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.
Project-based professional service organisations supply their services as tailored or one-off projects for specific clients. The particular form of their organisation, the character of their relationships with their clients necessary to deliver highly customised projects and the non-routine, creative nature of the work come together in a way which makes the management of these service firms particularly demanding. A common challenge is fluctuation in the workload. While this is partly influenced by changes in demand, the external environment does not provide a comprehensive explanation and the interaction between business processes and project processes needs to be examined. In providing a generic explanation of the causes of workload fluctuation as well as an assessment of different bidding strategies based on a system dynamics model, this paper aims to help to advance the theoretical understanding of the project-based professional service organisation and ultimately to help to provide tools for its managers.
Recently, an invasive Asian beetle known as the Emerald Ash Borer (EAB) (Agrilus planipennis Coleoptera: Buprestidae) has emerged as a threat to Ash trees in the Midwestern United States and Canada (McCullough and Katovich 2004). Significant infestations in Michigan and nearby areas have all but doomed nearly one billion native ash trees. This paper presents an argument for the establishment of a widely accessible knowledgebase of information on the EABs spread capabilities. We argue that spatial dynamic modeling stands as a flexible and powerful decision support system platform. We present initial simulations of EAB spread scenarios constructed using tree information and land use data collected for DuPage County, IL, an uninfected suburban county in the Chicago metropolitan area. These simulations test policies focused on impeding the costly spread of the beetle. This analysis also presents a framework for further studies assessing the economic impacts on municipalities and counties due to tree removal costs and aesthetic damage. Our work points to human driven movement as the major vector for EAB spread throughout our study area. Here, the focus falls on the ability of state and county implemented firewood quarantines to act as effective policies for slowing EAB spread.
The negligent upkeep of many abandoned industrial sites (brownfields) throughout the twentieth century has had grave impacts on the urban landscape of American and European cities. In recent years, brownfield redevelopment has come to be viewed as a strategy for sustainable land use and urban revitalization. This study assesses the feasibility of the construction of a dynamic simulation model of urban brownfield redevelopment. Literature surrounding brownfield redevelopment is reviewed and used to construct a dynamic hypothesis of brownfield redevelopment as it relates to site liability, economic viability, and availability of redevelopment funding. Finally, an initial system dynamics model of the brownfield redevelopment process is constructed. This quantitative analysis is performed using the 2003 US Conference of Mayors brownfield survey, which serves as a dataset on brownfield distribution and average site size. We conclude with suggestions for the extension of the model to capture spatial feedback in order to assess redevelopment effects on the surrounding matrix of urban land-uses.
The complexity and characteristics of the pharmaceutical firm present an intriguing context for underlying information management issues during clinical trials for new drug development. This paper reports on the evaluation and performance of MIS for information management in clinical trials in new drug development. The main objective of the study is to examine the economic and business impacts of automating that process, to enhance our understanding of informational stakes involved, using a system dynamics (SD) model. The SD method is enriched in this paper with other conceptual frameworks such as Alters (2001) Work Centered Analysis (WCA) and the Balanced Scorecard (BSC) (Kaplan and Norton, 2001). Results of the simulations for alternative sensitivity analyses on errors rates in data transmissions, that is, on alternative error-rate specifications, do not necessarily influence project delay, but rather work intensity. A discussion details the usefulness of enriching the SD modeling process with alternative conceptual frameworks in the problem definition in such complex settings.
The phenomenon of dwarf or stunted small and micro firms (in Italian nanismo aziendale) is recognised in the small business literature. These are firms that have survived through many years, maybe many generations, providing their owners with acceptable returns and lifestyles, but have remained very small. They might therefore represent potential lost opportunities for owners and, given the importance of the SME sector, local employment and economies. A system dynamics model replicating the basic no-growth, cyclical behaviour attributed to stunted SMEs is firstly analysed. Alternative policies arising from different entrepreneurial views and aimed at changing behaviour to one of stability or steady growth, are then tested and analysed. In this relatively simple form, the model does link behaviours to system structure and could support individual entrepreneurs in understanding the reasons for dwarfism in their firm and the potential for unleashing growth. It could also form the basis for a more detailed model to support the identification and evaluation of strategic alternatives in individual firms.
Modelling knowledge in SD organisational interventions may become a puzzling task because of difficulties in achieving a common shared view among business key-actors about the impact of Intellectual Capital (IC) investments on future company performance.
Such difficulties are not only related to the intangible nature of IC, but also to the indirect role of knowledge in affecting performance drivers and outcomes. This phenomenon is particularly relevant in service businesses, where intangibles account for a high percentage of total assets.
In order to overcome such problems, a conceptual framework has been developed by the authors to build a generic SD model aimed to support business decision makers in IC planning, with particular regard to service firms.
Such model has provided the basis for developing two ILEs focused on a telecom mobile service provider and an insurance company. The first application was related to an education project, while the second one was linked to a consulting assignment.
The use of a conceptual framework as a basis to build an ILE has proved to be a successful strategy in order to better communicate business key-actors the potential of SD in modelling and assessing IC policies.
Main key-issues underlying model development and the ILEs application are discussed in the paper, and most significant outcomes from simulations are commented.
The evolution of fleet maintenance and management policies highlights the growing importance of maintenance issues in both private and public companies. The need to improve maintenance performance requires an accurate evaluation of the trade-off between costs and benefits related to alternative fleet maintenance and management policies. However, the complexity of maintenance system makes this evaluation a very difficult task.
More often a fleet manager deals with the following key issues:
is it more profitable to repair or to renew the company fleet?
Is it more convenient to reduce the average age of the different assets (e.g., by increasing investments in new bus) or to expand the maintenance activities (e.g., by rising repairing costs)?
In fact, fleet managers cannot ignore the impact of their decisions on both company service and financial performance over time.
Aim of this paper is to show how the System Dynamics approach can effectively support fleet managers in designing and evaluating their strategies. The simulation model here presented is based on the result of a project with two Italian city bus companies. Through such tool decision makers can test different fleet strategies and assess their effects on company performance.
In todays economy all manufacturers need to pay attention on how to build strong and long-term relationships with their dealers chain. In fact, it has been demonstrated that short term policies aimed to provide dealers immediate benefits (e.g., price discounts) may prevent the development of long term and fruitful relationships. Also supporting dealers in promoting manufacturers products has been proved as a sustainable strategy in long run.
Another implication of manufacturers bounded policies refers to their inclination to reinvest significant amounts of their sales revenues in advertising and product portfolio improvement, without taking into account the need to invest in dealers human resources, to make their strategies sustainable.
Based of the above remarks, this paper aims to demonstrate the usefulness of a system dynamics approach in involving both manufacturers and dealers in strategic reasoning.
Empirical evidence arising from a research project conducted by the authors with a manufacture operating in a high-tech industry, shows that using system dynamics as a methodology to support communication and learning may act as a significant lever to design successfully long term oriented policies. Such policies ought to increase dealers skills and motivation, and improve potential customers awareness of product benefits, at the same time.
Electric power systems are traditionally designed and developed with the assumption that demand is exogenous to the system. Connecting the feedbacks from the system to consumers will provide incentives for consumers to reduce demand during periods of high system prices. A system dynamics model is used to analyze the dynamics and long term implications of adoption of technology to enable demand response. The model includes the decision by consumers to adopt demand response technology along with decisions by investors to build generation capacity. The adoption process reduces overall system prices for peak demand periods, creating feedbacks with generation investment. The effects of technology improvement via learning, long term demand elasticity, and policies to promote adoption are considered. The results of the simulations show that diminishing returns to adopters and significant externalities in terms of free rider effects limit the attraction of individual adoption. A subsidy to alleviate the costs to individuals can be justified by the significant system level savings from widespread adoption. Several pernicious effects can emerge from large scale demand response, however, including increased price volatility due to a reduction in generation capacity reserve margin, an increase in long term demand, and increased emissions from the substitution of coal plants for natural gas and renewable generation capacity.
PANEL: Andrei Borshchev, Xjtek,Russia; Nate Osgood MIT,USA; Mark Paich, Decisio Consulting, USA; Hazhir Rahmandad, Sloan School of Management, MIT, USA; Mark Heffernan, International System Dynamics, Australia; Sara Metcalf, University of Illinois, USA; Chris Johnson General Electric, USA;Geoff McDonnell UNSW Australia; Other users from industry.
There is increasing interest in combining agent based (AB) and system dynamics (SD) modeling methods. This workshop will demonstrate the differences between the AB and SD approaches using some popular examples from the Dynamics of Contagion and the Diffusion of Innovation, using the AnyLogic multi-method software. It will also walk through some practical examples of the use of combined methods in health, marketing and other industries. The workshop will conclude with a "warts and all" panel discussion involving experienced SD practitioners and researchers in SD, geography and computer science, all of whom are adding AB methods to their work.
This paper presents a dynamic hypothesis explaining the system dynamics underlying the identity theft epidemic. The causal loop structure synthesizes current understanding of the problem and suggests that any strategy to address the identity theft epidemic by primarily focusing on prosecuting thieves without effectively mitigating the underlying forces is doomed to failure. The causal loop diagram elucidates the dominant feedback structure ...a collection of rapid-feedback, self-reinforcing dynamics that generate ample opportunities for would-be thieves. Preliminary results from the analysis provide a foundation for exploring policy options through a full working model, yet to be developed.
Environmental strategies such as Zero-to-Landfill are gaining increasing attention throughout the world. Product take back is a significant means of ensuring that products that have reached the end of their useful lives are reclaimed for reuse, remanufacturing, or recycling. Such a strategy is expected to minimize environmental impacts, reduce overall resource consumption, and provide economic value to manufacturers and consumers. The reverse logistics, however, can be quite complicated as product collection, product disassembly, processing, component returns, and component reclamation must be considered. Further, the costs and magnitude of the requisite system must be projected to support appropriate planning and execution. In this paper, we present a model of a reverse logistics system for a consumer product. The impacts of closed-loop logistics on product adoption rate, product costs, and component reliabilities are balanced against the cost of new infrastructure, shipping and tracking, and processing and inventorying of expended components. We illustrate how a reverse logistics approach may develop as a function of product adoption, the total value of returned components, product reliability, and product lifetime. A Zero-to-Landfill strategy has a significant potential to improve the triple bottom line people, planet, and profit of companies that adopt it.
Organizations may fail to adopt sustainable solutions as a result of incomplete and/or inaccurate feedback into the decision making process. Events that cause harm - environmental, health, or social - are commonly the delayed effect of a prior course of action, itself the result of decisions that emerge from endogenous policy. By accelerating the cost of future harm into current period decisions, producers and purchasers have greater access to the quantity and quality of information that influence decisions to produce and consume. The creation of a financial policy structure that makes future, long-term costs of production, promotion, and consumption explicit in the decision process will correct a current deficiency in the analysis of costs and benefits made by producers and purchasers. Such a feedback loop would correct a structural market failure and could reduce the need for governmental regulation.
Laboratory studies have shown that people cannot handle the time con-stants in dynamic tasks. Yet they obviously cope with such tasks with some success outside the laboratory. This study is one in a series of studies that examine the hypothesis that people cope by relying on heuristics that allow them to simplify the task. The heuristic studied here was that of relying on frequency differences, i.e., what Reason (1990) calls frequency gambling. It examines the effects of varying the relative frequency of scenarios that require different responding, and where relying on frequency rather than learning the actual time con-stants will lead to some success. The results show that the participants did not learn the time constants, that frequency had a strong effect on their decisions, but that their responding also seemed to be influenced by another heuristic identified in earlier studies, viz., that of rapid and massive responding. Implications of these findings for system dynamics modellers are discussed.
This paper introduces the notion of increasing returns to economic activity agglomeration and develops a formal system-dynamic model where this notion is used to explain the self-organizing nature of the spatial structure of industrial clusters. In this model, both pecuniary and external economies based on knowledge spillovers are considered.
The objective of the paper is to show that the one of the main source of macroeconomic investment instability is similar to that which makes difficult managing supply line in famous Beer Game developed by the system dynamics group of MIT Sloan School of Management. It will be pointed out that ignoring production time delays causes instability not because economic agents simply ignore supply line delays, but because they adjust their expectations more rapidly than the delays involved in supply lines, whatever those delays could be. The paper is structured in three sections. In the first we present the classic Phillips argument about unintentional destabilizing effects of stabilization policy in modern dynamic system language, in order to show how to build a simplified macroeconomic supply line model for investment dynamics; in the second section, the macroeconomic model is developed and simulated. Third section concludes the paper suggesting that the inclusion of production time delays in macroeconomic models reopens the space to the control theory in stabilization policy debate
Capturing Project Dynamics with a New Project Management Tool: Project Management Simulation Model (PMSM)
Ali Afsin Bulbul
Portland State University
Systems Science Ph.D. Program
Harder House
1604 SW 10th Ave.
Portland, OR 97201
Phone: (503) 221-4576
Fax: (503) 725-8489
afsin@pdx.edu
In this research, traditional project management concepts, methods, and their deficiencies relative to increasing complexity of projects is discussed. System Dynamics (SD) modeling is proposed as a complementary project management tool to be used at the higher level to augment operational level project management methods. The potential usage of SD models to promote the learning from projects, both in individual and organizational dimensions, is discussed. Working as a project management laboratory, SD project models can be successfully used to improve understanding of the project process. They can be used to design the project in the project-planning phase, to monitor and control the project in the project-execution phase, and to learn from the project in the post-mortem phase working as a learning infrastructure. A generic SD project management simulation model (PMSM) is built to serve for this purpose. The model structure and the graphical user interface are explained briefly. Tests performed to validate the model revealed that the model is appropriately designed, works properly, and it is robust relative to the purpose of the model.
The Department of Homeland Security (DHS) is funding the development of a Critical Infrastructure Protection Decision Support System (CIP DSS) that is intended to be used by DHS decision makers to assess the impacts of deliberate attacks or disruptions on the United States infrastructures and how they might be mitigated by investments in protective or recovery technologies. One of the 17 critical infrastructures is the Defense Industrial Base. The basic mechanisms of such a model are the flows, especially surge response flows, of war materiel from private sector defense industries to the Department of Defense (DoD). In order to capture surge flows, additional models of military logistics, especially deployment, and military missions are needed to drive the behavior of interest. Basic system dynamics models are being considered to provide this feedback to the basic mechanisms. With this consideration of military mission effectiveness, the models main output decision metric is an estimation of casualties, which presents its own system dynamics modeling challenges.
In this paper, we present a novel project management model that incorporates several features yet to be actively addressed in the literature and focuses on earned value management. The model utilizes the basic structures employed in building project dynamics models. The effects of time-varying project team size, of training and communication overload, and of change management are incorporated into our model. With the help of our model and a hypothetical software technology project, we demonstrate how our system dynamics model can contribute beyond basic project tools like MS Project, in generating the earned value management indicators required by project managers under different scenarios and starting assumptions. Results are consistent with well-known behavior of projects in that the later the changes arrive, the longer is the delay in completing the projects. These phenomena are propagated through the earned value measures to see the actual effects upon schedule and cost performance indices. The study also focuses on the use of earned value measures as well as critical chain concepts to understand how these separately impact project duration and cost.
This paper takes a system dynamics perspective of the contemporary trend of Offshoring Knowledge Worker jobs from USA to gain a better and deeper understanding of the results and implications of the trend, its impact on the jobs and workforce dynamics. The results not only support the viewpoint of economists that offshoring is beneficial to the economy, but also highlight another impending phenomena just round the corner, namely the slow rate of growth of workforce. Net U.S. workforce growth is slowing because seventy-one million baby boomers are beginning to retire. In this context, model outputs suggest that offshoring is postponing the undesirable state of U.S. jobs outstripping the U.S. workforce by nearly five years. Thereby, policy-makers have longer to find effective solutions to tackle the impending shortage of workforce in decades to follow. The model suggests that offshoring could not have come at a better time for the US economy.
Faced with new challenges in managing the cyclical and volatile business environment, management at a Commodity Plastic (COM-P) Company agreed to apply System Dynamics (SD) to support strategy development. A SD model of COM-P industry was built by adapting the Pulp and Paper Model. The structure of COM-P Index Price creation was mapped and added to the generic model. The following were investigated: a) The effect of current delays in adjusting prices on phantom demand, on capacity utilization and shipment rates; b) The phenomenon of Phantom demand or pre-buying when customers perceive that prices may be about to go up was modeled; c) By applying the model, the amount of margin lost or gained by the industry due to the price protection terms in the contracts was estimated; d) The risk in the top ten long term contracts under different supply and demand conditions and oil prices in order to support the sales organization with their negotiations; e) The model was applied to get guidance on capital investment timing and to assess the effect of different oil prices and supply & demand scenarios on the profitability of new investments. In many cases the results were counter-intuitive.
Society membership has grown by over 40% from 1999, but the representation of women has remained flat at 12%. Thus, in July 2004 the Policy Council unanimously approved the formation of a committee to work on tracking and improving the diversity of the System Dynamics Society. Last October, a pilot diversity survey was included in the annual membership renewals. In the course of developing the survey, members raised important questions about how diversity should be defined for the System Dynamics Society. More importantly, the initial results suggested potential solutions. Both issues raised questions that need to be discussed. How should diversity be defined with respect to the System Dynamics Society? How does diversity affect participation at conferences and in the society? What are some possible solutions? Please join us in this roundtable discussion on diversity in the System Dynamics Society.
Kaplan and Norton propose a double-loop process that integrates the concepts of Balanced Scorecard and Strategy Map to support managers to define and implement the firm strategy more effectively. The BSC is a performance management system based on a set of few and critical indicators. These key performance indicators are linked together in a causal diagram that represents the hypotheses about the strategy. This approach supports what Argyris calls double-loop learning which facilitates the strategic learning of managers and leads to better performance. This type of learning produces changes in manager assumptions about cause-and-effect relationships and leads to a better understanding of the context, what means a process by which managers can explicit and improve their mental models about the business system. This article describes a simulation-based research for testing a system of hypotheses about the influence of the BSC approach on strategic learning and performance, which uses a System Dynamics-based micro world.
A method of overall analysis for a compared evaluation of various nuclear fission and fourth generation units is here described. In this paper a series of questions related to the near-term deployment of new nuclear technologies in the US and Worldwide are answered and validated by reproducing the mechanisms that drove the nuclear market to the actual configuration. It is then presented a simplified model of the form often used to project market competition ad hoc configured for the case of the energy production by nuclear power. The reproduced mechanisms of interest as well as the out coming model had been designed following the SD approach since it was considered a most suitable and necessary tool for the research and evaluation of the typical feedback effects, which are characteristic of the destination market.
The most outstanding mechanism in terms of importance, uniqueness and significance was undoubtedly the lock-in effect, also referred to as long-term market domination. According to the lock-in phenomenon, even though a nuclear power plant is less attractive from a technical point of view it can take control of the market by being the first to be installed or by moving faster along its learning curve.
This paper revisits the macro-economic modelling and medium term scenarios undertaken at the New Zealand Planning Council (now disbanded) in the mid 1980's. The following major reports were published: "A Macro-Economic Model and Scenarios to 1995" (by Eric Haywood & Bob Cavana) and "Towards 1995: Patterns of National and Sectoral Development" (by Dennis Rose, Adolf Stroombergen, et al). These reports discussed the development and use of a macro-economic system dynamics model (SDMACRO), used to generate trends for the main macro-economic variables, and a general equilibrium price sensitive sectoral model (JULIANNE), which generated compatible sectoral and national forecasts of a range of variables for each of 22 sectors for nominated years. The (JULIANNE) model used outputs from (SDMACRO) as constraints and inputs. A brief overview of the SDMACRO model and its use at the NZ Planning Council will be presented. Also, the reforms of the New Zealand economy that have taken place since the mid 1980s will be summarised and a comparison of the SDMACRO scenarios will be provided against what actually happened over the period between 1985 to 1995. Finally, the paper indicates the development that has taken place with the macro-economic model and how it is currently being used.
The integration of information systems and business process will affect competitive advantages of firms. In order to develop information system, modeling of business process is a fundamental work of system analysis and design. System dynamics is useful to solve non-linear, complex, time delay and feedback problems of business processes. However it still belongs to a special field of modeling language because it cant be integrated well with information systems in organizations. The purpose of this paper is to integrate system dynamics with UML and thus they can be developed synchronously during information systems implementation in enterprise. For this reason, integrated development process and system architecture with system dynamics and UML have also been proposed in this paper.
In this paper, I try to grasp the inner significance of abnormally sustaining house price growth, or so-called house market bubble in Shanghai real estate industry by the tool of system dynamics which especially focuses on the systems with highly dynamic characteristics, and complicated feedback relationships involved, which is consistent with the real estate market system. The most fundamental purpose of this project is to see whether it is the speculators intervention that causes the problem of unsuitable high price in Shanghai house market or not and to see what kind of impacts both on the aspects of society and economic fields will be after the trend of speculation is quenched. This paper mainly divides the system into 6 parts, population and economy sector, family house demand sector, speculators demand sector, speculators profitability sector, house price sector, and house construction and sale sector to analyze how these subsystem can directly or indirectly work on the whole real estate industry in Shanghai.
The system thinking is a kind of new thinking mode that fostering the creative ability. It already has some successful applied experience abroad, particularly in education. In the chemistry teaching especially the calculation of chemical equation of high schools,students are always puzzled by the numerous and complicated superficies of chemical equation and hardly grasp its mathematics essence,which result in bad teaching effect.
This dissertation makes some beneficial quests. Aiming at the relevant problem of the calculation of chemical equation, we put up some teaching practice in 5 classes by using the system thinking method and its related software STELLA, such as the teacher's brief introduction to the software, the basic calculation model establishment way and students activity etc. In this process, students can hold the calculation regulation more effectively. At the same time, the study moving ability between teachers and students also improves dramatically, which leads to the exciting development in other realms.
As a high school student who really enjoy the world of architecture, I use the Stella software to have a try on explaining the former of the curved roof of Chinese ancient architecture by system dynamics view: the factors we call structure, practical, aesthetic judgment, economy affect each other. The trend of the using of the curved roof was increased a lot at first, and then reached a balance eventually; the explanation itself has caused and satisfied my interest of a kind of research. But something more important is that I have cemented an opinion here: in our world, physical and mental (we call it a system), so many social phenomena exist under the control of different basic factors. Its more complicated than we expect most of the time. Luckily the system dynamics view makes us face the complicating world in a deeper, wider sight, and retrace the procedure of its former and change. Then we can make sense of world better. So this kind of try has encouraged me a lot.
This article examines the conceptual framework for the social amplification of a risk issue with an analytic lens of System Dynamics. It will explore the dynamic interaction of general public, mass media, government agencies, and non-profit organizations; or what is called social stations, with regard to the national project of constructing the high-speed railway in Korea which was stopped by a Buddhist nuns 100-day hunger strike for protecting salamander and natural environment. Existing studies show that risk amplification occurs when media sensationalism causes risk perception and public concern to be magnified far beyond levels proportional to the risks estimated in risk assessment science. The case study underlines that social amplification is much accelerated within a highly networked society, or internet environment. Such process can create political over-activism or disruption, social conflict, or policy failure more costly than what the issue is.