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1987 Proceedings – Shanghai, China

The 5th International Conference

of the System Dynamics Society

1987 – Shanghai, China

The following papers were presented at the conference in parallel and plenary sessions. The original printed proceedings, edited by Qifan Wang and Robert Eberlein, were printed in hardcopy and distributed at the conference. Below please find the Paper Index for these proceedings. Papers are listed alphabetically by the last name of the first author. Available papers are Acrobat (.pdf) files and can be read using Acrobat Reader available from

PAPER INDEX – listed alphabetically by first author:

Adler, Karen J.    Depression, Perception and Cognition
Bakken, Bent E.   A System Dynamics Approach to Group Formation and Productivity
Bakken, Bent E.   Simulation Games – Do People Really Learn?
Bapna, Raj Kumar with Sushil K. Sharma   A Quantitative Performance Measure and Its Application to System Dynamics
Bapna, Raj Kumar with Sujoy Ghose and Sushil K. Sharma   Beyond DYNAMO: Future System Dynamics Simulation Programming
Barlas, Yaman with Stanley Carpenter   A Fundamental Philosophy of Science Question and Validation of System Dynamic Models
Breiter, Andres E.  Must Government Owned Enterprises Be Less Efficient Than Private Ones?
Clark, Thomas D.   Parks and Natural Resources Management: A Systems Study
Davidson, Pål I. with John D. Sterman and George Richardson   A Petroleum Life Style Cycle Model for the United States with Endogenous Technology, Exploration, Recovery, and Demand
Diallo, Amadou with R. Joel Rahn   Application of Modal Analysis to Large System Dynamics Models
Doll,Georg   Sales-Oriented Product-Innovation-Rates A New System Dynamics Approach to Research & Development Budgeting
Drew, Donald R. with Lee D. Han   System Dynamics Model of Infrastructure Induced Development of Taiwan
Eberlein, Robert L. with James H. Hines   Model Restructuring
Fang, Meiqi   A Dynamic Modelling System with Chinese Character DYNAMO as the Kernel –Software Tool for System Dynamics
Ford, Andrew with Peter Gardiner   Bringing the Results of the Bonneville Project to the Classroom
Guetzkow, Harold   Development and Utilization of Global/World Models in International Affairs
Horiuchi, Toshiyuki with Wang Mohang, Akira Shimizu and Toshiro Simada   Design and Analysis of the Development Model in Chiba Prefecture
Hu,Yukui with Suling Jia   System Dynamics Model for Studying the Impact of Tech-Progress on Economics
Jiang,Yongning   Thought Criteria for Use of System Dynamics
Jin, Hui with Bao Lui and Jisong Kou  Research of Decision and Planning on the Development of Tianjin Can Industry-Application of System Dynamics
Jutila, Sakari T.   Dynamic Modeling of Adoption, Rejection and Life Cycles of Innovations
Kameyama, Saburo Kameyama with Takahiro Kojima, Akira Uchino and Kinnya Machida   Accounting Dynamics – Its Concepts and Model
Keloharju,Raimo   Simplification by Planning: The Third Way
Kishi, Mitsuo with Keitaro Noda, Yuji Yamashita and Katashi Taguchi   A Prototype Expert System for System Dynamics Modelling
Lambert, André with Louis Lohle-Tart   A Systemic View of the Population of China, Today and Tomorrow
Lee, Jiyang and Qifan Wang   Applying System Dynamics to the Study of Pharmacokinetics and Pharmacodynamics
Li, Puhua with Chunpeng Tang  SD Model of Urban Water Using of Tianjin
Lin,Ruiji   CISD- – A Normative Method for Technology Assessment
Millen, Roger Neil   Process/Production Control: A System Dynamics Study
Milling, Peter M.   Manufacturing’s Role in Innovation Diffusion and Technological Substitution
Moffatt, I.   Towards an Integrated, Intelligent Knowledge Based System for Dynamic Modelling
Paul ,H.   A System Dynamics Model of Transportation Energy Demand
Qin, Datang with Tongrun Zhao and Zhishan Wu   An Application of System Dynamics to Beijing Urban Ecosystem Research
Rahn, R. Joel   Aggregation of Oscillating Subsystems
Rego, Juan with Juan A. Vega   Probabilistic Generation of Scenarios for Argentina, Using a Elemental Harrod-Domar Model of Growth
Roberts, Nancy with Tim Barclay and Tim Kreutzer   Modeling Tools for Problem-Solving
Sancar, Fahriye Hazer   Implementation and Evaluation of a Modeling Approach to Community Development Planning Meeting the Challenge of Paradigm Breakdown
Schoenberg, Ronald with Albert J. Bergersen   Decomposing the Long Wave Through a Non-Parametric Stochastic Measurement Model
Senge, Peter  Catalyzing Systems Thinking within Organizations
Shimada, Toshiro Shimada with Kenji Fukushima, Hirokazu Mizushima, Kinya Machida and Akira Uchino   A Simulation Model for Dental Diseases
Shorb, Alan McK   Money- A Systems View
Sun, Dongchuan Sun   R-SD: The Comprehensive Development and Utilization of Water Resources of Rivers
Tao, Jianhua with Ming Tang, Xing Zhang and Jinfang Chen   The Mechanism and Program of Demand and Supply of Talent in ESE (Education-Society-Economy) System
Wang,Qifan   Philosophical Views and Basic Theories of System Dynamics
Wang, Qifan with Bingyi Wang   The Comparative Study of System Dynamics and Synergetics
Wang,Qifan with Jianglin Dong   A Look into the Future of Microelectronics in China
Wang,Qifan with Guangle Yan   The Parameter Quasi-Optimization for System Dynamic Models
Wang,Qifan with Haizhou Huang   The Comparative Study on System Dynamics and Grey System Theory
Wang,Qifan with Haizhou Huang   The System Dynamics Analysis of the National Financial and Monetary System of China
Wang,Qifan with Ma Shan   Some of the Limits to the Growth of Big City in China
Wang,Qifan with Bing Wu and Jianglin Dong   Economic Structure Changes and Their Impacts on Chinese Economy
Wang,Qifan with Xinnong Yang   The Coordinative Development of Boomtown in Industry, Society in China
Wang, Xiaoting with Qifan Wang   The Behavior of Industrial and Investment Structures in the Change of Demand and Supply
Wang, Hongbin with Demin Yao   The System Dynamics Model for Policy Analysis of the Forest Industry System
Wu, Jianzhong with Gang Wu   Rural Dynamics: A Study on the Exploitation and Protection of the Rural Resources in a Southern Province of China
Wu, Wenhua with Chingrui Xu and Shaozhong Jiang   General System Dynamics Simulation Software System – ZU-DYNAMO
Xia, Yunguan Xia with Wangkang Chen   The Study of Planned Economy and Market Economy of Oil and Engine Demand in the Equilibrium System through S.D.
Xu, Chingrui Xu with Shaozhong Jiang, Yiqun Xing and Jiasheng Wang   Dynamic Modeling and Policy Analysis for National R&D Resource Allocation Decisions
Yang, Ching T. with Zi-yuan Xu   A Tentative SD Model Applicable to the Study of Local Education Development Strategy and Policy Analysis in the Urban Area of Shanghai
Zhang, Jue   Control and Administration of the Investment Hanger and Consuming Expansion
Zhang, Nai-guang with Cheng-hong Hu   A System Dynamics Model and Policy Analysis for Rural Socio-Economic Development of a Provincial Lake Area
Zhu, Mingjie with Chenghong Hu   Application of System Dynamics to Cardiovascular System Biofeedback Regulation of BP for Hypertensives

last updated by ng on 12/3/08


Depression, Perception and Cognition
Karen J. Adler

Abstract: Depression is one of the leading psychiatric disorders today. A new approach known as cognitive therapy has made significant gains in treating depression by helping people change their understanding of their actions and environment. The approach is based on the assumption that it is primarily a person’s thought process concerning circumstances, rather than the circumstances per se, that are central to depression. In this paper, we develop a system dynamics model that can be used to explain more fully the dynamics of the processes that lead to depression, as well as the dynamics of getting better. The model is used as a vehicle to integrate the many facets of cognitive therapy to a coherent classification of the technique. A variety of case studies are used as a basis of model development and evaluation. The model is simple enough to be understood by people who do not have formal training in system dynamics. As such, it serves as both a valuable tool for therapists practicing cognitive therapy as well as a means of communication to the general public of the nature of cognitive therapy.

A System Dynamics Approach to Group Formation and Productivity
Bent E. Bakken

Abstract: Based on previous work on Group formation, in particular on the classic “The Human Group” by Homans (Homans 1950), we develop a System Dynamics model to portray the growth of two social subgroups within a larger work group. The work-group is the people working in the bank wiring room of the Western Electric facilities in Hawthorne, Illinois as described in Homans work (op.cit). Working with concepts taken from Cognitive Dissonance (Festinger 1957) we describe the dynamic interaction pattern of a synthetic group consisting of five individuals. Depending on hypothetical time constraints describing the participants willingness to change, we get a distinct subgroup formation process before the development of a common set of beliefs for the entire group or just development of a “group culture” without the prior formation of the subgroups. Further research is suggested, notably the inclusion of antagonism in the model. It is also suggested that such SD models can be used to integrate knowledge of personalities to simulate the impact of a person on the performance and behavior of a work-group.

Simulation Games – Do People Really Learn?
Bent E. Bakken

Abstract: The use of computers to improve general and task-specific mastery is the core of most computerized learning games. But they are also employed to communicate complex structures. Substantive theories explaining concept formation and learning has been developed by Piaget (1936) and used by Papert (1980) in a computer-specific sense. A recurring assumption in theories of learning is that people who learn from computer games learn in an abstract way, i.e., they learn more than to repeat efficient manipulations of the symbols on the screen.
This study develops a theory of the learning process involved when simulation games are used to reveal the structure of a complex system. Within the framework of a sample of student exposure to a compute simulation game, we find evidence for a theory that games do transmit knowledge of a complex system. In particular, the study indicates that participants Initial Experience, as well as its Relevance to the situation plays a major role in the mastery of the game. Another factor determining understanding of the structure is the use of gradually increased complexity. A System Dynamics simulation model of the learning process is developed, giving new insights into how simulation models should be built to overcome dilemmas of game transparency and real world complexity. A sample of 8 students show a close fit to the model predictions. A framework for further behavioral research and the state of the art implications for System Dynamics modelling practice is outlined.

A Quantitative Performance Measure and Its Application to System Dynamics
Raj Kumar Bapna, Sushil K. Sharma

Abstract: This paper presents a general quantitative performance measure to analyze the performance of System Dynamics models for the desired model behavior. The advantages of using a quantitative performance analysis facility are discussed. Some possible applications including optimization and sensitivity analysis are discussed. Also discussed are the implementation aspects. 

Beyond DYNAMO: Future System Dynamics Simulation Programming
Raj Kumar Bapna, Sujoy Ghose, Sushil K. Sharma

Abstract: Advances in computer technology, since DYNAMO first appeared, promise significant developments for System Dynamics modeling and simulation. This paper discusses the future System Dynamics simulation languages as part of a human-engineered, integrated simulation programming environment. Many features of such languages and environments, that may become available in the next five years, are identified and discussed. The relevant advances in Simulation and Computer Science are presented with appropriate modifications in the context of System Dynamics methodology. Some aspects of implementation of such languages and environments are also discussed.

Must Government Owned Enterprises Be Less Efficient Than Private Ones?
Andres E. Breiter

Abstract: This paper is based on direct observation of privately and government owned enterprises in Argentina, Italy, Poland, U.S.A. and Yugoslavia.
A causal model is presented which is found in all enterprises operating successfully and efficiently over time. The frequently observed inefficiencies in government owned companies are explored with its help. The same method suggests why certain privately owned enterprises exhibit inefficient behaviour while on occasions government owned enterprises are an example of dynamic, foresighted and efficient management.
The external pressure groups and their methods for exercising influence through government bureaucracy and other channels on company management are found to be of great importance and so is the legal structure and competitive environment in which management operates. The availability of adequately trained managers is another key element.
Several general recommendations are formulated for policies that will ensure efficiency in both government and privately owned corporations.

Parks and Natural Resources Management: A Systems Study
Thomas D. Clark

Abstract: A study of the management structures for state parks and natural resource protection areas is presented in this paper. This analysis vehicle is a system dynamics model of a typical park encompassing flora and fauna natural resources, cultural heritage resources, and recreational areas. Such systems are complex feedback structures where management goals must be drawn to achieve desired ends within fiscal and personnel constraints. The model is used to suggest methods of measuring the tradeoffs between goal accomplishment and resource constraints. The model was developed through an extensive study of the Parks System of Florida.

A Petroleum Life Style Cycle Model for the United States with Endogenous Technology, Exploration, Recovery, and Demand
Pål I. Davidson, John D. Sterman, George Richardson

Abstract: This paper describes a model of the life cycle of the petroleum resource in United States. Expanding on prior system dynamic models of petroleum resources, the model endogenously generates the complete life cycle of the resource. The model treats endogenously the petroleum demand, the development of technology for and investment in exploration and recovery, the discovery and production of petroleum and the development of petroleum substitutes. With only two exogenous variables (GNP and the international petroleum price), the model is able to portray the evolution the petroleum resource, and the associated industry, starting in 1870. The correspondence between simulated and actual data is examined through a variety of statistical measures. The model is used to show how the interplay of technological progress, depletion, and the development of substitutes create the lifecycle by altering the dominance of the feedback processes in the system. A full documentation may be found in (Davidsen, 1987).
The model constitutes the basis for more comprehensive studies in the following areas of concern, all related to the management of depletable resources: 1. Adaptation of the model to different kinds of depletable resources, and generalizations to obtain a model portraying the generic structure of the life cycle of a depletable resource. 2. Analysis and evaluation of current practices in the management of depletable resources. 3. Design and evaluation of alternative strategies for the management of such resources.
The model seems furthermore to be a promising tool for teaching resource management.

Application of Modal Analysis to Large System Dynamics Models
Amadou Diallo, R. Joel Rahn

Abstract: In this paper we present methods developed to aid the application of modal analysis to large system dynamics models. The approach is based on a method of direct linearization which can be achieved using DYNAMO equations derived from the model being studied. The linearization is followed by identification of the sub-systems of the model and a modal analysis of the sub-systems. The sensitivities of the modes to structural and parameter changes are used along with a causal loop diagrams to propose changes in the model that will have a desired dynamic effect.
Application is made to Lyneis’ model of a firm. As suggested by the analysis, modifications both in the polarity of some relationships and in their strength are introduced to stabilize each sub-system and the results are shown to be positive using the criterion of over-all profitability of the model firm. The paper concludes with a discussion of further developments of the process and to account more completely for the non-linearity of the system.

Sales-Oriented Product-Innovation-Rates
A New System Dynamics Approach to Research & Development Budgeting

Georg Doll

Abstract: Research and Development (r&d) are the source for planned invention and innovation and therefore play a crucial role for the success of a company. New products and processes become indispensable because of technical progress and competition. Early long-range r&d planning is required.
Despite the strategic importance of r&d budgeting, the usual approach resembles more a rule of thumb than a scientific method. The process most widely used takes a fixed percentage of sales for r&d. This sales orientation approach seems perhaps too simple, as there is no causal link between today’s sales and tomorrow’s products. Another method considers the product-innovation-rate; this is the fraction of total sales which comes from products that are younger than e.g. five years. The actual product-innovation-rate then is compared with an intended value (e.g. forty per cent) and the r&d budget is accordingly adjusted.
Contrary to previous studies, a System Dynamics simulation shows that the rather sophisticated product-innovation approach does not lead to better results in terms of cumulated profit. In its place, a modified approach, which avoids the disadvantages and combines the benefits of both the sales and the product-innovation-rate orientation methods, has been developed and implemented. This sales-oriented product-innovation rate approach shows superior results in some of the scenarios tested, including expansion and shrinkage portfolio situations.
The handy but accurate System Dynamics model (less than hundred equations) is easily adaptable to individual circumstances of specific industrial enterprises and therefore offers practical support for strategic long-range planning.

System Dynamics Model of Infrastructure Induced Development of Taiwan
Donald R. Drew, Lee D. Han

Abstract: This paper describes a pilot model, the harbinger of a comprehensive package of interactive national, regional and sectoral models of Taiwan, to be used for long range planning. The model, called DMT (Development Model of Taiwan ) is distilled from many mental and verbal models of Taiwan, each of which involved various segments of the system with considerations given to certain variables and to various policy interventions involving still other variables.

Model Restructuring
Robert L. Eberlein, James H. Hines

Abstract: Models are continually changed and altered, and it is clear that more effective techniques for accomplishing this can make modeling easier and faster. One common way that models are changed is to remove selected pieces of structure from the model. This type of model alteration can be done for debugging a model, for tuning a model, and for performing policy analysis. In this paper we present techniques that automate the processes involved in removing components of model structure. By taking out some of the drudgery of changing a model, and guaranteeing consistency in the resulting altered model, the techniques greatly enhance modeling fluency and speed. These techniques are implemented in a software package that is part of Professional DYNAMO.

A Dynamic Modelling System with Chinese Character DYNAMO as the Kernel —Software Tool for System Dynamics
Meiqi Fang

Abstract: This paper gives a brief account of the technical details of Chinese Character DYNAMO compiler, which follows the current DYNAMO grammar. The compiler is in the form of modules, which lays good foundation for further expansion. Taking DYNAMO as a kernel, reinforcing its internal function and statistical analysis of results, joining other programming languages, methods and modules, adding verification of model and using advanced ideas of other branches of system science, we can build a Modelling System with Chinese Character DYNAMO as the kernel. This paper gives the logic design of the Modelling System.

Development and Utilization of Global/World Models in International Affairs
Harold Guetzkow

Abstract: The development and utilization of global/world models in the context of political implications of world economic trends is overviewed in terms of three streams of research, that of multidisciplinary social scientists, of the econometricians, and of the system engineers. Socio-political processes impinge on world economic trends, just as trends in turn impact on politics, both national and international. The use of simulations rich in system dynamics for the study of international affairs is found to have much potential, as documented in findings obtained by researchers throughout the world.

Design and Analysis of the Development Model in Chiba Prefecture
Toshiyuki Horiuchi, Wang Mohang, Akira Shimizu, Toshiro Simada

Abstract: In this study, we have selected chiba prefecture as an subject. Chiba Prefecture is located in the Metropolitan region which is made up of Tokyo Metropolis and three prefectures. Though its local power is not so high compared with others, Chiba Prefecture has been remarkably vitalized in recent years. In order to study how the life environment of our local society will change in the near future, we have designed a local development model based on the System-Dynamics and analyzed it until 2000. The whole model is made up of 6 sectors; population, industry, land and dwelling, finance, education and medical facility. In the population sector, we have studied the change in the age structure. In the industry sector, we have analyzed the change in the structure by studying agriculture as the representative of the secondary industry and tourist industry and retail as the representative of the tertiary industry. Based on such kind of analysis, we have concluded the followings in 2000. the population of Chiba Prefecture will reach the level of 6.27 millions. The secondary industry will grow move rapidly than the tertiary industry, it’s will become post Industry Society. The local society might become advanced-age society, we way say that our Chiba Prefecture will be relatively comfortable to live, compared to the other areas of the Metropolitan Region.

System Dynamics Model for Studying the Impact of Tech-Progress on Economics
Yukui Hu, Suling Jia

Abstract: The consumption of resources and the environmental pollution caused by the discharge of waste materials and waste heat occur as useful products are being turned out in the social-economic activist activities. Based on the concept of entropy, the paper deals with the impact of tech-progress on every link of this process. This is the major mechanism for the impact of tech-progress on economics.

Thought Criteria for Use of System Dynamics
Yongning Jiang

Abstract: The purpose of this paper is to explore the thought criteria of modelling in system Dynamics.
Thought criteria of system dynamics has appeared as a dynamic theory in the field of economics. This field has three characteristics: nonlinear fluctuation, time delay and qualitative transformation. These characteristics constitute the basis of model building in system dynamics.
The concept of thought criteria is based on the process of cognition: Study of subject– Modelling—Understanding of object. It is closely associated in series with interactive elements of the system. The modelling has been inspected in practice as a transitional link between subject and object so that modelling has turned into a cognitive and analytical method  and will be used, first, to carry out simulated tests of the prototype and thus deepen our comprehension of it; secondly, to compare the specific properties of theoretical and experimental systems with those of the real system, and by means of the result from these comparisons, to improve a causal relation loop; and thirdly, to show a tendency to pass from qualitative analysis to quantitative analysis, thus leading to the combined assessment of the system. The rules of the combined of the application of the system model are identification, interchangeability, controllability, and availability.

Research of Decision and Planning on the Development of Tianjin Can Industry-Application of System Dynamics
Hui Jin, Bao Lui, Jisong Kou

Abstract: The paper analyses the system of Tianjin Can Industry using System Dynamics method. It puts forward suggestions to the development decision and planning of the seventh five year and the year 2000 of the Can Industry. The model simulates and analyses emphatically the returns on various investment and the efficiency of various developing products, which should be a reference for the decision-maker.
A new idea of using Optimal Technology to optimize the System when the model simulation is carrying on is brought forth in the paper, and good results are obtained.

Dynamic Modeling of Adoption, Rejection and Life Cycles of Innovations
Sakari T. Jutila

Abstract: The well established theory and methodology of the assurance sciences, especially the probabilistic reliability and availability theory, is applied to the modeling of the dynamics of innovation adoption processes. In particular, this approach allows one to model the dynamics of the diffusion of innovations through complex organizational decision networks. The approach taken here is an analytic one. However, it provides a logical framework for dynamic computer aided approaches. As the management and control of the dynamics of the innovation adoption are becoming increasingly important, obvious extensions of this approach are in the direction of optimal control systems concepts and applications. A number of empirical examples from the American automobile and steel industries are discussed.

Simplification by Planning: The Third Way
Raimo Keloharju

Abstract: This paper puts forward the idea that essential parts can be removed from a SD model without harm if the model is revised successively during the simulation. The revision requires an optimization package, called DYSMOD (Dynamic Simulation Model Optimizer and Developer). A multi-stage production model, developed by J. M. Lyneis, is used for demonstrating that the idea works in practice.

A Prototype Expert System for System Dynamics Modelling
Mitsuo Kishi, Keitaro Noda, Yuji Yamashita, Katashi Taguchi

Abstract: In this study, a prototype expert system to support system dynamics modelling is designed by organizing the knowledge structures of generic patternized expectations and the rules on how to construct system dynamics models. The system is a production-rule-oriented consultation system written in PROLOG. The proposed system covers the system conceptualization in part, system modelling, and generation of simulation program. Brief executing processes of the proposed system are: 1) Extracting concepts (nodes) within a system by perceiving action/decision making and by inferring the causal relations (links). 2) Preparing a causal-loop diagram of the system automatically by interconnecting the causal relations and by eliminating inappropriate links. 3) Transforming the causal-loop diagram into a flow-diagram automatically, and generating a simulation program. The proposed system has a knowledge base of facts acquired in the systems modelling, to facilitate the modelling of a system related to the ones dealt with in the past. Some application examples are provided to verify the applicability of the proposed system.

A Systemic View of the Population of China, Today and Tomorrow
André Lambert, Louis Lohle-Tart

Abstract: The authors present models, written in Dynamo language, used for reconstituting the demographic evolution of China between 1953 and 1978, and for dynamic simulations of the Chinese population. These models incorporate standard features of demographic projections but also a highly disaggregated sub-system of the female fertility, by age of women and number of children ever born. The spontaneous evolution of population is easily analyzed; any number of changes in fertility and/or mortality can be simulated, together with their consequences on population figures.
The paper presents simulations of modifications in the trends of mortality and fertility. The effects of such modifications are discussed.
The authors show the importance of existing stocks of people (by sex, age and number of children) for understanding and predicting the evolution, “natural” or consecutive to governmental actions, in population parameters; the evolution can be accelerated or delayed due to structural constraints.
The short- and long-term effects of the possible evolutions in demographic parameters on the several stocks (population structures) are discussed, in the perspective of their usefulness for decision-makers. The disaggregation of the model allows to make sectorial projections for each simulated hypothesis.
The feasability of a stabilized population in China by the year 2000 is also discussed.

SD Model of Urban Water Using of Tianjin
Puhua Li, Chunpeng Tang

Abstract: The paper presents a preliminary attempt for application of system dynamics in the study of urban water using and its management.
The SD model of urban water using describes the complicated system behavior. It will help us to understand and trace time interval behavior of urban water using system, to observe and handle dynamic trend of system behavior, to obtain the features of urban water using in different time. Therfrom we may have a quantified rational knowledge about water demand and have to find an effective may to strengthen scientific management of urban water using, to promote rationalization of urban water using, to save water resources and to resolve unbalance between supply and demand. Meanwhile, necessary informations and quantized references should be provided for administration and departments concerned to determine the speed of economic development, study layout and structure of industrial development, adjust key points and methods for urban water using.

CISD- – A Normative Method for Technology Assessment
Ruiji Lin

Abstract: The formal KSIM (Kane’s SIMulation) model is equivalent to a particular system dynamics (SD) model. On the basis of this equivalency, we use the KSIM and cross-impact concepts to simplify the SD modeling steps, and a new procedure –CISD from the abbreviation for Cross Impact System Dynamics which is technically simpler and more normative, has been introduced. CISD is well applied in the field of Technology Assessment (TA). An example for TA of agricultural chemicals with CISD is presented. A general computer program for CISD which is called CISD-FORTRAN makes CISD procedure more widely used with facilities even for nonspecialists.

Process/Production Control: A System Dynamics Study
Roger Neil Millen

Abstract: Using data from a large primary steel products company, two Industrial Dynamics simulation models were constructed to study the effects of process control computer-generated information on management control systems. The first model represented the existing system, the other proposed process control/business control interfaced system.
The research provides an initial step in the solution of the problem of integrating process control and management control systems by investigating the relationship between process information and control decisions at the operating level of management.
The proposed system model indicated much less fluctuation in inventory levels following changes in demand, lower backlog ratios, higher inventory ratios, lower delivery delay ratios, and higher levels of consumer satisfaction. The proposed system was also fairly insensitive to changes in the time between transmissions from the process control systems to the management control systems once the interface was effected.

Manufacturing’s Role in Innovation Diffusion and Technological Substitution
Peter M. Milling

Abstract: Successful innovation management depends upon both, the intrinsic attributes of the new product to be marketed and the firm’s internal performance like cost management, timely delivery and quality assurance. The impact of these latter aspects is frequently neglected in the design of models for supporting decision making in innovative firms.
A model is outlined to study the market response of different manufacturing policies for innovative goods. It allows e.g. the evaluation of an aggressive strategy with large production capacities from the outset, or a more tentative behavior to avoid the pressures stemming from high fixed cost and the risks of eventually idle capacity.

A System Dynamics Model of Transportation Energy Demand
H. Paul

Abstract: This paper presents a system dynamics model of the transportation energy demand in Singapore. The transportation sector in Singapore is heavily dependent on oil and is one of the major consumers of energy. Thus, it is essential to model the transportation energy demand to be able to see the implications of changes in economic situation and oil prices.
The transportation sector is divided into passenger transport and freight transport. Five modes of passenger transport are considered. The Mass Rapid Transit is included in this model as it will be the major mode of public transport in 1990’s. The ratio of per capita energy consumption to per capita income is used to indicate the change in energy consumption as income changes. With this as a basis policy changes such as price of fuel and regulation of ownership of private motor vehicles are made.
The model can be used to test various scenarios, e.g., changes in economic conditions and in fuel prices. The simulation results can then be used to examine the various policies that could be implemented to alter the transportation energy demand situation. The model has been calibrated using available information and some policy analyses have been performed with the model.

An Application of System Dynamics to Beijing Urban Ecosystem Research
Datang Qin, Tongrun Zhao, Zhishan Wu

Abstract: The study on urban ecology has its world-wide significance due to the phenomenon of growing “urbanization” nowadays. With System Dynamics, the author has studied the simulation model of ecosystem in Beijing. While determining the variable set and doing the sensitivity analysis , the author has posed a new method. A retrospective verification is done with historical data and then several strategies are analyzed by using this model. The research shows that the simulation model is an important method in urban ecosystem study and of great value to practical use. 

Aggregation of Oscillating Subsystems
R. Joel Rahn

Abstract: In previous work, the analysis of the effects of aggregating simple dynamic systems has been studied by applying methods developed for thermodynamic systems in order to take account of stochastic effects. This approach is based on the Master Equation for the probability density of the contents of a vector of system levels. The goal of these studies is to determine the dynamic characteristics of systems composed of a population of sub-systems with the same dynamic structure while accounting for novel behavior that is introduced by the process of aggregating the sub-systems into the larger system.
In this paper, the Master Equation analysis is applied to four versions of a Commodity Cycle model to determine the nature of modes of behavior that arise from the process of aggregating a population of entities whose dynamic structure is derived from the oscillatory structure of the commodity cycle model. The approach used here is novel in two respects. It contracts with the more recently developed analysis of chaotic systems in which non-linear, aggregate or lumped-parameter models generate behavior that is unpredictable while not being stochastic. In those models, no attempt is made to explain the large-scale or aggregate chaotic behavior in terms of the sub-systems. Compared to previous work in the same vein, this paper addresses itself to a slightly larger model as part of a natural progression in the analysis of ever-more complex systems by Master Equation methods.

Probabilistic Generation of Scenarios for Argentina, Using a Elemental Harrod-Domar Model of Growth
Juan Rego, Juan A. Vega

Abstract: The growing amount of the foreign debt of the developing countries shapes a gloomy future for most of them. The chances for maintained growth fueled by internal saving is nil if the service of the debt is satisfied, as it has to be to avoid international isolation. This is particularly true in the case of Argentina, with a debt equivalent to two thirds of its GDP, and its debt service representing more than 5 per cent of the GDP. After showing the historical facts about the Argentine economy, this paper presents a very simple version of a growth model type Harrod-Domar, adapted to the parameters of the local economy. Then the model is used for answering to “what-if” type of questions, wich arise from different plausible scenarios. Finally, it is analyzed the probabilistic generation of scenarios and related technical problems using DYNAMO.

Implementation and Evaluation of a Modeling Approach to Community Development Planning Meeting the Challenge of Paradigm Breakdown
Fahriye Hazer Sancar

Abstract: This paper outlines the characteristics of a search process for a planning paradigm to supplant the rational approach. After a brief discussion of the ongoing debate about the shortcomings of the prevailing paradigm, the central issues and assumptions in planning method are identified. These are then used to develop a set of criteria for procedural development and evaluation to guide the search for new approaches to planning. In the first part of the paper such criteria are operationalized to develop a series of procedures and models for community development planning and measures for evaluating these are given. The second part of the paper reports on the actual implementation and evaluation of the approach as an appropriate search strategy. The context, the models, and the evaluation results obtained in two applications, Door County Wisconsin and Janesville Wisconsin, are presented. Based on these applications the potential of the overall approach as a search strategy is discussed.

Decomposing the Long Wave Through a Non-Parametric Stochastic Measurement Model
Ronald Schoenberg, Albert J. Bergersen

Abstract: Earlier work demonstrated the presence of two long waves of colonial administration of different lengths (1490-1825 and 1826-1969). Whether these were separate episodes or examples of deeper underlying cyclical dynamics has implications for the existence of a common system dynamic over the long wave. To further inquire into the existence of a common cyclical rhythm these larger waves were decomposed through the use of a non-parametric stochastic measurement model.
To do this a 490 year time series of colonial administrations is divided into ten episodes. A conditional Normal-Poisson model is proposed based on the assumptions of a stochastic process. The mean number of colonial administrations established and terminated over each episode are estimated, controlling for a quadratic time trend which would be induced if the system was not constant throughout an episode as assumed. Two sub-cycles are observed withing each of the two long waves of colonial administrations previously reported (Bergesen and Schoenberg, 1980).
The presence of these matching sub-cycles provides a strong evidence supporting a common system dynamic in not only economic but political aspects in international life.

A Simulation Model for Dental Diseases
Toshiro Shimada, Kenji Fukushima, Hirokazu Mizushima, Kinya Machida, Akira Uchino

Abstract: Dental diseases dealt with in this study are cavities (fillings, extractions and crowns), pyorrhea and baby teeth.
The total number of teeth with dental diseases in Japan changes year by year depending on oral conditions ans are affected by the number of dentists, economic conditions and technical progress.
This model contains 4 sectors: demography, cavities, pyorrhea, and baby teeth. The demographic sector covers populations of 5 three-year age groups under 14 years of age and 13 five-year age groups above 15 years of age. The cavities sector and pyorrhea sector are composed of populations of five-year age groups, on the other hand, the baby teeth sector uses populations of three-year age groups.
From the total number of defective teeth, dental busyness and total dental care costs in Japan are calculated yearly from 1963 to 2010. The simulation results are used to modify the dental policies of Japanese administrators.
This study is a research project of the Japan Dental Association.

Money- A Systems View
Alan McK Shorb

Abstract: This is a paper about possibilities. It is the beginning of an investigation into the influence of perceptions of money on the dynamics of major economic policies. No concrete results are reported.
We begin with anecdotal evidence that many economic policies are based on a local and static perception of money. Local in that it only considers the part of the economic environment which directly impacts on, or is impacted by, the policies being made. Static in that it considers this environment to be essentially unaffected by those policies.
This usual perception of money is illustrated by exploring a number of common thoughts about money. This exploration reveals the confusion surrounding this perception. In order to penetrate this confusion, a step-by-step examination is conducted of the role that money plays in an economy. This examination leads to another perception of money: Money has no value itself; it is merely a proxy for economic product that already exists. This perception is more global and dynamic than the usual point of view. Global because the focus on economic product forces one to consider the full economic context of a transaction. Dynamic because that emphasis leads one to consider the impact of decisions on the whole economy.
A number of everyday economic transactions are illuminated by the new perception of money in such a way that consideration of those transactions naturally relates them to a wider economic system. Armed with this appreciation of economic transactions, the anecdotes presented early in the paper are revisited. In this visit, the new perception of money automatically suggests different approaches that the decision maker could take.

R-SD: The Comprehensive Development and Utilization of Water Resources of Rivers
Dongchuan Sun

Abstract: R-SD is a dynamic system model used to study the comprehensive development and utilization of water resources of rivers. This problem covers a wide range of aspects, such as hydraulic power generation, water transportation, flood cotrol, water consumption of industry and households, irrigation in agriculture, reservoir fishery, around-reservoir tourism and recreation facilities. R-SD also relates to the thermal power generation and land transportation. It is a system with multivariables, nonlinear and complex feedback structure. Usually, it is called as economic system of river-valley.
This paper emphasises on the structure of R-SD model. First, it gives the interrelationship figures between the subsystems, then the main cause-and-effect chains and flowchart of the system. Finally, a part of the results of a case study is given. It turns out that during the comprehensive development and utilization of water resources of rivers, the emphasises should be placed on the development of hydraulic power generaion in association with water transportation and other aspects. Meanwhile, thermal power generation and land transportation should be jointly developed to promote the economic prosperity in the river-valley. In R-SD, we have also posed three degrees of satisfaction, which are guided to decide the development velocities and investment proportions of power generation, transportation, and water supply.

The Mechanism and Program of Demand and Supply of Talent in ESE (Education-Society-Economy) System
Jianhua Tao, Ming Tang, Xing Zhang, Jinfang Chen

Abstract: The regional demand-supply and training mechanism of talent is regarded as a feedback-cnotrol structure under the synergetic actions of education, society and economy. By building ESE simulation system, we have studied its stability in operation and its sensibility to main parameters. We have attempted the combination of SD with LP (Linear Programming), and some initial conclusions are reached which can further be discussed.
Using the principles of the Education-Economics and SD methods to forecast and program the demand-supply of talent is becoming very popular in the educational theory circle of our country recently. There are many scholars whose studies have really shown the originality of SD method, but there are two problems that little attentions have been paid in their studies. One is that forecasting is not the strong point of SD, and it is also not competent for programming by SD methods only, the other is that we often pay more attention to the supply but neglect the demand between Education and Economy, which easily results in the lack of enough impetus to the system operation. Our paper tries to do some studies on overcoming the above two inadequate aspects.

Philosophical Views and Basic Theories of System Dynamics
Qifan Wang

Abstract: System Dynamics, founded by professor Forrester at Massachusetts Iustitute of Technology in 1956, is a discipline which analyzes and studies the system of information feedback. Basic views of theories of system dynamics distinctively show its dialectical characteristics. More attention should be paid to the features of complicated nonlinear systems. The model simulation of system dynamics is a kind of structure-function simulation. One of the remarkable advantages of system dynamics is that it can handle problems of high order, nonlinear, and multiple-feedback system.

The Comparative Study of System Dynamics and Synergetics
Qifan Wang, Bingyi Wang

Abstract: Being two different branches of the system science, System Dynamics and Synergetics share many common concepts and mathematical manipulation techniques. The comparative study of the two subjects will help accelerate the developments of both subjects as well as the whole system science. In this paper, the authors first introduce the basic ideas and mathematical handling techniques of synergetics, then that of system dynamics. Finally, the two subjects are compared from the angles of both the concept and the mathematical manipulation technique.
The following are the major points of this paper:
1) Synergetics deals with systems that are self-organized. It studies how such systems evolve in a self-organized fashion, how new patterns are brought about, or in a philosophical sense, how the animate and the inanimate world evolve. In contrast, the systems, with which system dynamics deals, are partially self-organized, partially man-made. It studies the relationship between system structure and system function.
2) The general equations of both synergetics and system dynamics are nonlinear, stochastical partial differential equations of high order.
3) Synergetics focuses its attentions on nonequilibrium phase transition, i.e. pattern formulation, while system dynamics endeavors, with most its efforts, to study the dynamic behavior of a system with some kinds of structure.
4) There are many concepts as well as mathematical handling techniques that are counterpart and can be used as a reference to each other, such as order parameter vs. sensitive parameter or minor structure; order parameter equations vs. dominant loop equations; slaving principle vs. the principle that dominant loops mainly determine the dynamic behavior of a system; adiabetic elimination vs. the insensitivity of system behavior to most parameters; linear stability analysis vs. Lyapunov method I & II, gain and phase shift analysis, etc.

A Look into the Future of Microelectronics in China
Qifan Wang, Jianglin Dong

Abstract: The rapid development and wide application of microelectronics has been making the production activity and life style changing, with great reformation in world economies. Weather or not can a country make achievement in developing hi-teches such as microelectronics is a serious challenge to both developed countries and developing countries including China. What can be done by China under the chelange and how about the future of microelectronics in China are of most concerns amonog decision makers in China.
A brief study is presented in the paper on the interrelation between microelectronics and socio-economic environment and all the effects from the relevant environmental factors. The paper also shows the research work on the development of scienice and technology in Chinia which is considered the most concerning problem to the development of microelectronics. Some viewpoints on the future of microelectronics in China derived from the research are given at the end of the paper.

The Parameter Quasi-Optimization for System Dynamic Models
Qifan Wang, Guangle Yan

Abstract: With the sustained development in science and technology method of system optimization has more and more widely been applied to the area of science, technique, engineering, economy, etc. The optimization theory is strongly supported by the birth and the development of computers. System dynamics models are good at understanding complex systems with the characteristics of high-order, multi-loops and nonlinear (say socio-economic systems). The purpose of this paper is to combine the modeling process of a system dynamics model with the optimization method so as to make the system synthesis more perfect. Because of the specific properties of large scale systems, there are some serious difficulties in completely optimizing systems. In many cases, it is impossible to find an overall optimization for complex systems. However, the quasi-optimization for dynamic systems is still available. This paper develops some ideas of the parameter quasi-optimization for system dynamic models and presents a practical method. Its advantages include that the goal of the parameter quasi-optimization is clear, the precision is controllable, the quasi-optimal indices are conveniently regulated, the whole process can be automatically completed by a computer, repeating computations and simulations are not needed. Besides system synthesis, this method can also be applied to system analysis such as the parameter quasi-optimization after decoupling a system, selecting the dominant loops, separating the interest substructures, etc. The final goal of this paper is to make a solid fundation for a common used modeling software package.

The Comparative Study on System Dynamics and Grey System Theory
Qifan Wang, Haizhou Huang

Abstract: System dynamics created by professor Jay W. Forrester at MIT, is a field which bases on system theory, absorbs the quintessence of control theory, and draws support from computer simulation technique. Established by professor Deng Julong at Central China Institute of Science and Technology in 1982, grey system theory derives its idea and methodology mainly from control theory and operations research. Although system dynamics and grey system theory both have their own features in methodology and processing technique, there are still a lot of common points between them. From the comparative study on these two fields, the paper arrives at that it is not only necessary but also possible to infiltrate and draw on the experiences of each other to develop themselves.

The System Dynamics Analysis of the National Financial and Monetary System of China
Qifan Wang, Haizhou Huang

Abstract: Based on the system dynamics approach, this paper tries to examine the structural causes of the long term performance of the economy after the reform, make the comparative researches on the financial and monetary system before and after the reform, and evaluate whether the system dynamics approach is a powerful tool to analyze the economy in a developing country such as China. After the description of the structure of the national financial and monetary model of China, the modeling approach is summarized in the paper. The formulation of the principal subsystems and the interactions among them are briefly introduced. The behavior of the model, and the four economic leverages — price, tax rate, interest rate, and loan leverage, are mainly concerned and discussed. The policies designed for economic reform are examined with the DYNAMO simulation, the different results related to the different policies are compared. At last the programs and the possible futures related to them for the economic reform are given in suggestion.

Some of the Limits to the Growth of Big City in China
Qifan Wang, Ma Shan

Abstract: In contrast with those fast growing of small- or mid-size cities’ economy, big cities in China are suffering a lot of difficulties: the deterioration of the external condition of production, the decay of the industry structure, the shortage of municipal infrastructure, the fund scarcity, etc.. People have been discussing the limit factors of big cities for times, but we still need more quantitative and dynamic analysis of the whole system. In this paper we use the system dynamics model to simulate the behavior of a big city, conclude that within this century the main limits to the economic growth of a big city is the production condition, including energy, material, and transportation supply, while after the early years of the next century, the market demand, which is determined by the cost and the quality of product as well as the economic development of other areas, will be the real limit to a big city. Policy testing shows that the effective adjustments to big cities are the improvement of material supply as well as the speeding up of the capital discarding.

Economic Structure Changes and Their Impacts on Chinese Economy
Qifan Wang, Bing Wu, Jianglin Dong

Abstract: In the past thirty years of initial industilization of its economy, China has established a primary industry system. But the unbalanced development in economy resulting from the industry policy of laying under stress on the industry aggregates to form a obstacle which hinders the further development. A great change in economy has occurred since 1984. The paper presents a historical review about the causes of the unbalanced structure, analyzing the present situation and discussing the possible impacts of the structure changes by means of a system dynamics model. The analyses and the simulation results of the model show that pertaining to past industry policy would put limits on the further development, new policy must be carried out. But on the other hand, a long period of time would be required for the completion of the changes. The expectation of rapidly change would prove to be unrealistic.

The Coordinative Development of Boomtown in Industry, Society in China
Qifan Wang, Xinnong Yang

Abstract: The paper researches into a typical example of a developed region with a boomtown of China, studies the coordinate development of economy, and population migration of that region, analyzes the mechanism and theory of industrialization of the rural area. A systems dynamics model created to study of urbanization is exhibited and explained. The paper makes comments on current policy. And by the simulation, various policies are examined, the paper finds out the more reasonable coordinative growth rate and scale among industry, agriculture and town construction. The interaction between a special region and outside in the process of industrialization and urbanization is also a subject of discussion. The general conclusions and suggestions on industrialization and urbanization of rural area of China are put forward.

The Behavior of Industrial and Investment Structures in the Change of Demand and Supply
Xiaoting Wang, Qifan Wang

Abstract: This paper presents a system dynamics model of China’s industrial and investment structures. The dynamic behavior of the two structures has been analyzed in the change of demand and supply structure. The model has given special concern to China’s limited resources and their allocation to different industries. A resource allocation mechanism is developed and the external robustness of the model is examined to test the control of the resources allocation system.

The System Dynamics Model for Policy Analysis of the Forest Industry System
Hongbin Wang, Demin Yao

Abstract: By means of the system dynamics theory and approach, A system dynamics model of the forest industry system for certain area is set up, and the future developing tendency of the forest industry system, under the conditions of various developing strategies and policies, is discussed quantitatively using the computer simulation based on the model. This model can provide scientific basis for making a long-term programme for the developing of the forest industry system.

Rural Dynamics: A Study on the Exploitation and Protection of the Rural Resources in a Southern Province of China
Jianzhong Wu, Gang Wu

Abstract: In this paper we use system dynamics approach to build a policy lab focusing on the exploitation and protection of the rural resources in a southern province of China at first. Then we proceed, after validating the model thoroughly, model-based policy analyses.

General System Dynamics Simulation Software System – ZU-DYNAMO
Wenhua Wu, Chingrui Xu, Shaozhong Jiang

Abstract: System dynamics modeling has been applied in a wide variety of areas. However, as a means of simulating models in computers, there is no any general DYNAMO compiler system that can be used in various types of computer. The purpose of this paper is to deal with a general compiler software system ZU-DYNAMO, which is used to simulate models in various types of computer with outputs in English or Chinese. Being different from traditional method, a new idea suggested in this paper is the selection of C language instead of assemble language as objective code. The aim of such selection is to make ZU-DYNAMO independent on a particular computer. The overall structure and design principle of the system are presented. The algorithms and techniques used in the system, and the structure of objective code are designed and analysed. The description of extensions of Arrays, FOR card, etc. and the ways to implement them are also given.

The Study of Planned Economy and Market Economy of Oil and Engine Demand in the Equilibrium System through S.D.
Yunguan Xia, Wangkang Chen

Abstract: The systems of oil and engine production of our complete planned economy before 1979 and market economy guided by planned economy after1980 are simulated and some conclusions are given in these models.
The complete planned economy can’t meet the national requiment for oil and engines and the market economy guided by planned economy can develop equilibrumly under the instruction of mixed policies applied to the production of oil and engines.
The main items of microeconomics are simulated and some useful plots and conclusions are given. Further study of many fields of macroeconomics and microeconomics is expected.

Dynamic Modeling and Policy Analysis for National R&D Resource Allocation Decisions
Chingrui Xu, Shaozhong Jiang, Yiqun Xing, Jiasheng Wang

Abstract: The confliction between the need of R&D expenditure and the limitation of R&D resources in certain time period is a serious issue facing both developing and developed countries. This paper deals with not only the mechanism of interaction between R&D, economy and education systems, also the mechanism and relation among basic research, applied research and development. Two system dynamics models were developed focusing on the above two problems respectively. And, through modeling and policy analysis, some new findings, such as the proper scale and growth-rate of national R&D expenditure, the relation between technology acquisition and self-developing R&D, the proper ratio of R&D expenditure, etc., were accomplished.  

A Tentative SD Model Applicable to the Study of Local Education Development Strategy and Policy Analysis in the Urban Area of Shanghai
Ching T. Yang, Zi-yuan Xu

Abstract: This paper discusses the application of System Dynamics approach to the study of local education development planning which fosters a tentative SD model applicabl to local education development strategy and policy analysis in the urban area of Shanghai. It can help decision making of the local government education authorities in this area. Based on education economic theory and the socio-economic development situation in Shanghai, this model, using DYNAMOIII language, contains four socio-economic sectors – education, economic, social structure and social life, from which 730 variables were attained with 90 level equations 179 rate equations.
The present study shows that the simulation model is not only feasible and practical for the study on local education system in Shanghai, but also applicable and useful to other urban areas as well.

Control and Administration of the Investment Hanger and Consuming Expansion
Jue Zhang

Abstract: Since the Third Plenary Session of the Eleventh Central Committee of the CCP, there have been great achievements in the development of economy in our country and the living standard of the people has been raised year by year. However, at this moment of the great boom, there appeared two protound contradictions in the macroeconomy: One is the investment hanger and the other is the consuming expansion. This is a universal persistent ailment in developing cotries.

A System Dynamics Model and Policy Analysis for Rural Socio-Economic Development of a Provincial Lake Area
Nai-guang Zhang, Cheng-hong Hu

Abstract: This paper is based on the historical and current situation of rural socio-economic development of a provincial lake area. At present, economic development of the lake area is considerably lag behind. Meanwhile, there exist rich natural resources and hidden unemployment of rural population. By describing the several facets of difficulty facing the lake area, the author addresses the issue of adjusting industry structure of the entire lake area, upon which the System Dynamics approach is employed in modeling and policy analysis.
The System Dynamics Model of the lake area rural socio-economic development consists of 8 sub-models, which are farming, fishery, animal husbandry, rural industry, forestry and side- occupation, energy, water conservancy and population. By simulating and analysing, policy recommendations are set force.

Application of System Dynamics to Cardiovascular System Biofeedback Regulation of BP for Hypertensives
Mingjie Zhu, Chenghong Hu

Abstract: The modern researches on physiology verify that there are close relationships between central nervous system (CNS) and autonomic nervous system (ANS) and some autonomic functions can be regulated by CNS to some extent. In this paper, the mechanisms of cardiovascular system, especially of BP regulation, under CNS control are researched. A blood circulatory system dynamic model is established and applied practically to treatment of hypertensives trained with biofeedback technique, in which pulse transit time (PTT) is employed as an indirect index of BP change. The result shows that the curative effect of this method is efficient for BP control.

Bringing the Results of the Bonneville Project to the Classroom
Andrew Ford, Peter Gardiner

Abstract: The Institute of Safety and Systems Management of the University of Southern California (USC) operates a Masters of Science Program in Systems Management (MSSM) at the main campus in Los Angeles and at 70 study centers located throughout the United States, Europe and the Pacific Far East. An introductory course in system dynamics is offered as an elective in the program. The students are interested in how managers use system dynamics and in the lessons from previous applications of system dynamics in large organizations.
One such application is the on-going project for the Bonneville Power Administration (Bonneville). System dynamics models are used at Bonneville to assist in the formulation of conservation policies. This paper provides a brief summary of the Bonneville project before turning to the main question of interest: What lessons from the Bonneville project are generally applicable to large organizations and worthy of attention in the MSSM program?

Accounting Dynamics – Its Concepts and Model
Saburo Kameyama, Takahiro Kojima, Akira Uchino, Kinnya Machida

Abstract: Accounting Dynamics (AD) is a methodology for the modelling and simulation od accounting using System Dynamics. Accounting identifies and measures economic transactions of an entity, and communicates these data to both internal and external decision makers. Thus it may be said that accounting controls resource allocations in social systems. In this context a simulation model described in terms of accounting will be very effective in order to analyze and project the behavior of social systems. In our model we emphasize the structure-dependent nature of System Dynamics. The AD model depicts the structure of accounts in an economic entity. The structure of accounts reflects charge-and-discharge relationships of accountabilities. Therefore the AD model seems to have a close relationship to the real world. The definition of accounting by R. Mattesich, i.e., the method of quantitative description and projection of income circulation and of wealth aggregates in macro and micro economy (Mattessich 1964), will be best met by AD. And accounting principles will be tested for their validation by the AD model simulation. The AD model will be able to be built at various levels, e.g., industrial, urban, national, in social systems. In our first approach, we have focused on the industrial level, and we have made a prototype of AD corporate model in a business entity. We will suggest critical issues in the application of the AD model for higher levels of social systems.

Applying System Dynamics to the Study of Pharmacokinetics and Pharmacodynamics
Jiyang Lee, Qifan Wang

Abstract: As an effective method of understanding the dynamic behavior of complex systems, system dynamics has great potential in the study of the dynamic course of drug absorption, distribution, metabolism, excretion and effect, which is the content of the disciplines called pharmacokinetics and pharmacodynamics. Two ways of applying SD are discussed: using DYNAMO to solve the traditional pharmacokinetic models — compartment models and combining knowledge of pharmacokinetics and pharmacodynamics to set up advanced models under the paradigm of system dynamics. The application of the method, technique and modeling view of system dynamics to pharmacokinetics and pharmacodynamics can be very helpful and fruitful.

Towards an Integrated, Intelligent Knowledge Based System for Dynamic Modelling
I. Moffatt

Abstract: Innovations in automated intelligent knowledge based systems (IKBS) including expert systems (ES) could have a major impact on the development of system dynamics methodology. This paper reports on the characteristics of an integrated system for modelling and managing complex, dynamic systems currently being developed. Essentially, the system consists of five sectors namely a simulation model; a set of quantitative measures as macros; means; a real world data set; an adaptive knowledge based system including an expert system; a policy decision making system. It is suggested that such an integrated approach to system dynamics could further enhance the usefulness of the methodology to modelling and managing complex systems.

Catalyzing Systems Thinking within Organizations
Peter Senge

Abstract: This paper describes the work of an M.I.T. research project (the Systems Thinking and the New Management Style Project) to bring systems thinking to top management groups in several large, successful corporations. The principal research tool, the “strategic forum” is described and critiqued. The paper then presents a case study to illustrate the strategic forum. Concluding remarks and supporting figures are presented at the end.

Modeling Tools for Problem-Solving
Nancy Roberts, Tim Barclay, Tim Kreutzer

Abstract: During the last year, the Technical Education Research Centers (TERC) has been combining microcomputer-based data gathering instruments with model-building software using the system dynamics approach to develop curriculum materials and software for high school students. The microcomputer laboratory aids students in collecting real-time data in such areas as heat, light, sound, motion, and water movement. Model-building helps students develop and test theories to study the data. An integrated software environment is being developed that will allow the data collected to be input directly into the models. In addition, the software will include an icon driven modeling language, algebraic function grapher, and spreadsheet to provide students with several different approaches to expressing model-building and simulation.

A Fundamental Philosophy of Science Question and Validation of System Dynamic Models
Yaman Barlas, Stanley Carpenter

Abstract: System Dynamic models, being causal simulation models, are in this sense very much like scientific theories. Hence, there is a relationship between validation of such models and verification of scientific theories. In evaluating System Dynamics models, we naturally apply our implicit “norms of scientific inquiry”. Most criticisms of such models hold that System Dynamics does not employ formal “objective”, quantitative model validation procedures. We show through a historical review of Philosophy of Science, that this type of criticism presupposes the logical-empiricist philosophy of science. This philosophy assumes that knowledge is entirely “objective representation” of reality, and that theory justification can be entirely objective, formal, “atomistic” process. According to the more recent “relativist” philosophy of science, on the other hand, knowledge is not “entirely objective Truth”, but it is relative to a given culture, epoch, and worldview. Theories can not be verified (falsified) by entirely formal, reductionist, “confrontational” methods. Completely objective (theory-free) observation is impossible. The act of observing itself requires an assumed theory. Theory justification is therefore a semi-formal, holistic, social, “conversational” process.
We discover that these two opposing philosophies of science correspond to two opposing philosophies of model validation. Most critics of System Dynamics seem to assume the traditional empiricist philosophy of science, whereas System Dynamicists mostly agree with the recent relativist philosophy on the question of model validity. We show that these philosophical results do have practical implications for both the System Dynamicists and their critics. Finally, having shown that the relativist philosophy is consistent with System Dynamics practice, we emphasize that such a philosophy of model validity should not lead to a total rejection of formal quantitative tools of model validation. On the contrary, we argue that such tools, appropriately chosen, are most useful when interpreted with the relativist philosophical perspective.