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Economic Environment Drivers (EED)

Purpose

Economic Environment Drivers (EED) model real operating conditions that mediate how much value BUFMs can actually realize.

EED complements FFD: - FFD: entitlement/opportunity signal (for example fuel-cost differential per kWh). - EED: realized environment (service level, utilization, demand-supply balance).

Together, FFD and EED provide ecosystem glue for coherent simulation across Rider, BCS, SNS, EPS, and other BUFMs.

Finance and BD rationale:

  • EED converts theoretical value into realized value under field conditions.
  • FFD shows opportunity; EED shows how much opportunity is actually captured.
  • EED explains why strong paper economics can still produce weak cashflow when service levels, utilization, or demand-supply balance are poor.
  • EED highlights which operating levers should be fixed first.

Core Drivers

Current EED core drivers:

  • service_level_ratio: delivered service vs demanded service
  • capacity_utilization_ratio: active capacity vs installed capacity
  • demand_supply_ratio: demand pressure on available supply
  • gap/penalty indicators:
  • service_gap_ratio
  • idle_capacity_ratio
  • overload_ratio

These are produced by calculate_eed_core_drivers(...) in models/eed_model.py.

BUFM Glue Factors

EED converts raw environment state into BUFM-ready factors:

  • revenue_realization_factor
  • variable_cost_realization_factor
  • fixed_cost_absorption_factor
  • fixed_cost_penalty_multiplier
  • demand_pressure_multiplier
  • ecosystem_coherence_index

These are produced by calculate_eed_glue_factors(...).

Applying EED to BUFM Cashflow

Use apply_eed_to_bufm_cashflow(...) to apply EED factors to a BUFM baseline block:

  • Base inputs:
  • base_revenue
  • base_variable_cost
  • base_fixed_cost
  • EED factors:
  • revenue realization
  • variable-cost realization
  • fixed-cost penalty

Output: - adjusted revenue - adjusted costs - adjusted net cash

Example Interpretation

If service level is below target and utilization is low: - realized revenue is reduced - fixed cost absorption worsens - net cash declines even if FFD remains strong

This is exactly why FFD and EED must be used together for ecosystem simulation.

Implementation

  • Python module: models/eed_model.py
  • Tests: models/tests/test_eed_model.py