This essay Student's Name: has a total of 607 words and 3 pages.
Linking Stock and Flow structure with feedback
The diagram represents the Vensim model from Sterman text on pg 212-213 about the shortages of gasoline of the 1970's. The model contains the variables elements that form the causal loops that are creating the gas problem. The items are derived from primary variables, which include Iranian revolution, government policies, media coverage, and consumer panic.
Tracing gas movement (where did the gas go)
Theoretically, in 1979, the inventory of the gas system was not altered in the United States, Neither was Iranian export decrease that drastic to give the trigger the gasoline problem. Consumer behavior merely triggered the changes in the system. The desperate actions of the nervous drivers pushed for moving gas from the storage underground tanks to vehicle gas tanks (Sterman 212-213). The drivers and other gas consumers anticipated a shortage of gas. This fear, in turn, generated an artificial demand for gas. The demand was majorly driven by the notation consumer had that supply would fall in the future and further expected increase in gasoline prices. With the increased speculated demand and panics consumer queue for gas increased. The view demand evidently pointed that the users expected that there would be the shortage of supply in the future. All these speculative events led to the price increase.
From the diagram above, Loop B, (Fill Er Up) indicates that the gas tank gradually becomes empty. In this scenario, drivers are making purchases to fill their tanks. Loop B2, which represent gas consumed, also provides that gas level in tanks reduces. The movement of drivers could reduce even though the reduced movement could not be significant because the rate of drivers' movement is not discretionary. Loop B2 is unstable before drivers run out of gas. Loop B3 is a representation of the supply depletion in the stations. Ideally, the likely demand is higher than anticipated supply and as a result lines for gas increased.
Since a driver tops vehicle tanks before the usual time, the increased demand triggered by new gas top up causes stations to either limit the unpredicted purchases to maintain the gas in the storage tanks or run out of gas. According to Sterman (212), Media Reports on gas Shortages also contributes to the "gas shortage notion" media actions also stimulates impulsive gas purchases and abnormal demand indicated by longer lines.
Assessing the effectiveness of the policies
The system employed to regulate gasoline consumption worsened the situation. Sterman points that "The crisis should ease once the average car is nearly full once deliveries are accelerated, every customer should be able to buy what they need" ( Sterman , 212-213). Furthermore, rationing only elevated the notion that perceived shortage would be a major crisis and drivers increased the frequency of filling their tanks.
Recommended policy to correct the situation at hand
For the given scenario a minimum purchase policy would have been much useful. For example, the policy would stipulate a minimum purchase of ten gallons. In this scenario, the consumer would pay to the minimum requirement whether the tank capacity would contain the gasoline or not. Evidently, the customer would either acquire a large gallon of the stipulated minimum capacity or wait until the gallon is empty to avoid paying for what he might not consume. The policy employed should avoid inducing rationing at all cost because ratios may create unnecessary hoarding and intensify the problem at hand.
Masser Sterman. "Shortages And Gasoline Marketing". Business Horizons 17.2 (1974): 212-213. Web.