Analyzing Price Cycles in Commodity Chemicals

Client:  a large global chemical company (Dow Chemical)

Authors/Consultants: Homer J

An SD model was developed to explain strong repeated price cycles in the chlor-alkali chemical market.  A first version of the model was developed focusing on Europe alone.  A second, expanded, version considered the entire global market.  The model led to an improved understanding of what caused the problematic price cycle, whether it could be accurately forecasted, and whether anything could be done by Dow to dampen the cycle or to manage more effectively around it.

Publication: Homer J.  Why We Iterate: Scientific Modeling in Theory and Practice. System Dynamics Review, 12(1): 1-19, 1996.

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