Elegant Furniture simulator runs

A buyer's reserve price is found by a pricing study conducted in developed countries on people interested in buying furniture. This study uses demand shaping (the implementation procedure's step 5) to identify a target value of y that is in-part, a function of the advertised maximum price a buyer will have to pay for one unit of furniture, e.g. one lamp. It is then assumed that buyers adopt this value as their reserve price. To increase demand, the demand shaping strategy advertises a reduced maximum price that a buyer will be required to pay for one unit of production.

Pure profit versus maximum employment

One way to increase the manufacturing network's total employment of relocated rural residents is to increase the number of buyer purchases. Doing so increases the number of orders placed to suppliers outside of the ICO. This can be accomplished by using the demand shaping strategy to encourage buyers to adopt a lower reserve price as discussed above. Then, to assure that all buyer orders are filled, i.e., suppliers always accept bid prices, ICO businesses would maintain a reserve price that is always above the supplier's asking price -- even if this reserve price is above the buyers' reserve price. Doing so can cause the ICO to operate at a loss. This loss is paid for with monies from the offering's biodiversity premium.

As an example of this management strategy, say that the maximum number of purchases that an ICO business could fill per year is 10000. And, say that Elegant Furniture's demand shaping campaign has created a market of about 10000 buyers each having a reserve price of 20 USD. Say that the current value of the manufacturing network's ith business, wi is 1500 USD. Using these values, the agent-based submodel of the manufacturing network is run over one year under two different management strategies: First, a pure profit strategy wherein the ICO keeps its reserve price at 50% of the buyers' reserve price, and then second, a maximum employment strategy wherein it keeps its reserve price at 95% of the buyers' reserve price. Figure negative profit shows the time series of the manufacturing network's total employment and the ICO's profit under these two strategies. This figure indicates that employment is higher under the maximum employment strategy relative to the pure profit strategy. This higher employment comes at the expense of the ICO's weekly profit. Profit is equal under both strategies at time points where there are no orders placed by ICO businesses to their suppliers since in these cases, the ICO's profit is equal to its revenue -- and this revenue is the same under both strategies because the buyers' reserve price is constant across the two strategies.

MPEMP solution

The value of vcMPEMP used here is described in the MPEMP section, above. The planning horizon extends from 2015 through 2040. ICO wage is adjusted to find the MPEMP. Its value under a pure profit management strategy is 59.0. At this value, the MPEMP multiobjective function equals -86.31. After 20 function evaluations run within an optimization algorithm, this function increases 96% to -3.58 at an ICO wage of 1245.58. The MPEMP then, consists of setting the ICO wage to 1245.58.

Figure legal employment shows model output of the poachers learning parameter l, number of rhinos poached, and realizations of rhino abundance. These variables are plotted under first, the pure profit strategy and then under the MPEMP. The causal chain that this plot depicts is: Changes in poachers group perceptions cause changes in their behaviors that, in-turn, cause changes in the ecosystem. Rhino extinction is avoided under the MPEMP but not under the pure profit strategy.