| Article ID: | iaor20073028 |
| Country: | United States |
| Volume: | 36 |
| Issue: | 4 |
| Start Page Number: | 326 |
| End Page Number: | 341 |
| Publication Date: | Jul 2006 |
| Journal: | Interfaces |
| Authors: | Marcus Henry S., Dikos George, Papadatos Martsin Panagiotis, Papakonstantinou Vassilis |
| Keywords: | forecasting: applications, materials |
Managers can improve their investment decisions in a cyclical market, such as the tanker market, by using system-dynamics models. We developed and implemented a system-dynamics model for the tanker market for Niver Lines. We combine entry, exit, and lay-up decisions, and determine the flow of transportation supply. Then, we compare supply and demand and calibrate the system. We derived time-charter rates from the interaction of supply and demand using historical data from 1980 through 2002. Our results reveal the key factors that affect tanker rates and unforeseen dynamics. The model is a powerful tool for modeling the impact of changes in various factors on time-charter rates.