This paper provides an overview of the literature in assessment of system dynamics (SD) models to substantiate a pragmatic framework intended to guide model testing, refinement and evaluation. It recaps the predominant philosophy of science embraced in the field, and its implications for model validation. It reviews tests for building confidence in SD models. In this literature, SD is presented as a relatively uniform approach to dynamic modeling. However, surveys of the field paint a different picture, containing surprisingly diverse forms of practice. We draw upon this breadth of existing practice to develop our framework. We propose five components of practice: 1) systems mapping, 2) quantitative modeling, 3) hypothesis testing, 4) uncertainty analysis, and 5) forecasting/optimization. In light of the proposed framework, we reclassify tests for assessment of dynamic models across these five practical categories. We believe this is useful to tailor tests to specific modeling efforts, guide model testing in different phases of model development, and to help conduct partial assessments of levels of confidence.
In developing countries, many community empowerment efforts, which consist mainly of building the communitys capability to fulfill its needs, failed to achieve the desired results. Counter-intuitively, sometimes the dependence to external agents grew even stronger. The paper is a preliminary attempt in elaborating factors that contribute to the success of empowerment process using system dynamics modeling. The case study is a poor village in Indonesia which received an infrastructure aid from a UN-agent in the form of Microhydro Plant to be managed for improving the community welfare. The model shows that empowerment is a feedback process influenced by many factors, and that capacity building to manage the plant is a learning process to be gone through by the community itself. Nonetheless, once this capability is achieved, the resulted capacity and awareness play significant role to improve the communitys life quality. This model is expected to evoke other efforts to build a more comprehensive understanding of community empowerment process, and hopefully will encourage the local government to try new approaches for higher rate of successful implementation.
Beer Game was developed by Slaon School of Management which didnt add price variable into the game. The reasons were：(1) As long as there is time delay, it will induce dynamic complexity. (2)If there is price variable, maybe we cant observe patterns and structure in the Beer Game.
In this research, we try to add the price variable into the Beer Game to verify the statement made by Slaon School of Management. Besides, we can explore whether it will influence players decision or not. The learning effects would be what we concern about.
After modeling and some real tests, we found that bullwhip effect still exists, and its much apparent then before. Besides, players are affected by price variables. From discussions after the game, we can find players lack of systems thinking, they have misperceptions of feedback and get used to put blame on others. Those learning effects are almost the same as traditional Beer Game induced. However, the Beer Game with price variable can conclude many behaviors made by players.Compare with the Basic Beer Game, adding the price variable seems too hard for the players to experience the structure produce behavior.
Chinas entrance into the WTO has further integrated its economy into the whole world. Economic globalization has not only generated excellent opportunities for Chinas economic development, but also created a vast demand for international business talents. However, in reality, the training of this kind of talents is far from satisfying the huge demand gap. What even worse is that talents requirement and training have gotten into a shortsighted and utilitarian condition. This paper uses systems thinking and systems archetypes theory (including the shift the burden to the intervenor archetype and the eroding goals archtype) to identify this phenomena and disclose the potential complex social factors. It provides the foundation of scientific methodology in understanding and dealing with these issues. Additionally, it offers a new standpoint of international talents demand and training based upon a strategic perspective.
This is the third paper of a series of macroeconomic modeling
that tries to model macroeconomic dynamics on the basis of the principle of
accounting system dynamics developed by the author.
Money supply and creation processes of deposits were modeled in the
first paper,
while second paper built dynamic determination processes of
GDP, interest rate and price level.
In this paper, these two separate models are integrated to present
a complete macroeconomic dynamic model consisting of real and monetary
sectors.
The integrated model is aimed to be generic, out of which
some macroeconomic behaviors are shown to emerge.
Specifically equilibrium growth path, business cycles and government debt issues
are discussed in this paper.
Chinas entrance into the WTO is a new departure in Chinas opening to the outside world. With the implementing of Going-global strategy, cross-border M&A of Chinese enterprises has become an inevitable trend. This paper uses systems thinking and system archetype theory to identify some typical problems in the process of Chinese enterprises cross-border M&A. By analysing the merger between Chinese D' long Group and German Fairchild Dornier, we could draw a conclusion that companies should focus on locating the source of the problem, rather than developing remedies for the short-term symptoms. In the process of cross-border M&A, Chinese enterprises need to concern if they have had the ability to merge and integrate the target companies effectively, especially the capability of post-M&A integration.
This paper elaborates the underestimated problem of voters power. Recently the demographic change as a major topic came up on the agenda in industrialized countries. Therefore, societies nowadays also evaluate political actions on their consequences on aging. How can we diminish unfavorable outcomes of ageing? The authors of this paper would like to draw the attention on a different perspective. If societies getting older and suffering from low birthrates what consequences does this have on elections? Based on a system dynamics model we are able to simulate different voter groups. The conclusions are alarming. We show that without a change in the voting system elections probably loosing their forward-looking perspective. Not the future will be key factor for election but preserving the current situations. This will be at the expense of our next generation.
A required feature of a Long-Term Disability (LTD) insurance policy is its method of calculating Basic Monthly Earnings (BME), which determines how much a disabled customer will be paid. Most BMEs conform to some standard formula. However, to increase sales of its LTD policies, a large U.S.-based LTD company increased its use of Non-Standard BMEs (NSBME), which led to more errors and higher costs. Our model tested various processing approaches and found the optimal way to process these claims: an even mix of low-level Disability Benefits Specialists (DBS) and mid-level Benefits Financial Consultants (BFC). The costs of the BFC review were offset by the savings from all the errors they detected. Also, suspecting that he companys reliance on NSBMEs was an example of the Fixes that Fail and Shifting the Burden systems archetypes, we found that eliminating this practice was the highest leverage policy of all.
This paper deals with issues related to a system dynamics modeling of market structures from a company's viewpoint. It is focused not only on a general system dynamics approach, but also on broader perspectives and aims - overcoming well known system dynamics market models, better intelligibility for marketing managers (e.g. in a form of using familiar marketing terms and market segmentation) and techniques of working with relevant data obtained from marketing research.
For further analysis and modeling, three basic types of markets have been chosen markets with fast moving consumer goods, durable-product markets, and services markets. Within the models, the authors want to reflect the structure of consumers according to demographics and their experience and knowledge of the product. Also relations between the value perceived by the consumers, product attributes and promotional activities are taken into account.
Described by the authors, the market model will be one of the results of a project supported by the Czech Science Foundation grant "System Dynamics Theory and Market Structures", number 402/05/0502. The approach points out some positive aspects as well as the limits of system dynamics based on the authors own experience in practical applications of system dynamics models.
In this paper we combine a fairly complex system dynamics model of the Nord Pool power market with stochastic price models from financial economics. The idea is to combine the fundemantal relationships of a system dynamics model, with a good representation of stochasticity from stochastic price models. The purpose is to provide long-term price prognoses for investment decisions as an alternative to the current approach of using scenarios for long-term prices generated by fundamental, partial equilibrium models. Our paper describes a case study at Agder Energi, a Norwegian utility operating in the Nord Pool market.