Pricing-Policy Analysis of Petrochemical Feed-Stock through Dynamic Systems Approach

Document Type : Original Article

Authors

1 * MS. Student, University of Tehran.

2 Professor, University of Tehran.

3 Associate Professor, University of Tehran.

Abstract

The purpose of this study is modeling and analyizing pricing policy of urea-ammonia Petrochemical feedstock through dynamic system approach.  The article outlines the effects of different policies and assesses the impact of each policy. To analyze and modeling system behavior based on dynamic system approach, Venssim software is applied. Having explained the problem, and choosing the approach; cause and loop diagram were identified through in-depth interviews with experts. The latter leads to scrutinizing loops and causal relationship between the variables affecting the system which includes: a selling price of urea and ammonia, discount on domestic sales, new urea and ammonia manufacturing plants. In the next step flow chart were designed, variables were formulated, and model validation was investigated under many scenarios. Finallythe impacts of different policies are studied. The results show that recent worldy decline of urea prices, justifies new projects of urea-ammonia .The profitability of the current company should set prices of feedstock below the current price. The best pricing policy that Ammonia & Urea feedstock can choose is the link between sales prices and feedstock prices, which yieldsto more precise prices while not decling the profitability.

Keywords


 
1. Azar, A., Gholamrrezaei, D., Danaeifar, H., & Khodadad Hosseiny, H. (1392). Dynamic analysis between industry and university in higher education policy of  Fifth development program by system dynamic approach. Industrial Management Perspective, 9. 79- 116.
2. Apostolopoulou, Evgenia, Bain, Barrie, Rowe, H. (2012). Fertecon Urea Outlook Quarterly outlook for the international urea market.
3. Aslani, A., Helo, P., & Naaranoja, M. (2014). Role of renewable energy policies in energy dependency in Finland: System dynamics approach. Applied Energy113, 758–765.
4. Ballardin, G. (2005). Environmental benefits and economic rationale of expanding the Italian natural gas private car fleet. In Proceedings of the 23rd System Dynamics Conference, Boston, USA.
5. BankWorld. (2014). World Bank Commodities Price Forecast (nominal US dollars) World Bank Commodities Price Forecast (real 2010 US dollars), (January), 1–4.
6. Bassi, A. M., & Shilling, J. D. (2010). Informing the US energy policy debate with Threshold 21. Technological Forecasting and Social Change77(3), 396–410.
7. Chenavaz, R., Carrier, L.-P., Etienne, L., & Paraschiv, C. (2011). Dynamic pricing in management science. Journal of Economic Studies and Research DOI10(2011.283).
8. Faghih, N., Ranaei Kordshooli, H., Mohammadi, A., Samadi, A.H, Mousavi Haghighi, M. H., Ghafornyan, M. (1392). Assessment of Services Supply Chain of Iran Fixed Communications by System Dynamics Approach Industrial management Perspective,. 11, 111-138.
9. Forrester, J. W. (1994). System dynamics, systems thinking, and soft OR. System Dynamics Review, 10(23), 245–256
10. Franco, C. J., Zapata, S., & Dyner, I. (2015). Simulation for assessing the liberalization of biofuels. Renewable and Sustainable Energy Reviews41, 298–307.
11. Georgiadis, P., Vlachos, D., & Iakovou, E. (2005). A system dynamics modeling framework for the strategic supply chain management of food chains. Journal of Food Engineering70(3), 351–364.
12. Ghaderi, F., Razmi, J., Seddighi, & A. (1384). The effect of energy directly subsidizing on macroeconomic indicators by systemic approach, Journal of Faculty of Engineering, 39, 527-537.
13. Glauser, James Chiyo, F. (2014). Chemical Economics Handbook. Text.
15. Malmir, B. (2014). A system dynamics approach to housing prices: A case study of the Tehran real estate market, 450–460.
15. Mohaghar, A., Sharif Salim, A. R., & Zare MirakAbadi, A. (1391). Modeling energy policy in the oil and gas industry (based options subsidy optimizing). New Economics and Business, 28, 23-43.
16. Mousavi Haghighi, M. H., Ranaei Kordshooli, H., Ghafornyan, M. (1392). Analysis of mobile phone market with system dynamics approach. Industrial Management Perspective, 9 , 135-158.
17. Mir-Kazemi M. M., Mohaghar, A. (1391). Simulate the effect of investment policy on the accumulation of innovation using system dynamics approach. Journal of Industrial Management, School of Humanities, 19, 81-95
18. Pormasomy, Said, shetab, Bushehri, Seyed Nader, Arbab Shirani, Behroz, mashayekhi, Alinaghi, 1389. A system dynamics model for the investigation and analysis of system of economy-energy of Iran. Sharif. 2, pp. 71-87.
19. Ray, S., Goldar, A., & Saluja, S. (2014). Feedstock for the Petrochemical Industry.
20. Sánchez, J. J., Barquín, J., Centeno, E., & López-Peña, A. (2007). System Dynamics models for generation expansion planning in a competitive framework: oligopoly and market power representation. In Proceedings of the 25th International Conference of the System Dynamic Society, Boston.
21. Sterman, J. D. (2000). Business dynamics: systems thinking and modeling for a complex world (Vol. 19). Irwin/McGraw-Hill Boston.
22. Sushil. (1993). System dynamics: a practical approach for managerial problems. Wiley Eastern Limited.
23. Tao, Z. (2010). Scenarios of China’s oil consumption per capita (OCPC) using a hybrid Factor Decomposition–System Dynamics (SD) simulation. Energy35(1), 168–180.
24. Wallace, Alistair, Taarland, Lars, et al. (2015). Urea Market Outlook. Global Commodity Industry Pricing & Market Analysis.
25. Wu, J.-H., Huang, Y.-L., & Liu, C.-C. (2011). Effect of floating pricing policy: An application of system dynamics on oil market after liberalization. Energy Policy39(7), 4235–4252.
26. http://www.codal.ir/