This paper will address the relative utility of employing the linguistic structure used by system dynamics compared to translating the modeler’s perception of reality into other symbolic language systems. The first section will review the relation of language to the method of scientific inquiry. This will include a discussion of the debate over the problem of evaluating policy alternatives of social systems. The final section of the paper will specifically identify some of the differences between the imposed linguistic structure of system dynamic models and the symbolic language systems often employed in orthodox economic analysis.
At the last System Dynamics research conference held in the United States, we presented a paper which described a computer simulation model of an elementary school. The purpose of the model was to examine the structural differences between schools which are effective and ineffective for what we have come to call “initially low-achieving children.” In that paper (Clauset & Gaynor, 1981), in a subsequent paper (Clauset and Gaynor, 1982), and in a book manuscript (Clauset and Gaynor, in preparation), we have described in varying degrees of details tests which examined a number of school improvement policies. Policies testes included the following: Changing policies affection time allocations, Improving teacher skills, Encouraging teachers to place more emphasis on low achievers, Raising teacher expectations for low-achievers, Improving classroom of school-wide behavior, Changing class size, Changing the demographics of the student body (e.g., size low achievers).
The model described in this report is meant to show how some of the practical problems of combining hydrological and biological processes can be addressed, how models can be used to examine specific questions, and along what lines the present model ought to be developed to eventually arrive at a useful policy tool.
Certain medical interventions may result in reducesd costs to society. Others, however, by keeping people alive longer, may cause higher costs to be incurred for continuing health care and disability and retirement payments. A generic disease process model for projecting the implications of various medical interventions is presented. The model is applied to myocardial infarction in the U.S. male population and results of simulating several interventions specific to that disease process are discussed. Conclusions are drawn and it is argued that this model is useful for identifying interventions that result in higher costs to society in order that adequate resources be set aside to cover these costs. The work reported in this paper was funded by a grant from the Kaiser Family Foundation.
In 1981 a preliminary system dynamics model was developed for the Norwegian State Railways to study passenger and freight traffic for the complete network. In addition, a particular model was developed to study commuter traffic in Oslo. This paper describes modeling work done for the Norwegian State Railways (NSB).
Several interactive computer graphics technologies are now available that can provide powerful tools which enhance our ability to conceptualize, implement, and communicate complicated system dynamics model structure and behavior thereby giving us opportunities to improve our effectiveness as researchers, consultants and educators. This paper gives an overview of several projects utilizing interactive computer graphics and evaluates their significance for system dynamics. Included in this discussion are: 1) computer aided design systems for “automagic” design and updating of overview, policy structure, flow, and causal loop diagrams, 2) computer teaching games and self-paced interactive computer aided instruction packages designed for personal computers; 3) review of the new Micro-DYNAMO and Hewlett-Packard plotting software from Pugh-Roberts, 4) computer networks, computer conference based academic programs for the general public, and network indexed video cassette extension libraries of system dynamics presentations and seminars; 5) interactive computer driven video disk processors with touch sensitive screens allowing a modeller multimodal access to overview, subsystem, policy-structure, causal loop and flow diagrams, table functions, documentors, and DYNAMO equations on the same system; and 6) two- and three- dimensional representations and animations of model behavior on multicolor dynamic displays driven by computer and video disks. These developments are assessed with respect to their possible contribution to the growth of system dynamics as a field, dissemination of system dynamics methodologies and to the implementation of policy recommendations. Because of falling prices for software and hardware, the explosion in interest in personal computers, the exponential growth in their functionality, and the current state of the field, we believe the next two decades will be the phase of most rapid growth for system dynamics.
A number of challenges face firms that need to decide when and whether to convert from technologies to new computer-based technologies. Such is the case with lithographic setup shops, which prepare photos for color printing; they must choose between continuing with traditional craft methods or acquiring digital image-processing equipment. Pioneering firms can be saddled with experimental, undependable, and expensive prototype systems. Rapid technological changes still occurring in digital systems can allow competitors who invest later to obtain cheaper, more effective equipment. But firms investing later may find themselves paying for the large investment just when most competitors are established in the new technology and competition has forced prices and profits to low levels.In order to create an organizing framework for analyzing and developing conversion strategies for these firms, we worked in collaboration with Inter/Consult, the project's sponsor, to build a system dynamics model of the color process industry, its market, and a typical firm. The primary purpose of the moel is to provide a clear understanding of the impact these major capital investments will have on the profit structure of lithographic setup shops and to help these shops develop effective conversion strategies. A secondary purpose of the model is to aid digital image-processing equipment suppliers in understanding their market and to provide them with a toll for generating alternative scenarios given different assumptions about economic trends, technological developments, prices, market size and composition. The model serves as a strategy support system that allows clients to derive scenarios explicitly from causal assumptions and to evaluate alternative investment strategies.
An experimental software package is being used as an extension to the DYNAMO IV compiler to linearize the model at any point during a simulation, compute the eigenvalues and eigenvectors of the linearized system, identify the levels important in producing each behavior mode, and compute the elasticity of a given eigenvalue (corresponding to elasticiy of period and damping) with respect to all model parameters. The package is intended to help modelers understand the causes of behavior in very complex models, both for debugging implausible behavior, and for presenting the causes of plausible behavior more convincingly. The package is able to work for the System Dynamics National Model, a model of around 300 levels. Practical experience has uncovered some difficulties in making the analysis useful,, but these are being surmounted. The experience suggests that mathematical methods should be used extensively “in the field” before being offered as candidates for expanding the paradigm of System Dynamics modeling.
For four years, the authers have been studying agricultural products markets with this year a development on lumber market. Search goals are not only to understand market working processes but also to define for each of then the M.I.S. necessary to permit some control by interprofessional organisations specially on price levels. The paper presents in a first step two building model approaches: One is a pragmatic approach, formalised by Buffa, Cuzo, Bonini, Boulden, Cetenick, Rosenzweig, on San Diego meeting, A.M.A., in 1970, the other is a theoretical approach by Bross, Schoderbeck, New -York in 1971, and Kaplan, Scranton in 1964. In a second type, the use of System Dynamics approach is confronted with these two first methods specially on noted research area, In conclusion, results of our models are discussed.
A steel demand model consisting of 15 sub-sectors was formulated by the authors to dynamically estimate the steel demand from GNP per capita. Attempt is now being made to develop a more general consumer demand model specific to India, which, among other things, takes into consideration inflation as caused by increase in money supply to finance development plans of the country, remittances from expatriate workers, foreign loans, and wage increase to increase in production ratio. Existing model has been further modified by giving due weightage to the effect of income distribution among low, middle and high income groups of population on the dynamics of demand. Attempt has also been made to study the sensitivity of the economy, and hence the consumer demand, to changes in the saving to consumption ratio. The positive effect of increase in saving on capital formation on the one side, and negative effect of decrease in demand on the other side, has been discussed.
A process-theoretic approach, seldom used but not without promise for organizational behavior research, is employed to postulate a process model of the natural logic evident in organizational policy making. The model is used to explain how the policies of a sample firm (for which twenty years of data are available) became adopted and how, together with critical events, this caused the firm to evolve in particular directions rather than others. Implications of the study are put forward in terms of identifying the pathologies of the policy making process. Some prescriptions are put forward for the proper control of organizations by supervisory bodies, such as boards of directors. It is suggested that Management Science, in the form of systematic procedures for adaptive organizational design and updatable cause maps, may have an important future role to play in senior management affairs. Questions are raised for government and society concerning sustaining and regulating firms in both the public and private sectors in the light of the study.
Among the most stable phase relationships between economic variables is that between money, the change in money, and general economic activity. Both the change in money and money itself lead production over the business cycle. This relationship buttressed with results of the Granger/Sims test for causality, has been used to support the notion that money causes real activity. This notion, in turn, is used to argue both that monetary policy causes the business cycle and that monetary policy can ameliorate the business cycle. This paper examines a hypothesis for the phase relationships which assume that money does not cause real activity, but, rather, real activity causes money. According to the hypothesis inventory assessment, which leads business activity, induces corporate borrowing, which in turn causes a money expansion with a lead similar to that observed. This has been a working hypothesis for the phasing in money of the System Dynamics National Model project. It is concluded that the hypothesis, by itself, is insufficient to account for the observed timing relationships. However, the inventory investment hypothesis combined with additional hypotheses such as a mechanism for household portfolio adjustment, can account for the phasing. These results do not depend on a causal flow from money to real activity. As a consequence, business cycle phase relationships should not be taken to imply money causes the business cycle nor that monetary policy can influence the business cycle.
The paper is concerned with describing an investigation of information usage in the control of colliery operations. The premise of the work is that to make the most of new information retrieval technology currently being installed in collieries research is needed to provide compatible advances in the methods of information usage. The approach adopted was to construct a continuous simulation model using system dynamics capable of providing a laboratory assessment of alternative managerial control policies based on alternative sources and levels of aggregation of information. The model developed represents a typical colliery situation composed of three working coalfaces and incorporating planning production, development and manpower sectors. The face sectors transform coal reserves to mined coal output, under manpower constraints and geological shocks, and these are all interlinked by means of allocation policies for manpower and shifts. A range of policies for for the exercise of control through these allocations are considered subject to a range of shocks. It is concluded that, although there are difficulties in designing single policies which are universally best, there are clear advantages associated with fully integrated colliery policies based on information inputs from all aspects of the operations.
It is envisaged that although the rabies system is a special case whereby there is no recovery from the disease, the principles generated by the analysis may be applicable to epidemiology in general. Such applications providing a definition of a disease system such that effective control policies may be elucidated. The work presented here is complete in itself forming a qualitative analysis of the system. It also provides the basis for a quantitative analysis using a derived computer simulation model.
This paper discusses an approach to model refinement which involves testing the behavior of individual pieces of a model in response to empirical input data for comparison with empirical output data. Partial-model tests should be used for selecting formulations or estimating parameters only when appropriate case-specific or logical information is not available for this purpose. The smaller the model components used for partial-model testing, the more likely it is that the model will prove useful for anticipating events outside the historical experience and the less likely it is that observed behavior will be incorrectly attributed to certain relationships or parameters. Thus, from the standpoint of structural validity, partial-model testing is an improvement over whole-model testing for the purpose of structural adjustment. The paper presents a detailed example of partial-model testing in the context of a generic model of the evolving use of a new medical technology. Specifically, the technique is used for adjusting and validating a model subsystem that can explain why the reporting of clinical information on cardiac pacemakers has been marked by regular oscillations over time.
The most basic problem of sociology as an empirical science is the difficulty of replicating studies within reasonable time limits and in genuinely comparable conditions. Sociologists aspire to make correct predictions based on verifiable statements about causal relationships, but cannot, the nature of macro-social phenomena precluding experimental designs with adequate controls. System Dynamics promises a way out of this dilemma. Four things need to be done. (1) Formulate the sociological theory as a causal loop diagram, making all causal reasoning explicit. (2) State what variables are involved in the functioning of the system. Calibrate the model until it is internally consistent. (3) Refine and adjust the constants until the model can reproduce a known time-series of relevant data. Repeat this on number of data-sets. (4) Systematically vary each constant in turn while controlling for the others. This is, in fact, the quasi-experimental procedure for testing the conditions under which the theory will stand or fall, and why. An illustrative example of the proposed strategy is presented, with encouraging results.
Proper data management is an essential component of system dynamic modeling. The authors have developed an approach to data management, as set forth in this article. The article first describes the modeling and data management activities from a critical path point of view. The approach to handling the data associated activities is then developed. This approach asserts the following: 1. it is appropriate to address data relates activities at each stage of the model development process, and 2. when properly linked, a synergism exists between each model development stage and its associated data handling activity. It is claimed that this approach, including sequenced data handling and synergism between data and modeling activities, can produce a more comprehensive and timely model.
This paper presents a system dynamics model of human factors in the implementation of office automation in the Job Service. The model includes sectors representing model acceptance by managers, supervisors, professionals, and clerks with the various factors impacting on such acceptance. Since the perceived usefulness of the automated system for office performance is quite important (especially for managers), sectors representing workflow and efficiency are also included.
The strengths of the SD approach are as follows: explicit use of causal relations, the admission of qualitative information into the model and the potential for methodological ‘merges’. The drawback of the methodology is that it is difficult for the uninitiated and considerable effort is required in the modeling of SD. The purpose of strategic planning is to find a new product/market combination which accurately reflects the company’s strengths and weaknesses. In our case the SD community is the “company’; the methodology of SD is the product and different types of models correspond to market areas.
This paper presents the discussion and the application of system dynamic methodology to study the consequences of government regulations on small surface coal operators. In 1977 Congress promulgated the surface Mining and Reclamation Act, which brought about some critical changes such as lengthy and costly permit application procedures, lengthy local and state review of permits and lands, increased bond fees and costly reclamation requirements. Small surface coal operators appeared to be particularly vulnerable. Policies frequently considered by the surface mining industry and the government to alleviate the hardship caused by the regulations are mechanisms to offset increased bond fees. It is a purpose of this paper to demonstrate the utility of system dynamics as any effective methodology to study the long term effects of such policies.
The paper concludes that the general models of business performance should greatly benefit from analysis within a dynamic framework. The work has already indicated possible relationships between existing theories and formed the basis of a simulation model which may identify the possible consequences of certain strategic actions combined with alternative organization structures.
The System Dynamics Method has been applied to simulate the flow of production in a steel plant. This model has been designed to be an aid in long term planning. The model is driven by a time variant input i.e. incoming orders of nine different types of finished steel products. The internal dynamics is generated by six negative feed back loops of a production shop. The material flow takes place through 16 such shops each having its own dynamics which gets induced to other shops as material flows from coke ovens to finishing mills. The model makes explicit the environmental influences, policy parameters and their relationships with production. Together these explain the dynamic behaviour of monthly production. It can now be used to experiment with all that can be thought of to influence the parameters and improve upon the production performance of the steel plant. The extended version of this model which includes the financial aspects is a top management laboratory for experimentation with different scenarios of environmental influences and counteracting strategies.
This paper compares and contrasts the philosophical and methodological paradigms used by psychologists and system dynamicists. Currently, psychologists collect huge amounts of data, use open loop methods of experimental design, and think that classical statistical models, such as analysis of variance and regression analysis, provide the most useful methods for studying social phenomina. Behavioral approaches to psychology differ sharply with the system dynamicists concerning the relative importance of external vs. internal sources of influence on behavior.The behaviorists focus on controlling the external environment, even denying the existance or importance of internal states. The problems of using external control are illustrate by contrasting two simple attitude change models; one which modifies attitudes solely through outside influences and another which makes the change in attitudes a function of the state variables. System dynamicists attempt to understand the dynamics of social processes through the study and analysis of dynamic loop structure. These techniques would be extremely useful for those psychologists using correlational analysis and causal modeling methods, where the implications of dynamic structure are not always fully understood.
Validation testing provides the tool for building confidence in a model. It enables an analyst to verify the correctness and usefulness of a model and to gain better insight into, and understanding of, the system being modeled. Although important, validation testing is sometimes difficult to conduct. This paper presents the author’s experiences with using the model validation tests to validate a system dynamics model. The paper describes the tests and applications that were most useful in examining the validity of the model, identifies difficulties that can arise during validation testing and offers suggestions for reducing their impact on the process of model validation.
The application of management science techniques to problems of managing libraries has been a relatively recent development. The paper describes construction, development, and application of an interactive System Dynamics computer simulation model to a large university library system. Actual experience gained in developing and applying this System Dynamics model is reported. Operational tactics and strategies a library might be considering in it's daily operation are simulated and evaluated. Possible improvements to this model are also discussed.
In response to the need for an integrated look at the problems of electric utilities, Pugh-Roberts Associates, Inc. has developed a strategic planning model for electric utilities. In various forms, it has been used by utility industry investors, by individual utilities, and by research organizations for analyzing alternative investment, management, and regulatory strategies.
This paper presents results of a model which has been used to avoid the consequences of a spatial expert opinion concerning the further development of the Berlin School of Economics in West Berlin in the year 1982. Starting point is the so called “HIS-Gutachten” of February 1982. This expert opinion was commissioned by the Senator for Science and Culture of the West Berlin government to show the possibilities of finding free capacity for a different institution in the building used by the Berlin School of Economics during the current period of limited financial resources.
This paper proposes to utilize the Management Technologies' U.S. Economic Model to simulate the same monetary policy tests performed on the three macro-econometric models. Such comparison is likely to be methodologically revealing for several reasons. First, the 'Management Technologies' U.S. model is at least of comparable detail and sophistication to the econometric models. Second, the U.S. Model has been developed for similar purposes of short-term (1-2 years) and medium-term (5-20 years) forecasting and analysis of various industry and government policy measures. Third, the U.S. Model has been extensively validated historically and empirically, so that model details and parameter values are not simply “representative” a priori selections, but meet the dual tests of being a priori satisfactory and historically accurate. Policy tests thus far performed on the U.S. Model in fact illustrate significant differences from the econometric results, both near-term and longer-term.
Our role is to advise senior British Telecom management on strategy for BT as a whole. This requires coherent strategic analysis aided by systems dynamics models. All management levels must have confidence in the models in their results. For analysing alternative futures we find that graphs are easier to appreciate and understand. We have also found that colour graphics greatly enhances the presentation of more than one curve at a time. Interaction with models in real time is a major step in boosting user confidence for it allows rapid confirmation, or rejection, of the user's prejudices. Interfaces to computer models, such as menus, bit pads, etc, are successful if they interface efficiently between the user's mental map and that which is enshrined in the model. If the user can move a 'lever' which exists in the real world and that causes the model to display the effects he expects, then he will have confidence in the model. Decision makers want the best strategy. We shall discuss how we use colour graphics to compare strategies, but that often begs the question 'Why?'. This requires techniques used in artificial intelligence, which can also be used to 'customise' interfaces to individual users.
A system dynamics model of a major telecommunications network has been developed to support managers in the function of long range strategic planning. Application of system dynamics to the strategic planning area was found to be, in some respects, quite unique. The article discusses this type of application in the areas of model requirements, sponsorship, scope, development, and review. In the area of requirements, it was found that a system dynamics model developed to support long range strategic planning should be quite broad in scope, must satisfy a potentially large community of planners, yet also must pass the review of tactical planners as well. A baseline-model approach is proposed as an effective way to satisfy these requirements. Guidelines for the modeler are proposed for obtaining sponsorship, for avoiding pitfalls in the model development process, and for interacting with model users and reviewers. The baseline-model approach, coupled with the guidelines, has been found to work quite effectively within one organization to support long range strategic planning.
System Dynamics has been virtually defined with a requirement for authoring a model in the language, DYNAMO. The present paper extends the previously established [Theory and Decision 7: 67-94 (1976)] result that DYNAMO esentially requires the author of a model of a dynamic system write a set of difference equations.
Federal Support for alternate energy technologies has gone through a boom/bust cycle during the Carter and Regan administrations. To investigate the effects of these policies, I use a system dynamics model of the industrial market penetration of parabolic troughs as a case study. The Regan policy, a laissez-faire policy, lets free market forces determine the market penetration. The Carter policy, an active government policy, combines research, development and demonstration with information dissemination and market financial incentives. The optimal policy depends upon future energy prices. If the price of conventional energy remains low, parabolic troughs never become competitive even with significant government support and thus the laissez-faire policy reduces federal expenditures by ~ $60 million with no negative effects. If the price of unconventional energy increases significantly, however, free-market forces do not develop parabolic troughs into a practical energy source without the benefit of an active government program. If this case study is generalizable to other alternate energy technologies, an active government role in alternate energy technology development should be thought as an insurance policy. How much is it worth to the U.S. today to insure future price stability?
Marxian economics is used as a new conceptual foundation for modelling urban growth. This conceptual model is made operational using the methodology of system dynamics to replicate the pattern of urban growth for an hypothetical city set in a British context. The predicted and actual patterns of urban growth are then compared to a set of British towns and cities from 1801 to 1971, with further predictions to 2001 in dicennial intervals. Some advantages and limitations of this new approach to urban modelling are discussed.
This paper reviews the application of system dynamics modelling in a variety of substantive studies published between 1961 and 1981. A five-fold typology of system dynamics models is presented and this is followed by a mehodological critique of many of these studies. On the basis of this review four fundamental epistemological problems are identified. These problems include the difficulties involved in closing complex, sub-global models, the various behavioural modes exhibited by dynamic models, the distinction between teleological and teleonomic perspectives and, finally, some aspects of the ideology of control are discussed in terms of conservative, reformist and radical uses of system dynamics models. It is argued that the methodological weaknesses and epistemological problems associated with many system dynamics models cast grave doubts on both their scientific content and usefulness to policy makers.
Researchers and practitioners in System Dynamics usually folllow a trial-and-error process to design new policy decisions. They mainly use causal loop diagrams for this purpose. However, these diagrams portray 'directions' of influence and not its 'strength'. Therefore, the process of policy design becomes time consuming especially for a beginner and those working with insufficient computer facility. This paper presents an alternative approach for policy design using Modal Control Theory. In this approach, policy variables are treated as control variables by delinking them from other variables. This generally leads to greatly simplified models which are free from many nonlinearities. Providing that this reduced system is linear and controllable, it is possible to synthetically generate control policies by modal control theory to ensure any prescribed degree of stability. These theoretical control policies can then be used to design realistic policy decisions. The Chapter-8 problem of Coyle is used here as a test example. It is shown that policies designed in the light of modeal control theoretic results are superior to those suggested by Coyle.
Rationality is an underutilized concept for creating and analyzing behavioral simulation models of business systems. Much explanatory power and insight can be gained by assuming that business decisionmaking is intendedly rational, examining the factors that limit rational adjustment in business decisions, and exposing in simulation experiments the rationality the underlies even the most counterintuitive total-system behavior. The paper begins by defining rationality and illustrating the difference between objective rationality, which is common in behavioral models of decisionmaking. Two methods of analysis are then proposed for clarifying the theory implicit in a simulation model. The first method is premise description. In describing decision functions and model equations attention should be drawn to the organizational processes of factoring, goal formation, routine and tradition that limit the area of rational adjustment in business decisionmaking. The second method is partial model testing. A sequence of partial model tests should be designed to examine the intended rationality of decisionmaking. The intuitively clear and sensible behavior of partial tests should be contrasted with the more complex and often counterintuitive behavior of the whole model. The application of these methods is illustrated with a simulation model of a sales organization containing linked decision functions for sales objectives and salesman overtime, and a behavioral function for sales force motivation.
Our objective in this research effort is to provide both software development managers and researchers with a useful way of thinking about organizational improvement issues. Our aim is to develop an integrative model of software project management that can help them answer the difficult questions they need to raise when assessing organizational health, selecting improvement tools (from many that are readily available), and implementing their choices.
Practitioners of Management Science have repeatedly confronted the problem of assessing the impact of variables such as job satisfaction and career aspirations on the performance of organizations. This problem is most acutely felt by service firms where the quality of 'output' is directly determined by factors that, because intangible, are difficult to define and control. In this article the authors use the methodology of System Dynamics to model the behavior of a professional CPA firm. The impact of qualitative variables on the behavior of a typical office is explicitly analyzed and translated into 'hard' economic terms. The results make some interesting observations about the key factors influencing long-term behavior in a people-intensive system, particularly in terms of the relationship between actions at senior levels and consequences further down the system. For instance, the way managers and partners allocate their time between apparently 'competing' activities is a critical factor influencing not only short-term behavior at junior levels but also the process whereby long-term judgments are made about the organization. Each activity has a different return profile (particularly with respect to time) and a different set of associated risks. The study contributes to an understanding of how critical aspects of human resource planning such as management time allocation contribute to the broader, strategic direction of the firm.
Self-organization denotes a class of instabilities in which a system spontaneously generates structure, diversity and/or specialization. From a thermodynamic point of view, transitions of this kind, which proceed against the general tendency for relaxation towards an unstructured equilibrium, can occur in energetically open systems and under far-from-equilibrium conditions. The exergy required to build up and maintain a non-equilibrium (so-called dissipative) structure can here be extracted from the continuous supply of energy (and/or resources). The interest of self-organizing systems originates in the work on irreversible thermodynamics performed primarily by the so-called Brussels school. According to this school, developments in biological, ecological, and social systems which involve qualitative change, diversification or increased complexity are also to be viewed as self-organizing processes. This applies for instance to the build-up of genetic information, the appearance of new species in an ecological system, the introduction of new techniques in a social system, the adoption of new scientific paradigms, and the penetration of new products. In the present paper we analyse the basic ideas of self-organization in terms of concepts familiar to System Dynamics practitioners. Through a series of relatively simple models it is shown how System Dynamics can be used as an efficient tool for modeling self-organizing systems. As a particular example we consider the evolution of cooperative structures (RNA molecules with their associated enzymes) in a prebiotic system.
The Dutch Disease is the name of macroeconomic effects of natural gas income spending in the Netherlands in the 1970’s. Spending resulted in increases in the national wage level, problems for exporting industries and economic instability. A system dynamics model of the Norwegian economy replicates the Dutch Disease for the case of oil income spending in Norway. The underlying causes of the Dutch Disease are discussed, and policies to cure problems are investigated. Subsidies to exporting industries have little effect on the problems in this sector of the economy, and they exacerbate economic instability. A wage freeze has some positive effects on the Dutch Disease. However, this policy causes other problems. An attempt to increase labor mobility has some positive effects. The most effective policy has been found to be a smooth and slow increase in oil income spending, the original cause of the disease. All problems cannot be avoided, and inevitable problems must be balanced against the benefits of oil income spending.
In our thesis we show that the advantage of using D.S. methods for the modelling of economic processes. Some practitioners of econometry have already seen the D.S. as a preliminary to the formalisation of model economy subject. In a recent article, we showed how the optimum of production may sometimes not be given primacy in a sector, in a grouping of firms , or a firm and it is sometimes profitable to analyse the weaknesses which can be found in a whole industrial network in order to understand the lack of competitiveness in national products. The aim of this paper is to apply methods of the system dynamics to the analysis and modelling of the process of pricing certain products in the French timber industry.
Peter Allan’s Intra-urban model is a very appealing application of bifurcation theory for simulating the evolution of an urban spatial structure. It is actually a spatial dynamic model, and it brings together many well-known empirical regularities and well-established theoretic proposals, as logistic growth, economic base theory, distance-decay functions, urban ecology and actor’s behaviour in an urban context. Until now, this model has only been tested in fictitious urban situations and did prove its ability to simulate various urban evolutions, especially of the north-american type. However, it needs to be tested in real-world situations. Main questions are: Until which extent the same set of equations is able to simulate various observed urban evolution; and how many changes in parameters’ values are necessary to reproduce observed evolution in different towns. So we tried to apply the model to a sample of fench metropolitan areas.
The relationship between the dynamic behavior of individual components of a large system and the overall behavior of the large system has rarely been analyzed in the system dynamics literature. The usual approach is to treat the large system (e.g. a national economy) as a lumped-parameter version of the component systems. A number of examples from physical systems (plasma instabilities, fluid and chemical-reaction waves) suggest that the lumped parameter approach is not always adequate as a representation of the dynamics of systems or as a cogent explanation of the behavior of aggregate systems. In particular, new collective modes of behavior are found when the stochastic distribution of micro-level systems over internal states is considered. The proper treatment of the aggregation of micro-systems can reveal novel dynamic behavior modes and can indicate under what conditions these modes may become active. The explicit treatment of the aggregation of micro-systems can also clarify the relationships between the structure and parameters of the micro-systems and those of a lumped-parameter representation of the macro-system, thus giving some precision to arguments based on macro-level models of interacting micro-level systems. One approach to the study of the collective behavior of elementary systems uses the concept of a “dissipative structure” as developed by Prigogine and colleagues over the past fifteen years. This paper continues the work of a previous paper on the subject by applying the Master Equation Formulation to several generic models of first and second order (including delays, sigmoid growth, predator-prey and other oscillatory systems). Conditions under which novel aggregate behavior may be expected to appear are determined. Some linear systems do not present any novelty in the theory, most attention is focused on non-linear examples.
Three types of changes are proposed as being generic to an organization's adaptation to its environment. They are: (a) Change in pattern, (b) Change in Structure, and (c ) Change of elements. The typology is based on Atkin's mathematical structure. The typology attempts to characterize change on the basis of what is changed and what is held constant, instead of on the basis of the effects of the change is done in a number of current typologies. The three types of changes are described and discussed with reference to a problem faced by a diverse and fragmented academic department. The typology provides a framework for a strategist to delineate alternative ways in which an organization can be changed to adapt to its environment, to evaluate the pros and cons of each alternative, and to make a choice.
The question at issue before this session is whether the system dynamics paradigm should be expanded to include selected issues from the broader field of systems theory. Although some limited expansion in this direction is desirable and probably inevitable, I will argue that it is not the most fruitful direction for broadening our paradigm to take.
It is important to begin any modeling attempt by determining the primary objectives of the decision makers in the field. In forestry there are two interests: production of multiple resources and profit (or cost). Conventional methods of analysis are incapable of handling the two foci adequately; one is always subsumed in the other. The DYNAST model, with the addition of an economic algorithm, provides a means of analyzing the system from both viewpoints without forcing one to dominate the other. This balance is achieved through using capital budgeting techniques such as net present value to represent both the multiple use and profit aspects of money. The economic algorithm can be used to analyze money as one of a host of multiple benefits in comparing management options, or as a method of estimating profitability independent of the context of the model. This latter application makes the algorithm potentially useful in many modeling contexts simulating business investment decisions.
This paper deals with the optimality and efficiency of antithetic random variates in estimating output parameters of general complex stochastic systems (e.g., reliability systems, stochastic networks, queues, etc.) with elements linked by multivariate dependence. It is shown that antithetic random variates are much more accurate than the crude Monte Carlo method, requires less CPU time and can be efficiently used by simulation practitions. The validity of the theory is demonstrated by simulation queueings and reliability systems and stochastic networks of different complexity.
A theoretical framework from the field of Organizational Theory called the “Competing Values Approach to Organizational Effectiveness” was used to analyze five System Dynamics models of organizations. This framework is a perceptual ordering of criteria that are often used to evaluate organizational performance. An example of the procedures involved is discussed using Richmond’s “Organization Evolution” model. The purpose of the exercise was to (1) determine if it was possible to express the behavior a dynamic model in terms of the Competing Values Framework, (2) discover what conceptual and technical problems might arise, and (3) draw some conclusions about the usefulness of the Competing Values Approach to system dynamicists and the usefulness of System Dynamics to organizational theorists. It was found that it is possible to formulate dynamic models in terms of the Competing Values Framework. However, conceptual and technical problems arise since organizational theorists and system dynamicists tend to work at different levels of abstraction. The Competing Values Approach may be used as one of many theoretical frameworks by system Dynamicists as an aid to organizational inquiry. Organizational theorists, on the other hand, can make use of System Dynamics since it allows a researcher to study structure and complex interactions over time.