Math Modeling L4

Mathematical Modeling

Lesson 4.

5 Steps

Step 1: Ask the Question

Step 2: Select the Modeling Approach

Step 3: Formulate the Model

Step 4: Solve the Model

Step 5: Answer the Question

Ex1. Oil Spill Cleanup Optimization

Statement

An oil spill has fouled 200 miles of Pacific shoreline. The oil company responsible has been given 14 days to clean up the shoreline, after which a fine will be levied in the amount of $10,000/day.

The local cleanup crew can scrub five miles of beach per week at a cost of $500/day. Additional crews can be brought in at a cost of $18,000 plus $800/day for each crew.

(a) How many additional crews should be brought in to minimize the total cost to the company? Use the five-step method. How much will the clean-up cost?

Ex2. Maximum Sustainable Yield Analysis

It is estimated that the growth rate of the fin whale population (per year) is $r\ast x(1-x/K)$, where $r=0.08$ is the intrinsic growth rate, $K=400,000$ is the maximum sustainable population, and $x$ is the current population, now around $70,000$.

It is further estimated that the number of whales harvested per year is about $0.00001\ast E\ast x$, where $E$ is the level of fishing effort in boat-days.

Given a fixed level of effort, population will eventually stabilize at the level where growth rate equals harvest rate.

(a) What level of effort will maximize the sustained harvest rate?

Model as a one-variable optimization problem using the five-step method.

Step 1: Ask the Question

1.1 Problem Restatement

The fin whale population dynamics follow:

• Growth rate
  growth rate: $r\ast x\ast (1-x/K)$ per year.

  • $r=0.08$ is the intrinsic growth rate.
  • $K=400,000$ is the maximum sustainable population
  • $x$ is the current population

• Harvest rate
  harvest rate: $0.00001\ast E\ast x$

  • $q=0.00001$ catchability coefficient.
  • $E$ is the level of fishing effort in boat-days.
  • $x$ is the current population

• Equllibrium: the level where growth rate equals harvest rate

• Current state: $x=70,000$.

1.2 Questions to answer

Find effort level $E$ that maximizes sustained harvest rate.

Step 2: Select the Modeling Approach

• Population follows logisitc growth.
• Harvest proportional to effort and population.
• Find the max $E$.

Step 3: Formulate the Model

3.1 Equllibrium Condition

According to this question, the level where growth rate equals harvest rate, so we can get

$r\ast x\ast (1-\frac{x}{K})=q\ast E\ast x$

$x$ is the variable we have to solve.

For $x>0$, divide by $x$

$r\ast (1-\frac{x}{K})=q\ast E$

3.2 Equllibrium Population as Function of Effort

$1-\frac{x}{K}=\frac{q\ast E}{r}$

$\frac{x}{K}=1-\frac{q\ast E}{r}$

$x=K\times (1-\frac{q\ast E}{r})$

$x_{eq}(E)=K\times (1-\frac{q\ast E}{r})$

$\because x>0$
$\therefore K\times (1-\frac{q\ast E}{r})>0$
$\because K>0$
$\therefore (1-\frac{q\ast E}{r})>0$
$\therefore \frac{q\ast E}{r}<1$
$\therefore q\ast E<r$
$\therefore E<\frac{r}{q}$

The final equation is

$x_{eq}(E)=K\times (1-\frac{q\ast E}{r})$, where $E<\frac{r}{q}$

3.3 Sustainable Yield Function

Sustainable harvest rate at equllibrium:
$$\begin{gathered} H(E) \\ =q\times E\times x \\ =q\times E\times x_{eq}(E) \\ =q\times E\times K\times (1-\frac{q\ast E}{r}) \\ =-\frac{q^{2}K}{r}{E}^2+q\cdot K\cdot E \end{gathered}$$

where $q,K,r>0$.

This is a quardratic function in $E$, concave down function.

Step 4: Solve the Model

4.1 Maximize Sustained Harvest Rate

$E_{opt}=-\frac{b}{2a}$ where $a=-\frac{q^{2}K}{r}$, $b=q\cdot K$.
so $E_{opt}=-q\cdot K/(-2\ast \frac{q^{2}K}{r})=\frac{r}{2q}$.

First-order derivative
$$\begin{gathered} \frac{dH}{dE} \\ =-\frac{q^{2}K}{r}\times (2E)+q\cdot K \\ =-\frac{2q^{2}K}{r}\times E+q\cdot K \end{gathered}$$

when $\frac{dH}{dE}=0$, it is the max.

$-\frac{2q^{2}K}{r}\times E+q\cdot K=0$

$q\cdot K\cdot (1-\frac{2q}{r}\cdot E)=0$

$1-\frac{2q}{r}\cdot E=0$

$\frac{2q}{r}\cdot E=1$

$E_{opt}=\frac{r}{2q}$

Second-order derivative to verify the answer.
$$\begin{gathered} \frac{dH}{dE} \\ =-\frac{2q^{2}K}{r}\times E+q\cdot K \end{gathered}$$

$\frac{d^{2}H}{d{E}^2}=-\frac{2q^{2}K}{r}$
since $q,K,r>0$.
$\frac{d^{2}H}{d{E}^2}=-\frac{2q^{2}K}{r}<0$

maximum confirmed.

Numerical calculation, $q=0.00001,r=0.08,K=400,000$.

$E_{opt}=\frac{r}{2q}=\frac{0.08}{2\ast 0.00001}=4,000$ boat-days.

$x_{opt}=K\times (1-\frac{q\ast E}{r})=400,000\ast (1-0.00001\ast 4000/0.08)=200,000$ whales

Maximum sustained yield:

$H_{max}=q\ast E\ast x=0.00001\ast 4000\ast 200000=8000$ whales pre year.

(b) Examine the sensitivity to the intrinsic growth rate. Consider both the optimum level of effort and the resulting population level.

From $E_{opt}=\frac{r}{2q}$

so $r$ is variable, $q$ is constant.

Sensitivity of optimal effort:
$\frac{\partial E_{opt}}{\partial r}=\frac{1}{2q}=50,000$

Elasticity:

$$\begin{gathered} \frac{\partial E_{opt}}{\partial r}\cdot \frac{r}{E_{opt}} \\ =\frac{1}{2q}\cdot \frac{r}{\frac{r}{2q}} \\ =\frac{1}{2q}\cdot 2q \\ =1 \end{gathered}$$

When growth rate $r$ increase $1\%$ will increase $1\%$ in $E_{opt}$.

© Examine the sensitivity to the maximum sustainable population. Consider both the optimum level of effort and the resulting population level.

$$\begin{gathered} x_{opt}=K\times (1-\frac{q\ast E_{opt}}{r}) \\ =K\times (1-\frac{0.00001\ast 4,000}{0.08}) \\ =K\times (1-1/2) \\ =\frac{K}{2} \end{gathered}$$

$\frac{\partial x_{opt}}{\partial r}=0$.

so the sensitivity to the maximum sustainable population is nothing to do with $r$.

Ex3. Economic Optimization of Whale Harvesting

Statement

In Exercise 2, suppose that the cost of whaling is $500$ per boat-day, and the price of a fin whale carcass is $6,000$.

(a) Find the level of effort that will maximize profit over the long
term. Model as a one-variable optimization problem using the five step method.

(b) Examine the sensitivity to the cost of whaling. Consider both the eventual profit in $/year and the level of effort.

© Examine the sensitivity to the price of a fin whale carcass.
Consider both profit and level of effort.

(d) Over the past $30$ years there have been several unsuccessful attempts to ban whaling worldwide. Examine the economic incentives for whalers to continue harvesting. In particular, determine the conditions (values of the two parameters: cost per boat-day and price per fin whale carcass) under which harvesting the fin whale produces a sustained profit over the long term.