A system dynamics decision support tool for bioproduct industry stakeholders who want to investigate how their decisions can impact the process of bioproducts gaining U.S. market share.
Adopters = 0 when bioproduct offtake agreement = 0 which is a plausible scenario we should explore
bioproduct supply to demand ratio is calculated as production / (Adopters * bioproduct performance advantage )
The ratio is needed to account for supply and demand effects on bioproduct price.
Proposed solution: replace the bioproduct supply to demand ratio with an indicator variable that returns the current equation when Adopters is greater than zero, and returns 1 otherwise (including when Adopters is equal to zero)
This implies that when the bioproduct market is still non-existent (zero demand), the bioproduct price model is a pure random walk and unaffected by the supply level.
One alternative would be to set the bioproduct price to zero when demand is zero, which aligns better with supply/demand theory but would make the NPV and other metrics extremely unfavorable at the beginning of virtually every model run.
Adopters= 0 whenbioproduct offtake agreement= 0 which is a plausible scenario we should explorebioproduct supply to demand ratiois calculated asproduction/ (Adopters*bioproduct performance advantage)The ratio is needed to account for supply and demand effects on bioproduct price.
Proposed solution: replace the
bioproduct supply to demand ratiowith an indicator variable that returns the current equation whenAdoptersis greater than zero, and returns 1 otherwise (including whenAdoptersis equal to zero)This implies that when the bioproduct market is still non-existent (zero demand), the bioproduct price model is a pure random walk and unaffected by the supply level.
One alternative would be to set the bioproduct price to zero when demand is zero, which aligns better with supply/demand theory but would make the NPV and other metrics extremely unfavorable at the beginning of virtually every model run.