The housing market of Taiwan thrived in the years of 1973, 1980, and 1987 respectively, and the rises of every seven years in housing price have brought numerous social and economic problems. In order to understand the micro-structure of the housing market, we developed a system dynamics model of the market’s multi-sector, in which landowners, construction companies, house buyers and house speculators are included. The interactions among decisions of various sectors formulate the micro-structure of the model. Through computer simulation, the cyclical fluctuations are generated and some macro-behaviors of the housing market model are explained.
Public Distribution System (PDS) in India is a consumer-side intervention in the food market. There are two basic aspects of evaluating the effect of policy intervention in PDS. One is analyse the overall percapita availability of cereals and the other is the percapita consumption. Based on this, the proposed system dynamics model looks at the intended Government policies to ensure whether the objectives of the PDS have been achieved.
An integrated theory of charismatic leadership was developed, and a System Dynamics model built of that theory. Applying the model to J.F. Kennedy, four data sets relating to the Peace Corps were successfuly reproduced by the model with the same set of initial values, attesting to the sensitivity of the general theory and model to the manifestation of JFK’s charismatic leadership.
The model presented in this paper establishes the role of Research and Development for survival and growth of a brewery corporation in a particular environment. Simulation results confirm poor performance under pessimistic scenarios including little investment in research, high competition and poor political, economical and social conditions.
We test the ability of the market forces to mitigate the dysfunctional effects of systematic ‘misperceptions of feedback’ – mental models, which ignore critical elements of a task’s feedback structure –demonstrated in prior experiments. We create a simulated multiple- agent market under two feedback complexity conditions (simple and complex) and three-market institutions (fixed, market clearing, and posted prices). While performance relative to optimal in the market clearing and posted price condition, complexity significantly degraded relative performance in all conditions. Markets moderate but do not eliminate the negative impact of misperceptions of feedback.
In today’s “Information Age”, the steadily rising requirements for communication and assimilation of knowledge present us with the constant need to confront new knowledge acquisition methods. One of these methods is Computer Assisted Learning or Computer Based Training. Because of the clear advantages evident in this type of instruction, the German-language computer-based tutorial SDACQUIRE was developed in the Department of Policy Management in Industry at Mannheim University. The goal of this program is to impart to the user the methodological fundamentals of System Dynamics.This paper presents a description of various aspects of the program’s development, implementation and application. Following a brief exposition of the evolution and benefits of Computer Assisted Learning, a description is given of the important aspects of the modular development of SDACQUIRE. A discussion of the components of individual lessons is then provided, leading into a final section on the interactive communication connected with the program’s use.
The potential of simulation technology to facilitate learning has been evident for many years. Yet in our experience most Management Simulators, while interesting and fun, are only partially fulfilling that potential. Particularly challenging has been the use of simulations to support team rather than individual learning. In the past two years Innovation Associates and Gould-Kreutzer Associates have produced and used Management Team Flight Simulators (MTFS) which support team learning through several new approaches. Our experience in creating these MTFS provides strong anecdotal evidence that with these approaches a very simple model can have a powerful impact on team learning.
System dynamics provides an important set of principles and methods for helping people gain a better understanding of complex systems. The use of computer simulation models is often positioned as the culminating outcome of most system dynamics efforts. As a field, system dynamics has traditionally downplayed the usefulness of simple pen and paper level tools because the real value is perceived to be in the computer model. Total Quality Management (TQM), on the other hand, utilizes almost exclusively, pen and paper types of tools and has had a high level of successes in having them used widely. This is the case despite the fact that causal loop diagrams and systems archetypes often capture a much richer picture of a system than most TQM diagramming tools. In this paper, we outline a general approach to diagnosis using systems archetype, causal loop diagrams, and semantics in the development of a structured process for mapping organizational change efforts.
This tutorial gives a survey of strategic issues in the statistical design and analysis of experiments with System Dynamics models. These models may be either deterministic or random. The strategic issues include what-if analysis and optimization. The analysis uses regression (meta) models and Least Squares. The design uses classical experimental designs such as 2 k-p factorials, which are efficient and effective. If there are very many inputs, then special techniques such as group screening and sequential bifurcation are useful. Some applications are discussed briefly.
The People Express Management Flight Simulator (Sterman 1992) developed a new area of research in the use of interfaces to enhance the learning value of system dynamics simulation models. Participants impressed with the learning power of the People Express learning laboratories frequently ask how they can have such a simulator customized for their own company or industry. This case study describes the rapid creation of a simple, yet highly dynamic and descriptive model (with a graphical interface) of a national oil company, and the experimental introduction of that model into an already established new employee training program in that organization.
When performing interventions with practising managers, questions arise concerning the approach which should be used to generate and select the issues to study without biasing the process towards a system dynamics framework. This paper describes a project in which care was taken to observe the stages of the process to facilitate reflection on the project’s development. The case involved two managers from an information technology department and evolved into a study of the dynamics of their new programmer recruitment policy. Early use of the ‘magnetic hexagon’ approach allowed articulation of the issues and focussing of interest on one issue. Policy structure diagramming was used to elicit a model and computer implementation and scenario generation followed naturally. The paper closes by recording the insights gained by the clients and by proposing some general lessons on techniques for structuring the early stages of consultancy projects.
This paper describes work and experience gained by a system dynamics team in developing a microworld to support a strategic management learning laboratory at Venezuela’s international airline Viasa and a computerized case study at IESA. The opportunity for this experience arose from an atmosphere of change produced by Viasa’s transition from state to private ownership. This work is intended to form part of a managerial development effort at Viasa and as a teaching and research tool at our business school.
Streamlining a production process shortening leadtimes and sqeezing inventories and cost are the highlights of any company restructuring. Efficient factory planning is in the end usually good logistic system design. But to master the many concurrent problems of an efficient logistic system design in a company it either takes time to digest all the local improvements or one needs an integrative method to structure these intertwined problems.Applying SDA opens the second method, which consistently proved to be faster and more efficient. This also includes the problem of proper embedding the MRP-system. Analysis of the process-chains of an important machine-tool production including sales and supply is reported as an illustrative exemple.
What organisational decisions actually cause diversity? Does diversity in mix of employees lead to diversity in range of output? This paper puts forward a set of hypotheses regarding the systems that generate (or limit) diversity in organisations. Our client organisation is the British Broadcasting Corporation (BBC), whose stated goal is to provide a broad, diverse range of programming –such diversity being appropriate to the BBC’s very broad and diverse audience. To achieve this goal, the BBC has set forth a human resources strategy of hiring and promoting diverse groups of people. Their premise is that diversity of people, under certain measurable conditions, will lead to diversity of output. Our model allows experimental study of the effects of feedback on the dynamics of diversity. This research is relevant to organisations concerned with diversity, with matching their market composition, or with fostering innovation. Results of recent studies will be available at the conference and by written request.
When modeling and simulation in System Dynamics, we can find many different uses of the term “model”. Although these uses are very interrelated among them, and with other uses this term in science, technology and philosophy, they serve to very specific and diverse goals and purposes. This paper tries to sketch a general framework in order to analize that wide variety of uses the term “model” has in System Dynamics. Sometimes, the differences among some of these uses will be so important that more than different uses of a term associated with a single concept, we could speak of different and mutually irreductible concepts. Nevertheless, whether theses uses of the term “model” are associated with a single underlying concept or with different concepts, all of them are perfectly integrated in System Dynamics. Our point is that this is one of the main sources of its great success for making clear our ideas and for managing our actions trought complexity.
Currently there are three methods for conceiving company wide quality control strategies, the participative approach, the simulation approach and benchmarking approach. All of these methods present shortcomings. This paper presents a new qualitative method based on system dynamics and an expert system that includes this new method. The expert system is applied to conceive the company wide quality control strategy of a manufacturing firm.
Various factors like price, delivery delays and product quality influence the diffusion of innovations. This paper discusses-among other aspects- the impacts of research and development (R&D) strategies on the technical know- how of a product as a strategic factor. To investigate the interrelations of R&D, market performance of products, pricing and profits and to draw conclusions for corporate strategy, an innovation diffusion model is needed, which represents the underlying problem structure adequately. This paper presents such a model.
Recent experience with existing businesses in the newly added eastern states of Germany has shown a tendency toward the immediate (and often rash) acquisition of current information systems technology for the support of operations. In many cases, the lack of planning reflected in these actions has led to disappointments and subsequent requests for help. The scenario evinced by these situations is reminiscent of the principles espoused in Richard Nolan’s stage hypothesis for information systems growth (1979). In this paper, possibilities are discussed for better understanding the unique set of circumstances presented by these situations, in light of the Nolan hypothesis, with a system dynamics approach.
This paper describes the evolution of production planning systems under the system dynamics approach. The structure, feedback loops and decision making process are analyzed under different “pull” & ”push” operation management techniques such as order point, base stock, MRP, KANBAN, etc. The study is made in chronological order, with the main objective being pointing out the procedures of controlling the system’s behaviour, arisen from the new production technologies development. Simulation results are presented for several cases.
Problem definition is the first and the most crucial stage in any System Dynamics study. A good and clearly defined problem is prerequisite to a good System Dynamics modeling. However, the way that a good dynamic problem is defined is subtle, is not well formulated and is not well taught. This paper presents a structured approach to dynamic problem definition that starts from static picture of the real world and turns it into a dynamic problem. The paper argues that most people are familiar and capable to present static picture of the situation of a real world system. The paper uses such a familiar picture as a starting point to define a dynamic problem. The approach is applied to develop a problem definition for a railway company as an example.
Yazd is one of the regions in the central district of Iran, entirely dependent on ground water for its water supplies. In such regions, as economy grows demand for water increases, but a serious economics crisis also appears due to depletion of ground water reserves. In this paper, a System Dynamics model is presented to analyze the interaction between socio-economic development and limited water resources. The model shows how the crisis would occur. The alternative policies is adopted to prevent such a crisis.
A clearly defined etiology for urinary calculi has not yet been established. In this paper, a primary System Dynamics model is presented to a better understanding the process of renal stone formation. The paper attempts to explain why in most patients who have recurrent formation of calculi, urinary excretion of calcium is normal, and why can not be over emphasized on hydration in the prevention of urinary calculi.
Actual Dissipative Systems are not workable without energy supply and energy dissipation. Among these systems are economical systems as well physical system such as fluidized bed. A System Dynamics Analysis of a simple macro- economical system related to the energy sector of a country shows causal loops including energy supplies. This analysis can applied to a fluidized bed. This system is a classical engineering dynamic system. Due to its complexity it has been highly investigated on the basis of time averaged regimes but a few studies exist about the true dynamical aspect. This is mainly due to the fact that the basic equations are complex. Several length and time scales exist simultaneously. The theoretical equations should comprise the classical hydrodynamic equations for fluid containing solid particles in suspension. The complete set of theoretical equations is for the time being not available. From analogies with the economical systems it is possible to identify causal loops which are not usually considered in the classical modelling of a fluidized bed, i.e. interaction with energy supply. Introducing this phenomena and using a very simple equation it is possible to show that space structuration can occur. Then by using a simplified non-linear hydrodynamic equation a chaotic complex behavior, in agreement with experiments, can be simulated. The analysis of the model shows that one of the origin of the difficulties to use the models lies in the existence of several time and space scales. This kind of analysis is helpful to understand fluctuant behavior of many other systems including economical systems.
New gaming software coupled to detail- rich readings (such as case studies and newspaper clippings) promise more effective ways for widespread dissemination of model-based insights. However, gaming- simulators have often been criticized for encouraging superficial thinking aimed solely at ‘beating the computer’ rather than understanding business and social problems. To avoid the so-called ‘video-game syndrome’ it is necessary to embed a model in a workshop that includes briefing materials and a gaming protocol to encourage reflection, discussion and discovery.This paper reports on a computer-based learning environment for the oil industry –an oil producers’ microworld. Game players (who need not be familiar with system dynamics) can take the role of different oil producers and create their own industry scenarios for oil price, production, OPEC quotas and crude oil reserves. The paper describes how participants are briefed about the oil industry, systems thinking and the model’s feedback structures. Samples are provided of the gaming interface and model generated scenarios.
The hierarchical structure of pyramidal shape which is adopted by most of relatively large organizations is now the target of renovation to raise the capability of adaptation in changing environments. The objective of this study is to obtain relevant insights for redesigning the structure. A simulation analysis is tried to investigate information processing properties that determine to a great extent the effectiveness of the organization. Several derivatives of the hierarchical structure, which are realistically likely candidates from which appropriate choices would be made, are the targets of the analysis. A set of implications will be provided as the results of the analysis.
We consider cases where reality is best described by a continuous model, and where data are sampled at discrete points in time. Then an exact transformation of the continuous model into a discrete one, or vice versa, is typically very complicated. Simplified transformations might produce great errors if the sampling interval for the time series is approaching natural periods or time constants of the system being modelled. For such problematic cases we discuss implications for a system dynamics, traditional discrete model econometrics, and Bayesian statistical methods.
A theory for the behaviour of cartels is advanced. The theory deviates from the received literature on three main points: Cartel behaviour is derived from literature on human behaviour rather than from principles of profit maximization, the theory focuses on commodity markets rather than being general, and it deals with the timing of formation, break down, expansion and dissolution. The theory is stated formally in a simulation model, which seems to replicate well the qualitative behaviour of cartels. Historical accounts of the timing of cartel events lend support to the theory.
For the long-term period in the low-latitude region of the earth, the statistical structure of the height dynamic field at 500 mb during the winter seasons has been studied successfully by using a new correlation function. {ρ (r)=A (r) *EXP [ B(r) ]} where A( r ) and B( r) are two general polynomials. The best selections of the degrees of these two polynomial can be found in the least –squares sense. The results show that this new mixed-type correlation function can yield more accurate fitting than Gandin’s formula (1963) {ρ ( r )=a * EXP (-b*r **2) }. The height dynamic fields at the regular nest grids are then computed and compared with those obtained from the measured data at irregular observational stations. The troughs of the resulting height dynamic fields can be identified very clearly.
This paper describes a methodology for manpower planning in health care. The methodology is applied in the field of rheumatology. This methodology uses the concept of political rationality: different actors with different mental models, goals, languages and power interact in a bargaining process with incomplete and imperfect information. A Group Decision Support Systems approach is advocated where interactive model building stimulates shared meaning and communication. In health care important decisions usually have a multi-level and multi-actor character. A bottom up procedure, starting at the detailed level gives a justification when aggregating to an higher level. Consequently the project was started with discrete event models before applying continuous simulation like system dynamics. Besides the modelling and communication processes the creation of a network of key decision makers in health care applying this approach is seen as a major product.
The rapidly growth of trade industries on the developing countries can be predicted that on the near future occurs many problems, especially the problems like as piling up by the goods at the port and passing over of capacity by the trucks at the road. These problems can be solved by the improvement on both a port and a road. However, it is suggested that because the budget constraint these regards can not be conducted at the same time. The scheduling projects strategy which priories the vital projects as the first implementation is the one technique that can be considered. However, to appraise the economic impact of this implementation, an existing trade industries system model is required. This appraisal is an interesting regard as the consideration for the planner in case to decide the better transportation planning. Based on the existing trade industries, this paper proposes a model which can appraise the economic impact of the scheduling transportation projects by using System Dynamics Methodology.
Although computer simulation modeling has long been used to study issues in peace and world order, it has not resolved the controversy surrounding peace research. The problem is the lack of a well-defined methodological rudder to guide the modeling process. In this paper, a new methodological approach to the study of peace and world order is proposed, and its merits discussed. This approach is a synthesis or marriage of institutional economics, system dynamics computer simulation modeling, and peace and world order studies.
During the process of system dynamics modelling of organizations, policies or problem, R-mode (so called “right brained”) procedures, such as the JOG exercise, seem especially relevant (1) in the early phases, when an elicitation of ideas, variables, considerations and concepts having possible relevance is undertaken, and (2) during any of the modelling phases, when an unbiased evaluation is desired, perhaps in addition to more traditional: “objective” L- Mode assessments. JOG is described, as it was employed with top and middle managers of a small US hotel chain, in developing a preliminary system dynamics model for a new corporate vision.
During the first years of the 80’s decade, the continual financing of the argentine deficit fiscal, throughout the emision of new money, pushed Argentina to the verge of hyperinflation. In June 1985, the seriousness of such a situation compelled the governing party, the Union Civica Radical, to adopt hard policies of stabilization, afterwards known as Plan Austral. In this article a SD version of a small dynamic model is presented – in Cagan’s tradition (1956), conceived by Fernandez and Mantel (1985)-of the mentioned Argentine stabilization process. Dynamic simulation is used to analyse the macroeconomic behaviour.
This paper refers to the assumption that the major paradigm of System Dynamics, General Systems Theory, is not able to provide adequate models of organizational learning processes. It is shown that the theory of self –referential systems is able to overcome current theoretical weaknesses: Considering the difference between communication, the basic operation of social systems, and thoughts, the basic operation of psychic systems, a framework for organizational learning is proposed. Consequences for the management of organizations, especially their strategic change resp. the building of learning organizations, are discussed.
Studies of chaos in foreign exchange markets often lack a theoretical underpinning. This paper tries to give some reasons why exchange rate movements may become chaotic. Starting from an assumption about different groups of traders that goes beyond recent models of fundamentalists’ and chartists’ behaviour it argues that, to capture the idea of chaos, foreign exchange markets have to be modelled as a dissipative system and not, as usual, as a closed conservative one. A qualitative system dynamics approach is chosen to demonstrate the complex interaction processes arising.
Ongoing research in the Rockefeller College of Public Affairs and policy is focusing on strategies for efficient and effective model building in groups. The intent is to involve a relatively large client group in the business of model formulation, not just conceptualization. Recent projects have explored strategies for accelerated group model building in the context of two public policy problem areas: the burgeoning cost and caseload of foster care in New York State, and recent unexplained increases in Medicaid costs in the state of Vermont.Five roles appear to be essential to support effective group model building efforts. We term the five roles the facilitator, the content coach, the process coach, the recorder, and the gatekeeper. This article identifies the five roles, briefly overviews the two problem areas, sketches the design of the group model building efforts, outlines the apparent results, and hypothesizes principles and strategies to guide future group modeling efforts.
Few real life case study examples exist concerning optimisation in system dynamics models. This study reports an attempt to estimate relevant parameters of an AIDS spread model in order to check whether the chosen model structure can be separately parameterised and thereby explain the course of the epidemic for more than one country. The UK and USA are the two countries selected and the parameter values derived are reported for each. The values obtained are not inconsistent with emerging knowledge about the epidemic and the subsequent optimised projections reveal that the peak of the homosexual epidemic has been or is about to be reached in both countries.
The paper describes from a client point of view some experiences with system-dynamics during the first year of Nostradamus. Nostradamus is a project, which aims at simulating the senior management of a large Dutch governmental organization with an one action orientated engeneers approach to adopt a more outwardly-orientated, creative and flexible attitude. In the beginning of the project the use of system-dynamics was intended as a central guiding aid in the proces of organizational growth. The intended use proved considerably more extensive than the actual use. Insofar this regression is attributable to system-dynamics we, as a client of system-dynamics, see in this regression a possible challenge for system-dynamics. We think system-dynamics could have been a more central supporting aid in Nostradamus if we would have found well-documented experience with system-dynamics in comparable situations. We suggest the system-dynamics-society to develop certain activities in order to stimulate demand and to better link up demand and supply in the area of systems-thinking.
While nonlinear combinations of multiple modes existing in complex oscillatory systems may generate chaotic behavior in real systems, the studies of chaos attempted in system dynamics have often resorted to forcing simplistic models of systems to chaos. This paper illustrates how chaotic modes have been constructed through the creation of mis-specifications and anomalies in the model structure and parameters. This process has not only reduced the models to artifacts with little relevance to problem solving but has also invariably introduced a stiff structure that is susceptible to considerable building up error as numerical integration methods are used with long simulation times. The paper concludes that a model must qualify as an empirically valid system by meeting the requirements of the normal system dynamics practice if the chaotic modes it generates are to be of practical value.
Since formal modelling requires having a model boundary encompassing finite complexity, so deductive logic is possible, complex problems must be partitioned into simpler parts before being analysed. There are many ways to slice a complex problem but not all create partitions that keep together processes contributing to effective policy design. This paper explore ways in which a complex problem may be appropriately sliced so the models of the partitions can serve as effective tools for policy design.
This paper describes a case study of applying organizational learning principles to the strategic change of a large German automotive company which seems to be successful alternative to the usual top-down approaches. Different models of implementing change processes are discussed, and their adequacies are assessed regarding to the degree of supporting self-transformational processes within the organizational.
To the date, Budget Plan definition in Italian public companies is approached with insufficient deepness. We believe this is common to other countries too.Indeed, most public organizations develop the Budget Plan basing themselves only upon the available data and not upon knowledge acquired in years of experience. Balance sheet data are therefore obtained simply adding to the previous information, an amount estabilished, for example, on the expected inflation rate.This approach although “trivial” supports the budget responsible, because during the budget presentation, very few elements can be effectively criticized. It is commonly accepted that also public companies find themselves in turbulent environments. This is due to both the increased number of endogenous variables, and to the complexity of exogenous parameters. Therefore the Budget Plan definition becomes always more critical, and consequential difficulty of its evaluation assumes relevant importance.The paper describes an experiment carried out by an Italian Public company which is adopting a dynamic economic- financial model for both, Budget Plan definition and for its evaluation. The model is based upon System Dynamics approach and evaluates a series of scenarios providing support to the budget definition responsibles in taking strategic policy decisions, and better “explaining” the effects of decisions undertaken.
System Dynamics has not achieved widespread recognition as a paradigm of substance in the business-related disciplines of Strategic Management, Organization Behavior, Organization Theory, or Operations Management. One reason for its slow acceptance by academicians in these fields and related social sciences may lie in the specialized meanings and usages attached to common words by the System Dynamics lexicon. Words such as “open,” “closed,” “feedback,” and “structure” -- used differently than established scientists might expect --may create perceptions that System Dynamicists simply don’t understand systems theory. Writers in the field need pay special attention to the semantic implications of their presentation.
Organizational learning is intrinsically systemic, because it deals with changes in thinking and acting not only in individuals, or in teams, but organization-wide. Our ability to understand and improve organizational learning will depend on having an operational systems framework, which can both sharpen theoretical insights and address practical management concerns. Building on past work in organizational learning and system dynamics, the new Center for Organizational Learning at MIT is attempting to develop a rigorous foundation of systems principles and methods so that current interest in organizational learning and “ learning organizations” can lead to significant advances in management theory and practice.
We gave a report on the model for dental diseases at the 1987 System Dynamics Conference. The model consists of 4 sectors: demography, cavities, pyorrhea and baby teeth. The demographic sector covered population of 5 three-year age groups under 14 years of age and 13 five-year age groups above 15 years of age. The cavities sectors and pyorrhea sector were composed of population of five-years age groups, on the other hand, the baby teeth sector used population of three-year age groups.From the total number of defective teeth, total dental costs in Japan were calculated annually from 1963 and projected to 2025. We added to this model a new level variable which is technology (rate variables and multipliers) in order to demonstrate to the effect of technology on the other level variables. New simulation results will be reported at the International System Dynamics Conference this year.
This paper explores the advantages of System Dynamics as an enquiry method for analysis of blood bank management Systems which exhibit far reaching social implications. Causal loop diagrams are developed connecting various system components. The integration of individual causal loops is presented in the form of an influence diagram representing the ‘dynamics’ of a blood bank. Simulation model is built on the basis of causal loop diagrams. The system response exogenous disturbances or policy changes are analyzed. The catastrophe model of blood bank system is developed and the parameters forming the control surface and behaviour surface are correlated with those of the System Dynamics model.
To each causal diagram, and the structure that it represents, a dynamical system can be associated. From its qualitative analysis, the behaviours associated to the structure can be deduced. This paper introduces a piecewise linear dynamical system associated to a causal diagram. Some interesting results on the qualitative behaviour of the system can be obtained from this dynamical system. In this paper a method is proposed to implement automatically the construction of a piecewise linear dynamical system to each causal diagram, the study of its equilibria and its stability. This allows us to obtain, automatically, the behaviour modes associated to a causal diagram.
After providing a framework for integration of System Dynamics and Expert Systems, this paper builds theoretical bases to integrate three main features of rule based reasoning mechanism into conventional System Dynamic models. Then we start to modify the System Dynamics modeling tools to adopt the integrated features. To illustrate, we demonstrate a prototype for integrated theories above.
This paper is a research on the integration of system dynamics, protfolio and scenarios. The prototyping is used in developing the system dynamics model which is focused on the activities of business technology management. At here, we will discuss about the implementation and some simulation results of the BTMDSS model.