Modeling Change With Difference Equations

MODELING THE CHANGE
WITH DIFFERENCE
EQUATIONS
A.VIVEK JOE BHARATH
ASSISTANT PROFESSOR
DEPARTMENT OF CHEMICAL ENGINEERING
COIMBATORE INSTITUTE OF TECHNOLOGY
INTRODUCTION
• Changes are common in any physical or real
system.
• If the change takes place over discrete time

periods, then the change can be modeled by
difference equations.
MODELING AND SIMULATION - M.Sc. DECISION AND

07/08/2022 2
COMPUTING & DATA SCIENCE
Basic Paradigm or Strategy
 Change may be positive or negative.

If change is positive, system’s behaviour grows with
time.
If change is negative, system’s behaviour decays with
time
MODELING AND SIMULATION - M.Sc. DECISION AND

07/08/2022 3
COMPUTING & DATA SCIENCE
Let us consider a system whose behaviour is influenced by a Variable A.
If the variable A takes following discrete value (Sequence of number),
𝑨={ 𝒂𝟎 , 𝒂𝟏 , 𝒂 𝟐 , 𝒂𝟑 … … … … … … 𝒂𝒏 }
Then the change in variable A can be written as

 
 
 
EXAMPLE:7
A fixed deposit of initial worth of $ 1000 gets interest rate of 3% per
month on the last day of every month in discrete manner. Develop a
mathematical model that predicts the change in bank balance by
considering change as discrete.
(i) What is the amount of money in the fixed deposit after 20
months`?
(ii) How many years will it take to reach balance as the double of
initial worth?
Bank Balance
bn
Let bn – Bank Balance or value of money in deposit after n months
Basic Strategy or paradigm for development of model
[ ] [ ]
𝑷𝒓𝒆𝒔𝒆𝒏𝒕
𝑭𝒖𝒕𝒖𝒓𝒆
= [ 𝑪𝒉𝒂𝒏𝒈𝒆 ] + 𝒗𝒂𝒍𝒖𝒆
𝒗𝒂𝒍𝒖𝒆 𝒐𝒇
𝒐𝒇
𝒗𝒂𝒓𝒊𝒂𝒃𝒍𝒆
𝒃𝒏 +𝟏 ¿ [ 𝑪𝒉𝒂𝒏𝒈𝒆 ] +𝒃 𝒏
In this example, change in bank balance is due to interest only.
𝒃𝒏 +𝟏=𝟎 . 𝟎𝟏 𝒃𝒏 + 𝒃𝒏
𝒃𝒏 +𝟏=(𝟏+𝟎 .𝟎𝟏) 𝒃𝒏
𝒃𝒏 +𝟏=𝟏 . 𝟎𝟏 ×𝒃 𝒏
When n =0, the above equation can be written as
𝒃𝟏 =𝟏 .𝟎𝟏 × 𝒃𝟎
When n =1 , the general expression can be written as
𝒃𝟐 =𝟏 .𝟎𝟏 × 𝒃𝟏
𝒃𝟐 =𝟏 .𝟎𝟏 ×(𝟏 . 𝟎𝟏 ×𝒃 ¿¿ 𝟎)¿
𝟐
𝒃𝟐 =𝟏 . 𝟎𝟏 𝒃𝟎
When n =2, the above equation can be written as
𝒃𝟑 =𝟏 .𝟎𝟏 × 𝒃𝟐
𝟐
𝒃𝟑 =𝟏 .𝟎𝟏 × 𝟏 .𝟎𝟏 𝒃 𝟎
𝟑
𝒃𝟑 =𝟏 . 𝟎𝟏 𝒃𝟎
Similarly, we can write
𝒏
𝒃𝒏 =𝟏 . 𝟎𝟏 𝒃𝟎
(i) What will be the value of money after 20 months?
Let us substitute n= 20 in the previous expression, we get
20
𝑏20 =1.01 × 1000
20
𝑏20 =1.01 × 1000
𝑏20 =1.2202× 1000
𝒃𝟐𝟎 =$ 𝟏𝟐𝟐𝟎 . 𝟐
n
bn= 1.01 X b0
S.No Money $
1.00 1010.00
2.00 1020.10
3.00 1030.30
4.00 1040.60
5.00 1051.01
6.00 1061.52
7.00 1072.14
8.00 1082.86
9.00 1093.69
10.00 1104.62
11.00 1115.67
12.00 1126.83
13.00 1138.09
14.00 1149.47
15.00 1160.97
16.00 1172.58
17.00 1184.30
18.00 1196.15
19.00 1208.11
20.00 1220.19
EXAMPLE:8
A fixed deposit of initial worth of $ 1000 gets interest rate of 1% per
month on the last day of every month in discrete manner. In addition
$50 is withdrawn every month from that deposit.
(i) Develop a mathematical model that predicts the change in bank
balance by considering change as discrete.
(ii) What is the amount of money in the fixed deposit after 20
months?
(iii) How many years will it take to reach balance as an half of
initial worth?
Input Bank Balance Output
Deposit of Interest
bn Withdrawal
Let bn – Bank Balance or value of money in deposit after n months
Basic Strategy or paradigm for development of model
[ ] [ ]
𝑷𝒓𝒆𝒔𝒆𝒏𝒕
𝑭𝒖𝒕𝒖𝒓𝒆
= [ 𝑪𝒉𝒂𝒏𝒈𝒆 ] + 𝒗𝒂𝒍𝒖𝒆
𝒗𝒂𝒍𝒖𝒆 𝒐𝒇
𝒐𝒇
𝒃𝒏 +𝟏 ¿ [ 𝑪𝒉𝒂𝒏𝒈𝒆 ] +𝒃 𝒏
In this example, change in bank balance may occur due to

addition of interest or withdrawal only.
(i) Change is positive if there is an addition

(ii) Change is negative if there is a withdrawal
𝒃𝒏 +𝟏=( 𝟎 . 𝟎𝟏 × 𝒃𝒏 − 𝟓𝟎 ) + 𝒃𝒏
𝒃𝒏 +𝟏=( 𝟎 . 𝟎𝟏 𝒃𝒏 + 𝒃𝒏 −𝟓𝟎 )
𝒃𝒏 +𝟏 =( 𝟎 . 𝟎𝟏 𝒃𝒏 + 𝒃𝒏 −𝟓𝟎 )
𝒃𝒏 +𝟏=( 𝟏 . 𝟎𝟏 𝒃𝒏 −𝟓𝟎 )
When n=0, the above expression can be written as,

𝒃𝟏 =( 𝟏 .𝟎𝟏 𝒃𝟎 − 𝟓𝟎 ) −− −(𝟏)
When n=1, the above expression can be written as,
𝒃𝟐 =( 𝟏 .𝟎𝟏 𝒃𝟏 − 𝟓𝟎 ) −− −(𝟐)
While substituting equation(1) in equation(2), we get

𝒃𝟐 = ¿
𝒃𝟐 =( 𝟏 .𝟎𝟏 × 𝟏 .𝟎𝟏 𝒃𝟎 − 𝟏. 𝟎𝟏 ×𝟓𝟎 ) −𝟓𝟎
𝒃𝟐 = ( 𝟏 . 𝟎𝟏 𝒃 𝟎 − 𝟏 . 𝟎𝟏 × 𝟓𝟎 ) − 𝟓𝟎
𝟐
𝒃𝟐 =𝟏 .𝟎 𝟏𝟐 𝒃𝟎 −𝟏 .𝟎𝟏 × 𝟓𝟎 −𝟓𝟎
(or)
𝒃𝟐 =𝟏 .𝟎 𝟏𝟐 𝒃𝟎 − 𝟓𝟎 (𝟏+𝟏 . 𝟎𝟏)
In similar way, b3, b4, b5 ….. bn can also be obtained.

When n=2, the recurrence relationship can be written as,
𝒃𝟑 = ( 𝟏 . 𝟎𝟏 𝒃𝟐 − 𝟓𝟎 )
While substituting b2 in the above expression, we get

𝒃𝟑 =( 𝟏 . 𝟎𝟏(𝟏 .𝟎 𝟏 𝒃 𝟎 −𝟏 . 𝟎𝟏 ×𝟓𝟎 −𝟓𝟎) −𝟓𝟎 )
𝟐
𝒃𝟑 =( 𝟏 . 𝟎𝟏 𝒃 𝟎 −𝟏 . 𝟎 𝟏 ×𝟓𝟎 − 𝟏 .𝟎𝟏 × 𝟓𝟎 −𝟓𝟎 )

𝟑 𝟐
𝟑 𝟐
𝒃𝟑 =𝟏 .𝟎 𝟏 𝒃𝟎 −𝟏 .𝟎 𝟏 ×𝟓𝟎 −𝟏 . 𝟎𝟏 ×𝟓𝟎 − 𝟓𝟎
(or)
𝟑 𝟐
𝒃𝟑 =𝟏 .𝟎 𝟏 𝒃𝟎 − 𝟓𝟎 (𝟏+𝟏 . 𝟎𝟏+𝟏 . 𝟎 𝟏 )
Therefore, in general, we can write

𝒏 𝟐 𝒏 −𝟏
𝒃𝒏 =𝟏 . 𝟎𝟏 𝒃𝟎 − 𝟓𝟎(𝟏+𝟏 . 𝟎𝟏+𝟏 .𝟎 𝟏 +…+𝟏 . 𝟎 𝟏 )
𝒏 𝟐 𝒏 −𝟏
𝒃𝒏 =𝟏 . 𝟎𝟏 𝒃𝟎 − 𝟓𝟎(𝟏+𝟏 . 𝟎𝟏+𝟏 .𝟎 𝟏 +…+𝟏 . 𝟎 𝟏 )
Sum of n terms in Geometric progression with initial term as ‘1’

and common ratio as ‘1.01’.
Let us consider a GP of following form a, ar, ar2, ar3 ….. arn-1 .
Sum of n term will be
𝒏
𝒏 𝟏 ×(𝟏 − 𝟏 .𝟎𝟏 )
𝒃𝒏 =𝟏 . 𝟎𝟏 𝒃𝟎 −𝟓𝟎 ×
(𝟏 − 𝟏. 𝟎𝟏)
𝒏
𝒏 𝟏 ×(𝟏 − 𝟏 .𝟎𝟏 )
𝒃𝒏 =𝟏 . 𝟎𝟏 𝒃𝟎 −𝟓𝟎 ×
− .𝟎𝟏

Modeling Change With Difference Equations

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MODELING THE CHANGE

• If the change takes place over discrete time

MODELING AND SIMULATION - M.Sc. DECISION AND

 Change may be positive or negative.

MODELING AND SIMULATION - M.Sc. DECISION AND

Then the change in variable A can be written as

Basic Strategy or paradigm for development of model

In this example, change in bank balance is due to interest only.

𝑏20 =1.2202× 1000

Let bn – Bank Balance or value of money in deposit after n months

Basic Strategy or paradigm for development of model

In this example, change in bank balance may occur due to

(i) Change is positive if there is an addition

When n=0, the above expression can be written as,

While substituting equation(1) in equation(2), we get

In similar way, b3, b4, b5 ….. bn can also be obtained.

While substituting b2 in the above expression, we get

𝒃𝟑 =( 𝟏 . 𝟎𝟏 𝒃 𝟎 −𝟏 . 𝟎 𝟏 ×𝟓𝟎 − 𝟏 .𝟎𝟏 × 𝟓𝟎 −𝟓𝟎 )

Therefore, in general, we can write

Sum of n terms in Geometric progression with initial term as ‘1’

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