Gloucester Community Development Corporation

1. Gloucester Community Development Corporation

2. Challenges • “You cannot build a model without a good understanding of the system you are going to simulate…” Jim Hines 2002

3. 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?

4. 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

5. 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

6. 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.

7. Surimi? A substitute for crab meat….

8. 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

9. 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 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 Phase 1: Learning • 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

10. Phase 2: Reflection • Meeting with client to confirm problem statement and initial reference modes

11. 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…

12. Total Revenues Revenues from White Fish Revenues from Surimi 1996 2002 2005 2012 t 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

13. 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

14. Operations Sector Community Sector Potential Factory Output Potential Demand Potential Return on Investment Revenues from Fishing Sustainability of community Attractiveness to Join Co-operation Resource Sector Fleet Composition Total allowable Catch (TAC) # Fleet Days at Sea Key Variables Key Variables

15. Phase 3: Agreement • Presentation of dynamic hypothesis • Definition for the scope of the project

16. 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 t

17. Operating profit 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 t

18. Total Revenues from fishing B3/R5*) R4 B1 R1-3 B2 1992 2002 2012 t 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

19. Community QoL 1992 2002 2012 t 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

20. 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

21. 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!!

22. Resource Sector

23. Community Sector

24. Operations Sector

25. 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

26. 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 t

30. 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

31. Basic Demand: Factory Capacity

32. Basic Demand: Pelagic Throughput

33. Basic Demand: Resource Dynamics

34. Lower Resource Fertility: Resource Depletion Dynamics can be very sensitive to resource parameters

35. 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 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 Learning’s along the way

36. 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?