Using the OPEC Production Simulator

THE SCIENCE AND TECHNOLOGY OF DECISION-MAKING
CIV 105 - Princeton University

Using the OPEC Production Simulator

About the OPEC Production Simulator

The OPEC Production Simulator can be used to play out the competition in oil production between Saudi Arabia and the other OPEC countries. The user of this simulator plays the part of Saudi Arabia, attempting to maximize revenues by choosing appropriate levels of oil production. The computer will simulate the behavior of the other OPEC countries. They change their production levels in response to your production decisions.

The OPEC Production Simulator window appears as follows:

The various buttons that control the execution of the program appear at the top of the window. The 14 graphs appear in the middle of the window. Of these graphs, ten in the top-left portion of the widow display the production, Q, of oil by each of the ten other OPEC countries each month (in millions of barrels per month) versus time, T (in months). The two graphs to the right of these display the revenue and production of oil of Saudi Arabia each month. The bottom two graphs display the general demand for oil and the potential overall revenue as determined by the overall demand function. The equation for this demand function and other information appear at the bottom of the window, below the graphs.

Procedure/Directions

Before anything else, the equation near the bottom-left corner of the window must be filled in. An INTEGER value must be entered into each of the two white boxes of the equation in order for anything else to work. (Note: You shouldn't change the parameters of the demand equation after you have started the simulation.)

Next click on the Setup button. This will display two graphs, one in the Demand graph area and one in the Potential Revenue graph area. These give general information about the demand equation you just filled in. The Demand graph plots the price of oil, P, versus the total quantity produced by all the OPEC countries (in millions of barrels per month). The Potential Revenue graph plots the total quantity of oil produced versus the corresponding total revenue of all the countries.

Now the simulation is ready to begin. Click the Next Month button. This will produce a window which appears as follows (may look different on different machines):

The top panel of the window displays the total production of oil last month by the countries other than Saudi Arabia. The center of the window contains a graph showing what Saudi Arabia's revenue (y-axis) would be at different levels of production (x-axis), assuming the other countries produce the same amount they did last month. The bottom portion of the window contains a small white box in which the user shall enter Saudi Arabia's production level for the current month. Click the Proceed button to update the simulation. An integer value must be entered into the small white box before the Proceed button is clicked. An error message will appear at the very bottom of the window if the entered production level is greater than 1830, which is Saudi Arabia's maximum production capability. If this occurs, enter a new production level below 1830 and re-click the Proceed button.

Click the Next Month button again and repeat the process. Keep doing this until you are finished with the simulation.

Commands/Buttons

All commands are initiated using the buttons at the top of the OPEC Production Simulator window.

Exit: Close the OPEC Production Simulator window and terminate the program.
Setup: View the Demand graph and the Potential Revenue graph (the two graphs at the bottom). These are calculated from the values placed in the equation at the bottom-left corner of the window. Each of the two white boxes must have an integer value for the Setup command to be completed.
Next Month: Display a window in which the user can enter Saudi Arabia's production level for the next month of the simulation. Then update all the graphs accordingly and update the average montly revenue at the bottom-right corner of the window.
Reset: Set the simulation and the graphs back to their original positions at time zero.