Testing process designs by their simulated performance in the market place

Abstract

A modified business game which accepts, as input, process designs to produce a particular product, and tests their performance in a simulated market has been developed and is proposed as a new decision making tool in the preliminary process design phase of a project. The procedure is illustrated with a simple model process, using a demand curve for the chemical product and assuming that the producers operate in an oligopoly. Results are presented in terms of market share, sales, profit, stock in inventory and return on investment for each firm. The effect of competition and the importance of the chemical product demand curve on profitability are clearly shown. By running various simulations, valuable information regarding the ‘optimal” process design can be generated.