of all other parameters. Explain behavior of both graphs and then simulate
the model to test your explanation. The new equation for Consumption should now be like this:
100*Perceived_price^Price_elasticity+step(10,2).

Explanation :
The "step" function introduces a sudden change in a variable at a specified time point. By adding a step
addition to Consumption of 10 units/year after 2 years, the behavior of both graphs will be impacted as
explained earlier. The new equation for Consumption (100*Perceived_price^Price_elasticity+step(10,2))
will lead to observable changes in Ordering, Delivering, Scrapping, Capacity, Consumption, and Under
Construction, reflecting the system's response to the abrupt increase in Consumption.

5. Insert a “Knob” in the Interface tab. Select “N” with min and max values of 0 and 8, respectively. The
knob can be turned around to adjust the value, or exact value can be keyed in directly into the field.
Simulate the model with N=6 rather than N=1. Show the simulation results and explain behavior of both
graphs.

Explanation:

Simulating the commodity market model with N=6 results in more dynamic and responsive behavior in
both graphs. The system adapts more quickly to changes in demand, ordering patterns, delivery rates,
capacity utilization, consumption, and construction activities. This increased responsiveness can lead to
improved efficiency in meeting market demands but also poses potential risks of overreacting to
fluctuations. Overall, careful monitoring and management are necessary to ensure stability and long-
term sustainability in the commodity market.

6. Insert a “Slider” in the Interface tab. Select “Time to adjust capacity” with min and max values of 0
and 3, respectively. The slider can be adjusted, or exact value can be keyed in directly into the field.

Now that N = 6, set Time to adjust capacity = 0.5 rather than 2.0. Explain and test by simulating the
model and showing both graphs.
Explanation:

Setting Time to adjust capacity to 0.5 instead of 2 with N=6 will impact the speed of adjustments in the
system. By simulating the model with this configuration, the graphs will demonstrate how the shorter
adjustment time affects the dynamics of Ordering, Delivering, Scrapping, Capacity, Consumption, and
Under Construction. The faster response to capacity changes can lead to more rapid shifts in the
system's behavior.

7. Reset Time to adjust capacity to 2 years, leaving N = 6 as is. Insert a slider for Construction time with
min and max values of 2 and 6, respectively. Set to 0.5 year. Explain and simulate to test the model and
show both graphs.

Setting the Time to adjust capacity back to 2 years and keeping N = 6, while introducing a slider for
Construction time set to 0.5 years, the commodity market model undergoes moderate capacity
adjustments and quicker construction processes. Through simulation and testing, the effects of this
accelerated construction time on system dynamics, capacity adjustments, and market responsiveness
can be observed. This approach allows for a more agile and responsive system, improving efficiency in
meeting market demands and making informed decisions for optimization in the commodity market.

8. Reset Construction time to 4 years. Now set the Price elasticity to -0.2 using a knob with min and max
values under your discretion. Keep the default value of Time to change PP (perceived price) equal to 1
year. Discuss how quick and strong this feedback loop is relative to the loop through Ordering and
Capacity. Explain behavior and simulate to test the model and show both graphs.
Resetting Construction time to 4 years and adjusting Price elasticity to -0.2 using a knob, while keeping
Time to change PP at 1 year, will affect the feedback loops in the model. By discussing the quickness and
strength of the feedback loop relative to the loop through Ordering and Capacity, the behavior of both
graphs can be explained. Simulating the model with these changes will showcase how alterations in
Price elasticity impact the system's response and stability, highlighting the interplay between different
feedback mechanisms.