The method presented in this paper allows for an investigation of how the eigenvalues characterizing the model behavior is created from the underlying model structure and how this behavior feeds back to change instantaneously the relative significance of the model structure. The method also allows us to identify the relative significance of the various parameters that governs the gains of the links and loops of the model. The method has been implemented using Matlab software for the purpose of facilitating an eigenvalue analysis of system dynamic models. This work is based on control theory as well as the previous work on eigenvalue analysis in system dynamics. It summarizes the thesis work by Ahmed AbdelTawab AbdelGawad (2004) and Bahaa E. Aly Abdel-Aleem (2004), under the supervision of Mohamed Saleh and Pål I. Davidsen. The method outlined and Matlab code developed in preparation for this paper may be implemented as part of any simulation package.
The purpose of this research was to assess the Egyptian software industry using a Systems Dynamics approach based on the Software Export Success Factors Model developed by Heeks and Nicholson, 2002. A CLD was prepared as a step towards building a model to simulate the expected effect of key software-related infrastructure variables on the Egyptian software export revenue. Simulations of software export industry over a period of 10 years point to the following: (1) Injecting an additional 30% financial resources resulted in an increase of 8.4% in software export revenue and 2.1% in job opportunities with respect to the reference mode, (2) Improving IT staff productivity by 42%, and delivered software quality by 10%, with a decrease in resistance to change of 20% led to an increase of 68.7% in software export revenue and of 12.9% in job opportunities with respect to the reference mode, (3) Enhancing R&D by 50% and IT staff innovation contribution by 10% resulted in an increase of 14.4% in software export revenue and 3% in job opportunities with respect to the reference mode, and (4) Improving the software export promotion efficiency by 14% and quality of delivered software by 10% led to an increase of 38.7% in software export revenue and 8% in job opportunities with respect to the reference mode.
The paper addresses the question whether a modular organizational structure breeds mechanisms that promote proactive strategic flexibility. We examine this question from the perspective of the cognitive school of strategic management and with the aid of system dynamics modeling and simulation to explore long-term dynamic effects. Both our analysis and our experiments with the model suggest that modular organizations do not necessarily encourage the construction of managers mental models with a capability to generate more strategic options and, thus, do not promote strategic flexibility at a higher degree compared to more traditional organizational structures.
The glucose regulatory system in man is a complex system. It is a nonlinear, multiloop, self-regulatory feedback system which exhibits behavior which is often counter-intuitive and which is insensitive to many external interference. The challenge in this work is to employ a model that is simple, but not too simple for the students of first medical year with the purpose to help them understand the glucose regulatory system in the human being body by quasi-practical approach based on simulation tool and not my theoretical understanding. This model describes the carbohydrate metabolism, digestion, absorption and fate of intake carbohydrates. The model attempts to reflect the underlying (patho) physiology of insulin action and carbohydrate absorption in quantitative terms such as insulin sensitivity, volume of glucose and insulin distribution and maximal rate of gastric emptying. The model represents the integration of two existing models proposed earlier by Foster et al. (1970) and Lehmann et al. (1992).
Despite the fact that much of recent terror is ethnically based, little attention has been paid to systematically explaining ethnic violence. We build on the work done by the Minorities at Risk Project (MAR) to the issue of ethnic terror using systems dynamics. While there has been important work done using MAR to explore ethnic violence as a base using statistics and qualitative analysis (Gurr 2000) there has been little work exploring ethnic terrorism specifically and none that has exploited systems dynamics as an analytical tool. The application of a systems dynamics approach will help us go beyond some of the limitations of statistical analysis to explore how government policy and ethnonationalist terrorism feed of each other in a cycle of violence, discrimination and repression. This work has three broad goals. First, it is targeted at understanding the causes of ethnic terror and second examining the way the relation between the ethnic policies of governments and the behavior of ethnic groups - particularly their choice to use or not use terrorism relate systematically. Third, this work sees to apply for the first time the tools of systems dynamics to political violence.
Evaluating new bank loans has been considered as one of the main dilemmas that banks managers have to deal with in order to reduce the probability of default. The lending process is a series of activities involving two main parties whose association ranges from the loan application to the successful or unsuccessful repayment of the loan. This paper describes the construction of a flight simulator which uses the ideas of System Dynamics and the Viable Systems Methodology. The Decision Support Tool thus formed uses systemic approaches to measure a firms performance and can provide a risk assessment in the sense of evaluating performance under different (what- if) scenarios. The credit worthiness from this model can then be evaluated against the usual estimate based only on financial ratios.
Prices in the Property and Casualty Reinsurance market are known to undergo significant fluctuations. In order to understand the reasons for these fluctuations a simulation model was built that replicates relevant features of the reinsurance market: a limited number of market participants are competing, low product differentiation, volume constraints for each market participant and discrete volume decisions based on estimated rather than actual market prices. Despite a number of simplifications the model captures the current market dynamics. In a further development the model was made interactive allowing actual players to take the role of the reinsurance companies and make the individual volume decisions based on current financials and the market history.
The model was built using agent based instead of system dynamics modeling techniques particularly to simplify implementation of critical discrete events and to create a simple to understand structure.
We will discuss the model, the trade-offs between the Agent-based and System-dynamics approach as they applied to this model and share some experience in communicating the model structure with the business owners.
Demand Conditioning is one of the methods used to address imbalances between supply and demand in supply chains. This requires the manufacturer to adjust the demand plan to respond to supply issues. The supply chain has several sources of delays and uncertainties such as lead times at different stages, forecast error, supply yield variability etc. that could potentially trigger or influence the conditioning process. In this paper, we examine dynamical effects in the conditioning process to study potential instabilities. We developed a Systems Dynamics model of a PC manufacturing supply chain to examine instabilities in the supply chain. This model provides insight on supply chain risks and error propagation due to unsynchronized execution. We also use the model to study the effect of different countermeasures to stabilize the supply chain.
A key determinant of any groups performance in such contexts as varied as product development, consulting, and craft manufacturing is its transactive memory system (TMS): that is, its shared, tacit memory system for managing and communicating information relevant to the group. Using the methodology of system dynamics, we model the relationship between TMS and productivity by leveraging the theory of learning-by-doing at both the group and individual levels. We also incorporate into the model the concepts of group forgetting, in which employee turnover reduces group knowledge. We also include the effects of specialization, overspecialization, and knowledge obsolescence. We then simulate the impact of each of these refinements and perform sensitivity analyses on them. Finally, we discuss several implications of this model for future research. One implication is that representing group learning processes by a single, traditional, power-law learning curve may be in many cases inadequate. Another is that the very development of a TMS may create excessive individual specialization that is detrimental to future productivity levels.
This paper examines results on a series of Cournot markets with groups of five seller subjects. Step by step, we add complexity (and realism) to the simplest market and test the effects on behavior in an accompanying laboratory experiment. Consistent with previous experiments and the rational expectations hypothesis, price behavior was explained with Cournot Nash equilibrium with biases towards competitive prices. When complexity is increased, there rationality is degraded and lead to a salient cyclical tendency. Indications of cyclical behavior were induced by the application of spectral analysis and autocorrelation. We found that the more problematic effect of complexity in market behavior is the extra delay rather than accumulations. We proposed a heuristic based on the bounded rationality theory, but the tests were not satisfactory.
An Adaptive Expectations Approach to the Mechanisms of Transmission Model of the Central Bank of Colombia
Fernando Arenas Pontificia Universidad Javeriana
Franz Hamann Banco de la República
ABSTRACT
Looking for the potential applications of system dynamics in macroeconomic modeling at the Central Bank of Colombia, the Mechanisms of Transmission Model (MTM) was recast in a system dynamics model. The forward-looking function of the model that, in the case of the MTM is a rational expectations based function, was approached by means of the TREND function. This document describes the system dynamics model and shows comparative impulse-response results between the models, when PULSE and STEP shocks are applied to inflation target, monetary policy, food supply, nominal depreciation rate, and risk premium.
Modelling of technology adoption has tended to be based on individual product diffusion, although traditional models have been extended to incorporate replacement, competition, generations of substitution and other managerial variables such as pricing. A question is: how can these models be broadened to represent service industry applications and generalised or upscaled to model the phenomenon of General Purpose Technologies? GPTs have the properties of pervasiveness and complementary technologies. GPTs suffer from long development delays or start-up problems involving the co-ordination problems of complementary bandwagon behaviour. System dynamics modelling is proposed as an effective industry-level modelling approach to link standard expert judgement market forecasting used in industry and theoretical analysis used by economists in order to provide robust technology management policies. This paper represents an overview of the work-in-progress research themes and a modelling agenda.
The automotive industry is considered as one of the main drivers of todays global economy. The industry spans across the globe, with nearly each country trying to develop the industry and its supply chain within its boundaries. This paper presents a Business Dynamics model that maps the Egyptian Automotive industry, which started as a public industry and then transformed to a market driven private industry. The Egyptian automotive industry focuses on the local Egyptian market, with no current plan for exporting to the global market. Such focus provides the Egyptian automotive industries with challenges that impede its growth. The Business Dynamics model presented in the paper presents an explanation of the current status of the Egyptian Automotive industry. The model is then used to provide insights for the current status of the industry, as well as testing several policy options for stimulating the industrys growth.
In this poster, authors explain a System Dynamics model developed for measuring efficiency of the Small Aircraft Transportation System (SATS) that NASA has been developing to enhance intercity travelers' mobility in the country. The model is comprehensive in the sense that it includes multi-modes such as automobile, commercial airlines and rail. It also considers different types of decision makers such as travelers, airlines, Federal Aviation Administration (FAA) and Federal Rail Administration (FRA) that dynamically interact with each other based on its own interest. The model allows users to change several critical but uncertain parameters such as the price for SATS trip, airports for SATS operations, etc. This feature enables users to do "what-if" type of study. Technically, the model is developed as a stand-alone tool with a Graphical User Interface that encloses all computational procedures written in MALTALB. Socio-economic data and computational results are represented at a county level using the Geographical Information System (GIS).
The Military Roundtable is the arena for sharing ideas and experiences
on the application of System Dynamics to military problems. The list of
topics includes, for example: strategy development; force-on-force
analysis; war-gaming; military decision making; training of military
decision makers; including command-post exercises; preparedness studies;
human resource management; development and management of military
capability; management of materiel acquisition; military logistics
modelling; in-service management. We suggest the following main topic
for this year's meeting: "SDM as a tool to support training and
exercise". Opportunities exist for participants to provide update on
recent research and consulting activities, to discuss opportunities for
the future and challenges that confront those working in or having an
interest in system dynamics modelling (SDM) in military context. We will
continue the work on assembling a compendium of models and readings on
SDM in defence.
The Norwegian Armed Forces used to have a unitary personnel policy. All officers were recruited with prospects of life-long employment. The long time constants in such a system meant that a transformation into a younger corps was almost impossible to achieve. The model-supported intervention significantly reduced the probable risk of failure in policy design and implementation. A number of achievements must be attributed to the model intervention per se. First, the models base case projected a 100% surplus of senior officers. This was an eye-opener. Moreover, the lack of suitable options within the current policy regime became obvious. Finally, the suitability of the new policy was convincingly presented and its implementation success virtually secured. The success of the model intervention is discussed. Though the most aggregated model sufficed analytically, the existence of a more detailed model that reflected the production system, crucially enhanced the analysis face validity, especially as a cost analysis was called for. However, more critical than the models transparency was that the results fell within the comfort zone of most key stakeholders. The results challenged intuitions enough so that the model was considered invaluable, but not so much so as to question the approach.
Natural gas for automotive purposes is an appealing alternative: curbing local and global pollution and dependence on foreign oil are among the most remarkable advantages. The other side of the coin implies building and maintaining an on purpose network entailing financial requirements. The final aim of this work is to compare its advantages with economic rationale.
A system dynamics model is built and taken as reference for all quantitative assertions. It contains data referring to two scenarios: business as usual versus expansion. The model treats separately global and local emissions and infrastructure needs. Quantitative results are the basis for the final assessment, that is grounded on the externalities theory. By analyzing the scenarios gap numerous remarks follow.
Regarding global emissions, beneficial effects seem modest. Local emissions would either decrease or not vary depending on the pollutant. Avoided externalities estimates exceed infrastructure financial requirements. Natural gas is a suitable answer in tackling some issues related to the road transport industry.
System Dynamics (SD) is a special type of simulation modeling where
output validity refers to validating the patterns of dynamic behaviors, such
as oscillations, growth or decline. The developers and users of these
models (the decision makers and people affected by decisions based on
such models) are all rightly concerned with whether a model and its
results are valid. Structural model validity and validation have long been
recognized as one of the main issues in system dynamics. This concern
is addressed through pattern recognition and testing in this paper.
Another issue in dynamic simulation methodology is parameter
calibration; assuming that the structure of simulation model constructed
by the user is valid. Parameter calibration is the minimization of an error
function which is a measure of the correspondence between numerically
calculated output patterns and the respective real behavior patterns. We
offer a software that does automated parameter calibration with respect to
a given (desired) dynamic pattern. This particular feature can also be
used in policy improvement design.
Our objective is to conduct simulations with economic environmental model. We list the important and causal relationships among the levels and trace the feedback loop structures. In describing an economic and environmental model we focus on the relations among income, consumption, emission, and damage. This paper yields insight into maximization of welfare. Next, we present the simulation runs of the model, conducted with the help of existing system dynamics modeling tools.
The importance of management flight simulators for learning has been already tested and documented. Single player simulation games are usually utilised, but a multiplayer simulation game adds direct competition to the existing problems (delays, nonlinearities and feedbacks). An asymmetric game also introduces bounded rationality and the dynamics of the information flow within the team. A network team game finally allows for the analysis of cooperation dynamics (by letting the users play against each other: against an unpredictable competitor, with no pre-defined strategy). This paper presents an asymmetric multiplayer network game that is considered to be easy to play and understand. The main advantage of the ILE here introduced is the facilitation of the analysis of: learning and decision making processes, cooperation and competition dynamics.