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1990 Proceedings with Abstract – Chestnut Hill, Massachusetts USA

The 8th International Conference

of the System Dynamics Society

1990 – Chestnut Hill, Massachusetts USA

The following papers were presented at the conference in parallel and plenary sessions. The original printed proceedings, edited by David F. Andersen, George P. Richardson and John D. Sterman were printed in hardcopy and distributed at the conference. Below please find the Paper Index for these proceedings including abstracts. 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 adobe.com.

For details about purchasing a copy of the printed proceedings, visit our website System Dynamics Society.

  PAPER INDEX – listed alphabetically by first author:

Volume 1

A Road Provision Model Using System Dynamics
Khaled A. Abbas

Abstract: One of the most difficult tasks facing highway administrators is how to efficiently manage the allocation of road funds. In this paper a comprehensible, easy-to-use, highway management tool is presented. This tool takes the form of a computer simulation model which is intended to assist managers of a network of highways to make better decisions concerning the allocation of scarce funds. It mainly simulates the effects of different investment strategies and maintenance options on the road network. This is done by tracing the life-cycle costs of the major activities of providing and maintaining the road system, and by considering the effects that these activities have on the state and performance of the road network.

The Use of System Dynamics in Modeling Transportation System with Respect to New Cities in Egypt
Khaled A. Abbas

Abstract:Since the development of System Dynamics, it has been applied successfully to a range of complex problems in different areas. However, relatively little use of the methodology has been made in the field of transportation. This paper attempts to review and evaluate the utility of the System Dynamics methodology for transportation studies, showing that it is well suited to the needs of various analytical problems in transportation. In fact, System Dynamics offers a potential way forward for transportation planning in general. The focus of this paper is on appreciating the strengths and weakness of the methodology of System Dynamics as an aid to reach a better understanding and appreciation of the dynamic, feedback relationships between the transport system and the other major sectors contributing to the development of a new city in the Egyptian desert.

Issues in Designing Interactive Game Based on System Dynamics Model
David F. Andersen, IK Jae Chung, George P. Richardson, Thomas R. Stewart

Abstract:The advent of the micro-computer revolution brings about the potential for people to increase their understanding of our environment. Technologies are becoming available that enable people to become more active learners about their environment. Along with technological advance, system dynamics modelers are paying more attention to gaming environments as a means to increase the interactions that a wide variety of game-players or audiences have with system dynamics models. That is, by creating easy to use and graphical gaming interfaces, users are able to interact directly with a model with little or no prior training. Throughout the iterative gaming processes, they can learn not only the system under investigation, but also the relations that give rise to the phenomenon of interest: “Learning by playing around.”
However, it is difficult to find general guidelines on how to create computer-based games, or, how to design gaming screens. Many researchers wishing to move into the area of gaming can look at existing gaming situations and attempt to emulate the best features of existing games. Although the “How to” depends upon the research purpose, the researchers and the game-player’s interests, the time frame of game, etc., general principles for designing games would reduce the ambiguity and the uncertainty in designing games in new areas, and heighten the utility and the applicability of the state of the art. This research proposes to advance our understanding of how to create gaming screens to support simulation-based games such as one linked to the STELLA software package. The research will document the experience of two teams of experts – one system dynamics modeling team and the other team of psychologists expert in human judgment and decision making – as they interact to create an interactive gaming simulation. In other words, the main purpose of the research is to examine issues that will be of use to modelers who are beginning the process of building system dynamics-based games. These issues will both reflect on “best practice” and attempt to articulate unresolved issues based upon interactions with the two expert teams.
The case chosen for study will be the financing of solid waste disposal in New York State, focusing on the mutual responses of the state and local governments in the presence of a waste crisis. The research proceeds by documenting the various versions of the gaming screens that have been developed during several iteration of the development process. After this history of the project is given, reactions and suggestions from both system dynamics and judgment experts are summarized into a series of issues. These reflections are based upon a research journal that documents how and why various versions of the gaming interfaces were developed.

The Use of System Dynamics to Measure the Value of Information in the Business Firm
Fred K. Augustine, Jr., Thomas D. Clark, Jr.

Abstract:The primary focus of the research reported in this paper was on the measurement of the value of information in the business firm. It involved development of a system dynamic model of a typical business firm and calibration of the model to an average firm in the can industry in the United States. The model has the five sectors of marketing, finance, production, research and development, and personnel. Data to calibrate the model came primarily from the Industrial Compustat data base. The model was used to test several propositions about the economic value of management information. This topic has been addressed by Morecroft (1977, 1979), Jones (1981) and others. The research extends work by them as well as demonstrating the multidimensional nature of information using the Gorry and Scott-Morton framework of typical information structure. A framework in which to assess information value is developed and discussed.
The performance of the firm was assessed using cost, profitability and efficiency measures under various values for the information attributes of accuracy, timeliness, relevance and reliability at the strategic, managerial and operational levels of the firm. Several propositions about information value are offered given the results of the testing.

Dynamics of Food Policy in a Centrally-Planned Economy: The Case of Vietnam
N.L. Bach, K. Saeed, J.E. Lukens

Abstract: This paper attempts to asses the impact of past and presently contemplated policies to maintain food self-sufficiency in a centrally-planned economy. The case of Vietnam is used as an illustration. Experimentation with a system dynamics model of the food production system incorporating relationships concerning soil ecology and agricultural land management policy serves as a basis for this assessment. Short-run policies to increase production are detrimental to maintaining food self-sufficiency in the long-run. A sustainable food production policy must incorporate soil conservation and improvement, control of population and possibly, finding food sources alternative to grain. Although difficult to implement in a market system, such a policy agenda may be feasible in a centrally-planned economy.

Simulation of Food Grain Storage Management System In Bangladesh
B.K. Bala, M.A Satter, Md. Golam Mohiuddin

Abstract: A system dynamics model of food grain storage, government procurement and release, and import in Bangladesh is presented. The simulation results of the model for govt. procurement and release, and import policies are also presented. Finally, the policy implications of the model are discussed.

Technical Education Modeling and Simulation
John D. Bernard, D. Henry Pate

Abstract: Initial testing is now complete on the TEMS instrument, the Technical Education Modeling and Simulation system. This research in the Industrial Education Department at Clemson University is a three phased project. The phases include developing an instrument (TEMS) similar to DYNAMO II (Pugh, 1970) for the modeling of socio-econ-educational systems, reducing world model concepts to a regional model for the state of South Carolina, and integrating technical education attributes and effects into the classical capital sector for this regional model.
The TEMS system is developed in dBASE IV and ’C’. It has all the model definition building features and run characteristics of DYNAMO II. Written for an IBM AT class of equipment, TEMS will replicate the WORLD2 model (Forrester, 1971) results in 40 minutes for a 100 year run. TEMS supports both the real time graphic mappings of selected variables and post analysis graphics. It has both an integrated statistical interface to SPSS statistics and a reporting system for model runs, definitions, user created functions and run time statistics.
Experimentation is in progress to calculate a CHAOS mapping for the class of level variable equations. Using this Verhulst equation mapping, TEMS should then dampen any wild ramping and explosiveness for these selected variables during the simulation.

Simulation as a Tool for Planning of Rural Development Programmes:
A Case in Southern Sudan

Tjark Struif Bontkes  

Abstract: Planning of rural development in developing countries requires participation and integration of various disciplines, such as economics, sociology, agriculture and health. Very often not all relevant disciplines participate and if they do, they analyze, plan and implement their programs separately. This paper presents an example of how simulation modeling can be helpful for interdisciplinary analysis of rural areas in the Third World. The analysis of the Bor District, an area in Southern Sudan, serves as an example.
First a general verbal and graphical overview of the situation in the rural area of the Bor District is provided. This is followed by a more detailed analysis regarding the population, the food consumption, the agricultural production and the livestock production of the area.
Due to lack of data, a common problem in remote areas in the Third World, many parameters has to be derived from studies of other, but to some extent similar, areas. Validation was therefore carried out by means of a sensitivity analysis and by comparing the model results with development in other areas. Experiments have been carried out by simulating the effects of one or more interventions, such as improvement of health services, veterinary services, the availability of water and schools, employment opportunity and the quantity of imported food, and the introduction of improved agricultural methods. The results indicate, that several interventions that initially seem to benefit the development of the area, prove to be disastrous after a number of years. In addition to that, some processes, that are unimportant in periods of stability, appear to become important when the system becomes unstable.

Contrasting Perspectives on Rationality and the Analysis of Performance Outcomes
Michael G. Bowen

Abstract: The normative view of rationality has been used for many years as the principal framework from which to analyze performance outcomes. Analyses of managerial behavior from this essentially reductionist view contain the argument that decision makers often fail to “correctly” observe and act upon the situations they face. A growing number of behavioral decision theorists, however, argue that the conclusions about behavior which have been derived from the normative view are misleading because they may be artifacts of the theoretical assumptions or empirical approaches used by analysts. The questions that this distinction raises are particularly important to systems scientists because they bear directly on whether powerful reductionist models of inquiry and evaluation, firmly entrenched in traditional scientific norms, will or should continue to dominate holistic perspectives for thinking about behavior in complex systems. The purpose of this paper is thus to review and explore differences that exist between the normative and non-normative views, and to use this synthesis as a framework for understanding the relative importance of the viewpoints as they relate to evaluating managerial performance.

Exemplary Computer Model for a Natural History Museum
Charles H. Braden

Abstract: A new Fernbank Museum of National History, to be located in Atlanta, is in the planning stage. A major series of exhibits is entitled “A Walk Through Time.” The walk culminates in exhibits which address the future. The museum planners wish to introduce the museum audience to computer modeling as an increasingly powerful tool with which to address societal problems. One exhibit is to present an exemplary computer model whose role is primarily tutorial. The model will treat limited facets of an urban system. The exhibit will present the model at two, or perhaps three, tiers of sophistication. The simplest presentation will utilize stored computer output in order to demonstrate model structure, interactions within the system, and some behavior patterns. Another presentation, also utilizing stored computer output, will allow audience participation in a restricted choice of model parameters. There may be a third exhibit tier in which less restricted parameter changes can be made in an interactive model.

Dynamics of Company Excellence Through Motivation of Employees
Andres E. Breiter

Abstract: Excellence of organizations over time requires high performance on the job by ever broader groups of employees. As technology evolves and population’s education improves typical employees are required less and less frequently to perform mechanical tasks or even to make limited repetitive decisions. The trend is for humans to carry out jobs with an ever greater context of complex analysis, creativity or non programmable decisions or human interactions. These activities can be performed on a consistent level of excellence only by well directed and highly motivated people.
A schematic model is proposed that generalizes observations and actual experience on how management may ensure that the essential conditions for outstanding job performance by all individuals within an organization be realized consistently over time.
Outstanding job performance over time occurs when: an adequate match between job requirements and individual skills and attitudes exists, a strong motivation is felt by all individuals, the social climate is favorable to excellent job performance and adequate equipment to do the job is available. These conditions are the result of complex dynamic interactions by viewing them as an integrated system.
Employees’ motivation, development, growth in responsibilities and mutual trust between employees and management are a key portion of the model. Substantial attention is given to interactive shaping of realistic expectations regarding job conditions, self realization and compensation, both material and psychological.
The management most likely to achieve excellence appears to be the one that sees its role as that of generating wealth, providing wellbeing for employees and distributing wealth fairly between shareholders and employees.

Using Complex System Dynamics Models; an Example Concerning the Dutch Dental Health Care System
E.M. Bronkhorst, T. Wiersma, G.J. Truin

Abstract: Recently a System Dynamic simulation model of supply and demand of the dental health care system in The Netherlands has been developed. This model includes major demographical, pathological, psychological, sociological and economical processes comprising the demand side. The supply side covers the availability of dentists, dental hygienists and factors which determine their productivity.
The main purpose of the model is to create an instrument for analyzing the Dutch dental health care system. A relatively simple model with e.g. 20 state variables just describing the main concepts of this system was not considered to be sufficient. Therefore, starting from a simple model, during the past decade a far more complex model has been developed. It contains for instance 440 state variables. This model has already proven to be very satisfactory with regard to its descriptive qualities. However, the necessity for working with complex models also has negative side-effects. Apart from the great effects needed constructing, validating and analyzing the model, it is well known that the more complex the model, the more difficult to communicate about its results and properties, with people for whom the model might be useful. This is even more so if it concerns people from outside the academic world (in this case for instance the dental profession or policy makers).
In this paper attention will be focused firstly on a short introduction concerning the model and its structure. Secondly, our experiences with the model will be used as an example of our ideas about how to construct sophisticated models with a high descriptive quality, while at the same time making them at least acceptable for those who might use its results, but were not directly involve in the construction of it.

Improving Education In Public Schools: Innovative Teachers to the Rescue
Gordon S. Brown

Abstract: This paper addresses the widespread belief that today’s public schools are not preparing our youth to conquer the problems of tomorrow. Although there is consensus within both academia and business that the need for reform is urgent, there is no generally accepted strategy for achieving improvement, nor is money to finance the job readily available. Creative ideas by great teachers are certainly the nucleus for reform, and, contrary to common opinion, there are many good ideas, and many great teachers.
But teachers are not the only players. All schools are dynamic systems of great complexity. Unfortunately, many essential features of school-system structures are poorly understood. As a result, well intended attempts at reform since World War II have often merely tweaked the system rather than implanting permanent improvement. Most proposals have focused on more math, more science, longer school days or more homework, without understanding why there is such small yield from what already exists in the schools. This author believes that only by a major restructuring of the relations between student and teacher, by the adoption of a new paradigm for the teaching-learning process, and by the introduction of much modern technology into the classroom, will our schools fulfill the demands that the future will make on students.
The restructuring program, described herein has been carried out in the Orange Grove Middle School in the Catalina Foothills School Districts (CFSD), Tucson, Arizona.

Anarquia-Interfacing Hypermedia and System Dynamics for Urban Management
Antonio Camara, Paula Antunes, Julia Seixas, Lia Vasconcelos

Abstract: A game for environmental urban management based on system dynamics models is being developed. Named ANARQUIA, this game uses Hypercard as a front end. ANARQUIA, considers a town managed without a government. The goal of the game, played by teams of five players operating under anarchist principles, is to manage the environment of a city optimizing environmental quality during the maximum amount of time. The game was applied to the town of Caparica, a traditional fishermen’s town in Portugal.

Exploring “Ideas”, A Multidimensional Dynamic Simulation Approach
Antonio Camara, Francisco Ferreira, Maria Julia Seixas

Abstract: There are three types of variables and relationships: numerical, linguistic and pictorial. Traditional system dynamics models are defined by a set of numerical equations which are defined from causal diagrams. Expert systems modeling has shown that one could also develop and use linguistic dynamic models. IDEAS is an integrated simulation approach that considers state of the art numerical and linguistic formulations and introduces pictorial models.
Pictorial models consider pictographs, symbols and signs defined by their color, shape, size and position. Operations in these models include reproduction, mutation and fertile and sterile encounters, following a biological analogy.
IDEAS may be applied to variety of problems. Two simple natural resource management models are presented to illustrate its potential applications.

The Cost of Instability in Defense Spending
Rolf Clark

Abstract: Budget instability like that seen in defense over the past 20 years cost defense about 15 percent of its force levels. This result derives from a dynamic simulation of the defense resource allocation process. The simulation assumes fiscal constraints, and uncertainty in planned future budgets. Inefficiencies depend on the severity of budget changes from budgets planned to those actually received. The effects of instability on the Army, Navy, and Air Force are shown to be quite different, with major determinants being the relative size of acquisition budgets and the life span of assets.

End User Computing Growth and Management in Organizations
Thomas D. Clark, Jr., Victoria L. Mitchell, Karen L. Williams

Abstract: The research reported in this paper involved the study of end-user computing in typical organizational settings. An extensive literature review was conducted and a number of executives consulted about the effects and position of the end user computing phenomenon within their organizations. The data served as a basis for a system dynamics model that focused on the forces that create growth in end-user computing. The “tiered infrastructure” of computing in the organization is demonstrated and discussed. One problem with the study of end-user computing has been the lack of testable theory about it. The majority of research has used case studies or relatively narrow field studies as a methodology. The key purpose in using the system dynamics approach has been to provide a vehicle to capture the ideas cataloged in the various case studies and cast them in the causal map format as a dynamic theory of systems organization and behavior.

A Model for Future HIV/AIDS Incidence in New York City
Catherine M. Crawford

Abstract: An earlier effort at projecting the future incidence of AIDS among adult homosexuals in New York City is reviewed in the light of data for 18 more months. One of the previous models holds up well against the new data. The model projects a temporary leveling off or reduction in new AIDS incidence, followed by a long, slower resurge. The HIV transmission probability, given an infected partner, is estimated at around 0.003. This level is barely sufficient to sustain endogenous growth in the homosexual population. From this it may tentatively be concluded that the epidemic will not start to spread exponentially among the heterosexuals provided they engage in less risky sexual behaviors than homosexuals.

A Behavioral Simulation Model Of Single And Iterative Negotiations
Thomas A Darling, George P. Richardson

Abstract: A simple simulation model demonstrates that the outcome of a negotiation may critically be affected by (i) the structure of the negotiating problem — the joint distribution of negotiators’ evaluations of potential settlements; and (ii) the negotiators’ tactical approach to the problem — the decision rules that guide the choice of concessionary offers made during the bargaining process. Hampered by cognitive limits and faced with imperfect information about the other party’s interests, negotiators may relay on simple heuristics in choosing among possible concessions during the negotiating process. The model of single negotiations is extended to examine how the outcome of one negotiation may impact future negotiations. Focusing on two negotiator interests — concern for self and concern for fairness — the model shows how adjustments in tactical decision rules from one negotiation to the next sometimes leads to an unwarranted deterioration in the parties’ relationship.

Introducing System Dynamics in Schools – the Nordic Experience
Pal I. Davidsen, Margaretha Bjurklo, Hugo Wikstrom

Abstract: This paper contains a snapshot of some of the activities in the Nordic countries, regarding the utilization of system dynamics as a basis for educational development. In particular we provide a brief description of the background for introducing system dynamics into public education, point out software developed in Norway for this purpose, present some of the methodological issues addressed and summarize the classroom experiences reported by two Swedish teachers.

A System Dynamics Approach to the Structure and the Economy of Fur Farming and Trade
Pal I. Davidsen, Leif Jarle Asheim

Abstract: The purpose of this paper is to explain the expansion and the contraction of the Norwegian mink supply in an expanding market, as a consequence of the mink pelt price and the mink farming costs. Significant variations in price, and time lags between capacity adjustments, breeding decisions and the fur sales, makes fur farming speculative, and only a small fraction of farmers generate their main income from such farming.
Moreover, we estimate, using a Bayesian approach, the farmers’ loan fraction, their response to profitability and a few delays in economic perception and capacity adjustments. This model is the first one in a series under development, portraying the national and the international fur production and market. In addition to reflecting the Norwegian mink production, this model may be considered generic for international fur production. An international demand model is under development.
Finally, empirical evidence indicates the relevance of our model to the current development in the Danish mink farming and to the Norwegian fox farming.

Building an Organizational Learning Environment
John P. Davulis, Ulrich Goluke

Abstract: This paper highlights the authors’ attempts to develop a software environment to help analysts (1) improve their understanding of the dynamics of the energy system and (2) build confidence in a complex, highly defined system dynamics model of energy supply and demand. The envisioned organizational learning environment has at its center a human interface design from which the user controls simulations, exercises, guided tours, model modifications, experiments, etc. While efforts to date have focused upon developing a micro-computer based system, the learning environment will be extended to workshops in the future.
Any energy simulation model can be intimidating to users who lack a sufficient understanding of supply/demand concepts and knowledge of the computer language employed. The situation becomes more complicated as the complexity of the simulation model increases and new operational (or system performance) concepts are introduced.
We provide a brief description of an energy supply/demand simulation model, ENERGY 2020, that central Maine Power uses for demand forecasting. Developed by George Backus and Jeffrey Amlin, the long-term energy policy model is used by analysts for both utility-level planning as well as state energy policy analysis. The model is coded in PROMULA for IBM-compatible personal computers.
The problem is to create a means by which new users can explore and understand the complexity of the energy system (the ENERGY 2020 Model) in a structured and non- intimidating manner. The goal is to bring the users to a higher level of understanding, mastery, and ownership of the model.

Manager Training Environment For Setting Complex Problems
D.J. de Tombe

Abstract: Managers of profit and non-profit organizations are often confronted with complex problems. Ill-structured diffuse problems which involve more than one domain. Problems that are hard to set let alone to solve. They differ a lot from the structured domain related problems we used to work with in school. In education little attention is given to the training of complex domain exceeded problems.
In order to be able to get domain exceeded problems, managers should get the opportunity to experience this kind of problems setting in a special learning environment. In order to enhance transfer the learning environment should be as close as possible to the real-life situation. A conference room can be a good learning environment in which managers can be trained to set complex problems. Setting complex problems is teamwork. It demands knowledge of various domains. Therefore different experts should work together in making a conceptual model of the problem. This can cause serious communication problems.
A free form game with a case as a prototype of a complex problem can be a good didactical instrument for training problem setting. Problem setting is defining the scope of the problem, the domains and the level of aggregation. What can be the role of computer programs like decision support system, simulations, expert systems and general problem solvers like SOAR and ACT* in the setting of domain exceeded problems?
In problem setting the computer can play a part by information retrieval. An expert-system as front-end of a database can assist the experts to get the relevant data out of the database in order to form in cooperation with each other a conceptual model of the problem.

Negotiating Reality: Using Language and Influence Diagrams To Articulate Knowledge
Julia M. Di Stefano

Abstract: This paper analyzes some of the recent literature on language and information processing, focusing on graphic representations which model the interactions between those transmitting and those receiving messages. Having examined four models concerning interpersonal communication and information processing, I concluded that today’s most promising research on dyadic communication is that based on the model of cybernetic control systems. Most useful are the models which 1. recognize the need for the speaker and listener to commit themselves to continue the dialog until they arrive at consensus and 2. also recognize that the recursive interactions between the two individuals are based on the principle of feedback, which, in the words of Norbert Wiener, “is the property of being able to adjust future conduct by past performance” (Wiener, 1954, 33).
“A fool sees not the same tree a wise man sees.” William Blake (1790)
For much more than 200 years poets and philosophers have been struggling with the mysteries of the human mind, imagination and perception. Increasingly, researchers in artificial intelligence (AI), in their attempt “to design computer tools suited to human use and human purposes” (Winograd and Flores, 1986, 8) are studying what happens when two people use language. What happens when the fool tries to communicate to the wise man about the tree the fool sees? And how can the wise man communicate about the tree he sees? We now know that Korzybski was correct in recognizing that “The map is not the territory,” and that each individual carries in his/her own head maps or mental models of reality formed by that individual’s own life experiences. In other words, the word or symbol is not the reality it represents, and the words represent different interpretations of reality to each individual. Small wonder then that our lives, professional and personal, are fraught with miscommunication.

Translating Systems Thinking for People in the World of Business
Linda Dolny

Abstract: New ideas are being implemented in business today with little thought of being given to the philosophical and emotional shifts that everyone in these organizations must make if American business is to succeed as an industrial power.
For programs such as continuous improvement, peer review, team concept and total quality management to succeed, an understanding of systems thinking and system dynamics is necessary. It is at the root of these philosophical shifts. Business needs people who can translate a complex, technical and sometimes frustrating subject. This requires innovative and creative ways of teaching adults at all levels in the workplace.
This paper deals with some of these methods and brings together a list of resources that have proven successful in communicating these ideas.

The Dynamics of Behavior and Motivation
Gerard Donnadieu, Michel Karsky

Abstract: MODERE (MOtivation, DEsire, REality), the model described in this paper, is the result of an international cooperation between a System Dynamicist and a specialist in applied Social Sciences.
This model is based on several current theories of human behavior and motivation, some of which were developed several decades ago, others more recently, but all of which have proven in daily practice to be helpful in the analysis and understanding of human motivation and corresponding behavior in the context of real environment.

Regional Energy Planning
I. Dyner, I.M. Giraldo, A. Moreno, D. Valencia, A. Lobo

Abstract: The general objective of this paper is to present a method for integral regional energy planning within the frame of national politics on energy and economic development.
A historical database and energy balances of supply and demand allow to analyze and model the dynamics of the sector and its interaction with other economic sectors and social and technological variables.
This paper contributes to understand how to mix econometric and system dynamics techniques. Whenever data is abundant and reliable, statistical analysis and modeling could be useful to reproduce historical behavior, but in order to study possible future scenarios it is required to set hypotheses on parameters evolution, probably based on system dynamics methods.
On the other hand, in order to model interactions among demand, supply, prices and other economic variables, system dynamics is particularly suitable. In this context, techniques that seem to be confronted appear to be as each one complementing the other.
The model was implemented by the Department of Antioquia in Colombia, which possesses a considerable amount of energy resources, particularly hydroelectricity. Specific methodological aspects for planning energy resources were considered to analyze the feasibility to introduce new elements such as gas.
Recommendations on policy considered integral development of different regional energy resources in accordance with supply potentials, requirements and economic efficiency.

Causal Tracing: One Technical Solution to the Modeling Dilemma
Robert L. Eberlein, David W. Peterson and William T. Wood

Abstract: A central dilemma for system dynamics is the fact that the same human limitations that motivate the use of models also make models hard to create, debug and even hard to use. Two commonly proposed escapes from this dilemma are education and generic models. We propose a third, technical approach and give an example. The example approach, “causal tracing,” is a computer tool that makes it much easier to find the feedback loop or input responsible for a given variable’s behavior. Correctly implemented, this tool reduces the time required for causal tracing by a factor of 10 to 100. The payoff is faster and more accurate creation of models and use of models.

Developing a Communication-Oriented Ontology for Using Computer Modeling in Negotiation
John R. Ehrenfeld

Abstract: Computers have been used as tools to facilitate complex negotiations and to resolve disputes that arise in that context. These past efforts have been limited by a view of both negotiation and of computers arising out of out pervasive technical rationality paradigm. This paper, an initial inquiry onto a new ontology for design, suggests an alternative model for negotiation and disputes based on an interpretive, communicative model that points to a richer set of possibilities for computers than merely the provision of information to the parties involved. In particular, the concepts of communicative rationality, developed primarily by Habermas, point to specific functions for computers in assisting the parties in establishing claims in rational domains beyond the positivist domain of technical rationality.

System Dynamics as a Foundation for Pre-College Education
Jay W. Forrester  

Abstract: Educational systems are serving poorly. The public response is apt to call for more of what is already not working, rather than seeking fundamentally new and more effective approaches to education. Promising new approaches are now being successfully demonstrated–system dynamics as a framework for giving cohesion and meaning to individual facts, and “learner-directed learning” to harness the creativity, curiosity and energy of young people. Together these reverse two fundamental roadblocks in traditional education. System dynamics reverses the educational sequences where deadening years of learning facts precede the use of those facts. System thinking through computer simulation introduces synthesis (putting it all together) based on facts that even elementary school students already have gleaned from life. Learner-directed learning reverses the process of a teacher’s lecturing facts at resistant students; learners take the leadership in exploration, information gathering, and creating a unity out of their educational experiences with the “teacher” acting as guide and participating learner and as a resource person.

Policy Design in Oscillating Systems
Douglas Franco

Abstract: Policy design is a key issue in System Dynamics. It consists in the introduction of changes into the system, in order to track the objectives trajectories. Those changes are either numerical or structural. Oscillations require more structural than numerical changes.
Oscillatory systems are usually undesirable because of the ups and downs they bring into the system components. For instance, the labor instability in the Labor Backlog model. (Lyneis 1980, pp 182-210).
Oscillations have been found very insensitive to numerical changes in the parameters (Graham(1977)); but, they have been found very sensitive to changes in the sign, and presence of them. Where presence denotes changes from zero to something. Therefore, the design of effective policies to control oscillations is a problem that goes beyond the Classical Optimal Control Theory of nonlinear systems (Coyle 1985), and it belongs to the Structural Control Theory. However, the Optimal Control Theory is a valuable tool to model the control structure. (Ozvern; Cuneyt; Sterman J., 1989, pp 130 – 147), (Keloharu 1982).
In this paper, some guiding principles for policy design in oscillatory systems are presented. The construction of the management structure is illustrated.
Two classical models: Labor- Backlog and the version of Kondratieff cycles presented by (Mosekilde; Rasmussen; Sterman (1985)), serve as prototypes to try the proposed principles on.

An Appraisal of System Dynamics in Assessing the Impact of Computer Information Systems
A. W. Gavine, E.F. Wolstenholme

Abstract: Any attempt to impose a computerized information system (CIS) upon an organization requires an assessment of its impact in terns of costs, benefits and procedural change. This paper briefly describes the capacity of the System Dynamics technique to capture the essence of an organization’s management structure and to assess, from a system-wide perspective, the impact of imposing a CIS. The paper employs, as a basis, two case studies set in a military context and a particular methodology developed with these applications in mind.
The efficacy of system dynamics in assessing the true impact of CIS on the enterprise and the user, is appraised, based on a set of independent criteria. The significance of the methodology for CIS development generally is considered and encompasses an elaboration of its place in the software life cycle.

Cognitive Biases, Modeling and Performance: An Experimental Analysis
Nicholas C. Geogantzas

Abstract: Producing (or constructing) strategic decision entails numerous cognitive and other bounds on human rationality, which often cause systematic errors and biases. Yet among the economic and management models used in strategic planning, few try to explain why decision makers remain so stubbornly and extravagantly irrational, ignoring logic, principle of optimization, and even postulated self-interest. One explanation may be the difficulty of extending methods used to study individual choice and decision-making behavior to dynamic group settings. This experimental analysis assessed the impact of cognitive simplification processes on the performance of 118 graduate business students who worked in a simulated strategic context. Randomly assigned to twenty-four teams, the subjects run international conglomerates with multiples actors, feedback loops, non-linearities and time lags and delays. The teams’ interaction, expectations, choice and model selection produced results that systematically diverged over time. Within a crossed factorial design, these results support the hypothesis that cognitive biases interact with strategic management models to influence performance. Poor performers chose models that reinforced their cognitive limits and bounds. Conversely, good performers constructed models which helped them recognize and overcome the negative effects of cognitive simplification processes. They produced effective decisions, not by optimizing functions, but through searching for recognizable patterns when they received feedback.

A Nonequilibrium, Nonlinear Approach to Organizational Change
Jeffrey Goldstein  

Abstract: Equilibrium models of organizational change are contrasted with a new model derived from nonequilibrium, nonlinear and dynamical system research. Kurt Lewin’s force-field theory is used as an example of the traditional equilibrium-seeking model. The characteristics of the new model are: nonlinearity; change in attractors; environmental gradience and nonequilibrium constraints; internal gradience; bifurcation; and self-organization. Advantages of the new model are described.

Freud’s Theories in the Light of Far-from-Equilibrium Research
Jeffrey Goldstein

Abstract: Freud’s theories are shown to rely on an equilibrium-seeking model derived from nineteenth century physics. This model is traced through Freud’s concepts of neuronal inertia; the pleasure principle; the primarily and secondary systems; instincts; the compulsion to repeat; the Nirvana Principle; the death instinct; and resistance. Quandaries concerning adaptation as well as the delay of discharge are attributed to the limitations of Freud’s equilibrium model. Next, the main features of far-from-equilibrium research are recounted, primarily from the work of Prigogine but properties of chaotic systems. The concepts of self-organization and dissipative structure, sensitivity to the environment, energy exchange, and nonlinearity help resolve the quandaries of adaptation in Freud’s theories.

Discontinuous Innovation Diffusion Analysis
M. Govindarajan, N. Ramaswamy

Abstract: The market place derives its dynamism from the inherent willingness of a consuming population to innovate. Many technological firms have been exploiting the consumer markets with their technology based discontinuous innovations. Several companies have been marketing small computers that, in pricing and programming structure, are amenable to adoption by individual consumers. This study is an attempt to study the diffusion/adoption process of personal computers in the Indian context from both a behavioral theory and marketing strategy perspective.

System Dynamics Combined with Monte Carlo Simulation
Norodd Hagenson

Abstract: The author suggests that a combination of System Dynamics (SD) thinking combined with Monte Carlo simulation models can yield new insight and be a useful tool. Systems with feedback loops often contain elements of uncertainty or randomness which can be modeled by Monte Carlo methods. On the other hand, feedback loop analysis could certainly benefit Mont Carlo simulation models. Studying single runs of SD models may yield considerable insight. But when a parameter is set to a constant or average value, variance is lost. Variance plays an important role in portraying any risk involved in a system.
These points will be illustrated by an example from an analysis performed at NDRE where SD thinking applied to a Monte Carlo model was the key to solving an important question. The example concerns dimensioning Airfield Damage Repair (ADR) capacity on Norwegian airbases subject to hostile attacks. One key question was: How long time must the runway be open per day in order to obtain acceptable operating conditions for air defense fighter aircraft? Does there exist some minimum threshold?
The main feedback loops concern damage on the runway and attribution between attacking aircraft, ground based air defense and defending air defense aircraft (depending on open runways). The elements of randomness concern the damage inflicted on the runway, and the repair time.
It is shown that under certain conditions (too low repair capacity) there is a risk of defending aircraft either being pinned in or wining the battle. The feedback loop between defending aircraft and the runway state plays a key role along with the randomness in the early damage. The statistical distribution of the fraction of day open may over time develop into having one peak close to 0 (closed), one peak close to 1 (open), and little in between. The average value is merely a weighted average between two extremes.
On the other hand, with sufficient repair capacity, the risk of being pinned in was eliminated. The effects were easily understood when thinking in terms of feedback loops, but the element of randomness was essential in order to recognize the threshold when the risk of being pinned in occurred.
The author believes that a similar combination of techniques could benefit traditional SD models, too.

The Application of a Dynamic Methodology to Assess the Benefit of a Battlefield Information System
Simon M. Henderson, Eric F. Wolstenholme

Abstract: This paper describes the application of the system dynamics method to the study of a conceptual military Command, Control, Communications and Information System (CIS) in the early phases of procurement. The work from which this paper was drawn constitutes one half of two parallel study streams to investigate the usefulness of the system dynamics technique in this area (the work did not attempt to assess the CIS itself). The conclusions from both streams are discussed in a separate paper (Gavine, 1990).

Volume 2

Cocaine Use in America: The Evolution of a Dynamic Model
Jack B. Homer

Abstract: This paper describes the development of a System Dynamics model of cocaine use in the United States of America. The model’s evolution is presented chronologically as a story in which theory and data have interacted and changed over time. This story may be particularly instructive for those System Dynamics modelers working, under conditions of some change and uncertainty, on extended studies of social behavior. An approach which combines skepticism, flexibility and attention to detail throughout such studies is advocated. When a variety of alternative theories and hypotheses is available, as in many social science applications, it is important to gather a wide spectrum of relevant evidence in order to reduce the risk of model misspecification and improve the study’s effectiveness.

System Dynamics Mapping Applied to Influence Mental Models: A Case Study
Anil B. Jambekar

Abstract: This paper is based on the results of experience working with a small firm, which experienced loss of key customers due to quality problems. One another large customer threatened to take their business somewhere else. These customers had been doing business with the firm for at least 10 years. It is at this point in time, i.e., Summer of 1986, the author was brought in to help the management develop a quality assurance program. After initial discussion, it became clear that the clamor for quality as found in popular and professional media did not permeate the management thinking. The expectation was to have someone install SPC charts and initiate Quality Circle Activities. Ultimately, the responsibility for maintenance of these black boxes would be assigned to their Quality Supervisor. It was clear that if the plant manager and the production supervisor did not assume the responsibility by making serious efforts to develop the quality perspective and did not involve in the learning process, the probability of successful implementation would be close to zero. The paper discusses how system dynamics symbols were used to map the mental models and to provide focus for generating dialogue. There was never any need to build a full scale model.

Challenge and Opportunity: The View of Management on the Employment Problem of China
Xiaodong Jiang

Abstract: The problem of labor employment is a major problem of global issues. It is also an especially pronounced problem in a country such as ours, with tremendous population and relatively poor background of economy. Under the leadership of the Central Committee and the State Council, and with the coordinated effort of all the localities, departments in society, we have achieved in the area of labor employment a tremendous success that has captured the attention of the entire world. However, owing to some reasons of irrational policies, we have also got the experience of failure in it.
The problem of employment is becoming more and more urgent and serious with the policy of deepening reformation. Showing by the experience and theory, any effort that merely aims at resolving the employment problem can be effective only in a short-term and have less success when it faces new situation.
To resolve the employment problem at present, we must begin with our employment philosophy and set up a system of strategic management in terms of employment that keeps on defending and promoting the stability and unity of society. The tremendous population of China is both a huge obstacle and a great motive force for the development of our society. We are facing selection– challenge and opportunity– that only depends on our effort and creation.

The Development of System Dynamics in France
Michel Karsky

Abstract: In this paper, we will sum up the situation, the achievements and successes of System Dynamics in France, but we will also analyze some of the practical difficulties to which it is confronted.
This expose will include three parts: -the teaching of S.D.,-its practical applications, particularly within industry,- an example of a successful application, illustrating some the practical difficulties in using our S.D. models.

Total Quality and System Dynamics: Complementary Approaches to Organizational Learning
Daniel H. Kim

Abstract: Total Quality (TQ) has received a great deal of attention in the business world in recent years. American companies, slow to enhance it at first, are joining in the TQ movement as they become convinced of its ability to enhance competitiveness. TQ is based on a philosophy and set of tools that focus on continuous improvement, and the fuel that drives the quality improvement engine is measurable data. TQ can be viewed as an effective means for advancing organizational learning whose current bag of tools are especially well-equipped to advance learning at the operational level. These TQ tools, however, are not as effective in dealing with problems that are ill-defined, where variables are fuzzy and hard to quantify or measure, where time delays are long, and where the system is loosely coupled but highly inter-related. These types of issues are precisely the ones for which system dynamics is well suited– issues of a dynamically complex nature where feedback loops drive the behavior of interest. Complementing the TQ approach, system dynamics focuses on advancing organizational learning at the conceptual level. Organizational learning, however, requires learning at both the conceptual and operational level. This paper briefly lays out the background of both fields, compares their common holistic approach, and provides examples of possible integration of the two approaches to enhance organizational learning.

Management Decision Support Simulations for Technology Investment Planning
Thomas Klaue

Abstract: Today’s investment decisions in the production industry require – as this industry becomes more and more integrated by information systems – a careful long-range planning. Investment projects have to be seen within the network of their environment, and their interdependent impacts can be assessed in a systematic investigation, as part of a Technology Strategy. Furthermore a Systems approach helps to clarify the complex process of Technology Innovations.

Modeling Complex Economic-Ecological Interactions in the Agricultural Sector in the Netherlands
Onno M. Knol, Geert O. Nijland, Marcel W.L. Bovy, Pieter Jan M.T. Stallen, Floor M. Brouwer, Paul J.J. Veenendaal

Abstract: In the Netherlands, ammonia emissions from agriculture contribute significantly to the acidification of soil and water. A 50-70 % reduction of these emissions within the next ten years is one of the great challenges for agricultural practice. This paper presents an outline of a combined system dynamics-optimization model of this problem, which will be used to study the effect of three different abatement scenarios.
A concise analysis of the acidification problem is given. The main causes of the current environmental problems of the agricultural system are described.
Next the choice of modeling techniques is discussed. System dynamics was applied because of the many (non-linear) interactions and delayed feedback relations in the agricultural system. The flexible responses to policy measures shown by the system’s actors in the past, urged including economic optimization procedures in the model.
Some remarks are made on technical problems, using Professional DYNAMO linked with a FORTRAN optimization module.
The model contains an integrated description of the ecological problem in its economic context, with links to the related policy field of eutrophication. Interaction with reference groups consisting of experts and governmental officials, and interviews with representatives of interest groups have greatly contributed to the development of the model.
Only tentative conclusions can be presented at this stage, as results are still being worked on. However, a better understanding of the acidification problem had been reached, by the reference groups and the researchers. An interesting aspect is the link between emission reduction policy scenarios and possible shifts in land-related agricultural activities.

Complex Dynamics in Bacterium-Phage Interactions
Heidi Kristensen, Lars Risbo, Erik Mosekilde, Jacob Engelbrecht

Abstract: In order to examine different strategies in the search for more resistant bacterial cultures, we have simulated a variety of growth, mutation, competition and selection processes that may arise in interacting populations of bacteria and phages. Our model considers a culture containing several variants of the same bacterium, each sensitive to attacks from a specific phage. The culture is growing in a chemostat with a continuous supply of nutrients. Surplus bacteria and vira are removed through dilution. Depending on the rate of dilution, the model exhibits a stable equilibrium, self-sustained oscillations, quasi-periodic behavior, deterministic chaos, or extinction of certain species. The model can also be used to describe evolutionary changes in the composition of the microbiological system.

Organizing Home Care in the Future: Using System Dynamics to Assess Organizational Changes
Hans A. Kuipers, Jac. A.M. Vennix, Sjoerd Kooiker

Abstract: In the near future the organization of home care in the Netherlands will be reorganized. In order to show some of the dynamic consequences of these changes, a preliminary model was developed. In this paper we will discuss the use of the preliminary model to elicit the ideas from policy makers about future changes in the organization of home care. This is done by conducting a Delphi study to keep the time investment of the policy makers as limited as possible.

Simulation Experiments in Corporate Planning For a Steel Plant
Rakesh Kumar

Abstract: Corporate planning process uses tools that are inadequate for present day environment of complexity and rapid change. Managements must supplement their intuition and experience with planning using corporate planning models. The key to assist managements to plan effectively lies in better and greater use of computerized corporate planning models. System Dynamics is one of the latest modeling innovations that provide a flexible framework in which to view the interdependent operations of a system in a coherent and orderly manner. With this in view, a modular approach using System Dynamics principles has been adopted to model an integrated steel plant. The model so developed has been applied to conduct simulation experiments in the area of corporate planning. For the purpose of modular construction the corporate model has been considered to be constituted of three modules of marketing production and finance. The production system has been taken for detailed investigation in this model. The physical flow of men, materials and machines in various capacity centers of the steel plant have been separately modeled and then integrated. The financial consequences of these flows have also been considered to simulate indicators of corporate performance such as profit and return on investment. The model has been applied to study the behavior of a large number of variables of interest in response to controllable as well as uncontrollable variables. The model has also been used to conduct “what if” type simulation experiments. It also has been used to identify debottlenecking priorities and evaluate modernization, expansion and debottlenecking projects. 

Urban Growth Modeling Under the Limitation of Transportation Facilities – Case of Bangkok
Koji Kuroda, T.H. Mark Tsaur

Abstract: This study introduces the concept of linking together the Urban Transportation Planning (UTP) and urban Dynamic (UD) models by means of some key indices, such as transportation accessibility, population and economic development (i.e. Gross Provincial Project, GPP). It is found that, by repeating the procedure several times, a certain level of socio-economic development can be achieved which will reflect future transportation conditions in the city. In addition, this study also found some new MOE’s (Measures of Effectiveness) concerned with socio-economic development which can be used to measure and evaluate the effectiveness of transportation investment policies on urban growth.

Simulation of Interactive Business Strategies and Operations
U. La Roche, Georg Fischer  

Abstract: There is growing application of simulation to practical training in management of business on strategic and operational level. In use are simple models where a business is immersed in a much bigger market which sets the context, and others where the context is set dynamically by the actions of the competitors (3), (4).
The simulation exercises reported are centered on the question of how to appreciate the impact of a reactive context in managing a business (1). The Implementation of Simulation with continuous simulation (Dynamo, etc.) gives easy appreciation of the impact of operational dynamics in a reactive strategic context.

System Dynamics Analysis as a First Step to Implement Flexible Operation Manufacturing
U. La Roche, Georg Fischer  

Abstract: Changing and improving manufacturing operations in such a way that optimum flexibility is achieved is a standard task nowadays.
Enhanced by the availability of CIM concepts and techniques the pervading paradigm how to solve the problem tends to be based on the structure of the data processing systems.
Since management of data systems and inventory are often handled as different functional entities the complex relations of the effects of goods flows and data flows that make up the dynamic behavior of the operations as a whole often evade appropriate treatment.
CIM related practice, doing the easy things first, is to follow a hands-on bottom-up approach in optimizing first individual process steps using preferably discrete simulations and then trying to add those optimized islands to a system.
If we follow the original ideas of J. Forrester and his group a quite different approach is proposed. In a combination of top-down analysis and bottom-up implementation we would first apply S.D.A. with continuous simulation to understand the operations in their context as is. After optimization we would implement the upgraded system bottom-up.
The approach used two levels of imaging the real system to a model. Top level simulation with a continuous model is used to analyze and define dynamic behavior, feed back loops and embedding of operations in the context of sales and supply.
Bottom level simulation thereafter serves to check detailed implementation of single tasks within the dynamic specifications arrived at by the continuous overlay model.
The procedure allows to exploit the strong points of both continuous and discrete simulation, namely analysis of the dynamic behavior of complex and intertwined systems of flows of goods and data on the one hand and detailed analysis of process steps involving clearly defined operations with work pieces handled.
A few examples serve as illustration how this first step of a top-down optimizing with the aid of S.D.A. worked in defining manufacturing systems as a whole before starting bottom-up implementation.
As the S.D.A. model is a lumped together model of the real system, its use for on-line prognosis can be a welcome byproduct.

On Reliability Improvement of S.D. Model
Li Zhouwei

Abstract: This article expounds the necessity of improving reliability of the S.D. model and based on the concepts of “Big System”, “Strictness” and “Parameter Accuracy” when developing a model puts forward some tentative methods to improve reliability of the S.D. model.

The Application of S.D. – I/O/O Model to the Improvement of Regional Industrial Structure and the Economic Development
Li Zhou Wei, Zhou Yong  

Abstract: This paper introduces an effective Model, which is the combination of the methods of S.D. – I/O/O (input-occupancy – output) in studying the improvement of regional industrial structure and the problems in economic development.

Designing a Manufacturing Function as a Competitive Weapon Using the Reference Approach
Julio Macedo

Abstract: The reference approach is a new system dynamics support method. This paper explores the possibility of using this method to design strategies that transform the production function into a competitive weapon. First, the requirements of a manufacturing strategy design tool are identified. Next, the manufacturing strategy of a case study is designed using the reference approach. Based on this application, the possibility of using the reference approach as a tool for the design of the manufacturing strategy is discussed. The analysis concludes that the reference approach is a valuable tool for the computer aided design of a manufacturing strategy.

Economic Policy and Monetary Policy: A System Dynamics Conceptualization
Jose A. D. Machuca, Carlos Roman

Abstract: The progress experimented by the Systems Approach and by its instruments is in our judgments well known and undeniable. Nevertheless, the economic analysis seems to remain immune to such advances and is maintained, for the most part, within an analytical-reductionist framework quite far from reality. In this work, we intend to use the Systems Approach and, within it, the methodology offered by the stage of conceptualization of System Dynamics modeling in order to relate the different objectives of the Economic Policy in Spain, as well as to relate those objectives with the Monetary Policy, whose goals should always be subordinated to the former. By this example, we will try to show the weaknesses and deficiencies which appear with the conventional approach traditionally used in the study of the Economy.

Dynamics of Flow of Scientist in Government Research Establishments
Purnendu Mandal, Pratap K. J. Mohapatra, Ashok Jain, V.K.C. Sanghi

Abstract: The paper reports the findings of an ongoing project on manpower modeling for a government research organization. The flow of scientists from one grade to an other has been modeled considering recruitment, promotion and retirement policies. Age distributions of scientists have been incorporated in the formulations and it has helped in retirement calculations from various grades. Future scenarios with alternative policies are generated and discussed.

Systems, Science, and Schools
Ellen B. Mandinach, Hugh F. Cline

Abstract: The SYSTEMS Thinking and Curriculum Innovation Network (STACI n) Project is a multi-year implementation and research effort intended to examine the impact of implementing and learning from a systems thinking approach to instruction and from using simulation modeling software. Systems thinking is an analytic problem solving tool that can be integrated into courses to enhance instruction. The purpose of the project is to test the potentials and effects of using the technology-based approach in precollege curricula to teach problem solving skills as well as content-specific knowledge .

System Dynamics in Strategic Planning
Ali N. Mashayekhi

Abstract: One approach to strategic planning is called “gap analysis”. In gap analysis, the future of an organization under its present strategy is forecasted. Then, objectives, or the desired future for that organization, is identified and the gap between the objectives and the future conditions under current strategy is determined. Finally, new strategies which will help to close the gap will be designed. System Dynamics can be used two important ways in the gap analysis. First, System Dynamics model can be used to forecast the future of an organization under current strategies and identify the gap between that future and the objectives. Second, System Dynamics model can be used to examine how much each strategy can be helpful to close the gap. The application of System Dynamics in gap analysis method is shown by an example of developing a strategy for water resource development in Iran.

A Numerical Sensitivity Analysis of Process Delay in the Incarceration of Juvenile Offenders
Paul E. McCold

Abstract: The analysis unit of the New York State Division for Youth is responsible for providing admission forecasts to allow the Division to anticipate changes in demands for facility space. Arrests of the most serious offenders had shown a 38% growth between 1987 and 1988, yet the annual admission rate declined 19%. In an effort to understand the reasons and account for this difference, a Stella model of the offender processing system was created and simulated using historical exogenous time serious inputs. Utilizing linear processing ratios and simple causal assumptions, the model reproduced the historical admission rates without any changes in processing trends. The results indicate that the admission rate was proportional to the arrest rate, given the long lag time involved in the conviction process. Further, the growth in cases backlogged due to an increase in processing time during 1987 did not imply that a small increase in processing resources would cause a surge of admissions.

Time – A Key Factor in Corporate Strategy
Peter M. Milling

Abstract: Empirical analyses indicate that the firm which is the first in bringing new products to the market has a major competitive advantage. The development time for sophisticated and high quality products is shortening. The time span of the market cycle is decreasing, and for high technology firms, even rather short delays can cause a deep cut in the overall profit performance. In the “Factory of the Future” the capability for immediate and reliable delivery of custom designed products is a crucial aspect.
Speed is becoming a decisive factor for corporate management. In Management Science, however, this development is not yet taken into account adequately. Different stages of the same process are still analyzed separately. Models of research and development e.g., do not investigate how delays influence the market performance of the eventually achieved product. Studies of innovation diffusion focus solely on the market cycle, thereby neglecting the lengthy and costly R&D processes. With such a limited perspective, those models must fail to support effectively decision making in a dynamic high technology environment.
The paper discusses System Dynamics’ role in such a setting. It presents a model for innovation management which integrates the stages of R&D with the production and marketing cycle. It is designed as a microworld for learning about the system and for studying possible ways of influencing its behavior. The model consists of two modules: a C-written algorithm, based on biological evolution theory, maps the firm’s research and development processes; the second module is a Dynamo-representation of innovation policies and market dynamics. Both modules are tightly coupled through flows of information. Their interactions allow the testing of corporate strategies for R&D planning and innovation management.
Although still in the development stage, the model provides insights into the timing of decisions. The results from this integrative view underline the importance of speed in the strive for competitive advantage.

Modelling the Oil Producers: Capturing Oil Industry Knowledge in a Behavioural Simulation Model
John D.W. Morecroft, Kees A J M van der Heijden

Abstract: A group of senior managers and planners from a major oil company met to discuss the changing structure of the oil industry stemming from the moves of traditional producers into refining and retailing. This broad ranging discussion led to a system dynamics simulation model of the oil producers. The model produced new insights into the power and stability of OPEC (the major oil producers’ organization), the dynamics of oil prices, and the investment opportunities of non-OPEC producers.
The paper traces the model development process, starting from group discussions, to flip chart drawings, to STELLA maps and finally to working simulations models. Particular attention is paid to the methods used to capture team knowledge and to ensure that the STELLA models reflected opinions and ideas from the meetings. The paper describes how diagrams of behavioral decision functions were used to collect ideas about the ‘logic’ of the principal producers’ production decisions. The diagrams served as a record of the meetings and the basis for first-cut STELLA maps. A selection of diagrams is used to illustrate the content of the model.
A sub-group of the project team was involved in developing and testing an algebraic model. The paper shows partial model simulations similar to those used by the sub-group to build confidence and a sense of ‘ownership’ in the algebraic formulations. Further simulations show how the full model can simulate thinking about producers’ behavior and oil prices.

System Dynamics and Decisions Under Uncertainty
Erling Moxnes

Abstract: The theory of decisions under uncertainty share basic assumptions with system dynamics. Both methods require that decisions are based on only available information, and both methods focus on the development of policy rules that improve system performance. Both methods have other implications for parameter estimation than conventional deterministic analysis. Fluctuations are frequently studied in system dynamics, and fluctuations and randomness are of great importance for decisions under uncertainty. Decisions under uncertainty can be studied by analytical methods, dynamic programming and Monte Carlo simulations. The latter method is quite easily applied to system dynamics models. Using Monte Carlo simulations we show that uncertainty has important implications for decisions influencing the “greenhouse” effect. Note that risk aversion is not an issue in this example. The theory of decisions under uncertainty brings new qualitative insights to system dynamics, and facilitates quantitative improvements of policy rules. Referring to or applying the theory of decisions under uncertainty might help to get a wider academic acceptance of system dynamics models, which are often thought of as being realistic but quite uncertain. The principles of system dynamics might bring the field of decisions under uncertainty in the direction of greater realism. The focus on real life interpretation of system dynamics models is most useful for the application of apriori information. Apriori information is needed to establish important autocorrelation in cases where short time-series do not contain sufficient information.

Computer Simulation of Shipbuilding Production Process Management
Ante Munitic, Tonko Bakovic, Dusan Ramic, Slavko Simundic

Abstract: The business-production managements of shipbuilding- PPBP, namely with one shipyard, in today’s too complex business conditions, is one of the most complex management organization systems. For this organization system, the intuitive collective management is not efficient enough especially today. For the management of such complex systems it is necessary today to apply the most contemporary method of management with obligatory computer support. In this paper, the authors are going to present the results achieved in researching the efficiency of System Dynamics Computer Modeling of the Business-Production Shipbuilding Process-PPBP, which they did in 1988 and are continuing in the “BRODOGRADEVNA INDUSTRIJA SPLIT, YUGOSLAVIA, one of the biggest shipyards in Yugoslavia.

An Analysis of the Cost-Effectiveness of U.S. Energy Policies to Mitigate Global Warming
Roger Naill, Sharon Belanger, Adam Klinger, Eric Petersen

Abstract: The issue of global warming has sparked debate among scientists and policy makers over the last two years. Many studies have been undertaken in the U.S. and other nations to determine the potential severity of global climate change and appropriate policy responses.
The U.S. Department of Energy is now conducting one such study of energy technology and policy options to mitigate greenhouse gas emissions. The study is an attempt to assess the emissions reductions potential and costs of several policies, using the FOSSIL2 integrated energy model. This paper focuses on preliminary results of a subset of eight policy cases. It discusses the modeling methodology, the formulation of these policies, draft results and some policy insights gained.

A Decision Support System for System Dynamics Modeling
Pei Weimin, Liu Shu-an, Wang Dingwei

Abstract: In this study, a decision support system for system dynamics modeling is designed. The intelligent part of the system is composed of a knowledge base, a data base and an inference engine. The function part of the system is composed of some modules for model construction, model generation, model simulation, model interpretation, model management, and PD interface. The proposed system is a production system written in PROLOG, and it can join up with the professional Dynamo plus software by means of the PD interface. Whole process from modeling to simulation can be realized by the support of the system. An application example is given in this paper.

Designing Learning Environments
Steve Peterson

Abstract: For the past 18 months, individuals at High Performance Systems have been engaged in the development of Learning Environments — personal computer based arenas for learner-directed learning. These learning environments have been used in a variety of settings, in grades 8-12, in colleges, and in corporations. Our experience suggests that learning environments can be of great utility in facilitating the learning process.
In this paper, I summarize what we have learned from our development activities. I begin by developing a generic learning environment framework. Then, I illustrate this generic framework with two examples. The first example learning environment is developed from the classic “Deer of the Kaibab Plateau” model. The second learning environment is motivated by the “Tracking Experiment” described by Richardson (1984). I conclude the paper with a set of learning environment design principles.

Microstructure and Macrobehavior of Centralized and Decentralized Systems
Jan Polowczyk

Abstract: The paper presents some results of research regarding the relationship between the centralization degree and the efficiency of economic systems. A simple system dynamics model has been used in these studies. The model has applied certain J.Kornai’s ideas concerning economic systems. Simulation experiments have confirmed the viewpoint that overall economic behavior arises from within feedback loops creating microstructure of each system. Two basic kinds of microstructure have been distinguished: centralized and decentralized. Macro behavior generated by them is close to these observed in planned and market economies. The paper is divided into four parts. In the first one, basic Kornai’s ideas are outlined. In the second part, model is presented, whereas in the third one, some results of simulation are analyzed. Conclusions drawn from the experiments are presented in the fourth part.

An Evaluation of Behavioral Simulation Models of OPEC
Stephen G. Powell

Abstract: Behavioral simulation models of OPEC have typically been built on the assumption that OPEC price changes are determined by capacity utilization. We evaluate this model by examining its empirical and behavioral justifications, and by observing how it performs in a simple world oil market model. We also briefly explore and evaluate alternative behavioral rules for OPEC.

Building Large Dynamic Models for Fun and Profit
Anne Quaadgras

Abstract: Building large dynamic simulation model of an industry requires sound organizing principles and appropriate tools combined with a thorough understanding of the industry being modeled. In this paper I will describe how we build a simulation model for a client’s business to answer the client’s key strategic questions.
The models are large because they are based on physical, observable phenomena in the industry. They must take into account the stocks and flows of product and money as well as represent managers’ decision-making processes and the key variables that impact each producer’s decisions. Most corporate decisions are based on physical or financial parameters, so the model structure is clearly understandable to the final user.
At Federal Group we use an effective methodology for building large-scale structural dynamic simulation models to address the real world problems of business decision makers. This paper presents how we have successfully constructed such models for oligopolistic, capital-intensive industries. However, our methodology can be generalized to a broad range of other business environments.

Pasion: Object-Oriented Simulation on the PC
Stanislaw Raczynski

Abstract: PASION is a process- and event-oriented simulation language designed for those who already know and use PASCAL. The language has a two level (process/event) structure and permits the use of all the Pascal Structures. It also offers the main features of object-oriented programming. PASION provides necessary facilities to handle sequences of random events, queues and quasi-parallel processes, both discrete and continuous. A PASION source program consists of a sequence of process declarations and a main segment which initializes the simulation. At run time the program generates objects which represent model processes due to the process declarations. PASION provides tools which facilitate the building of complex models by the mechanism of inheritance.

Effects of Stochasticity on an Aggregate Dynamic Model of Commodity Cycles
R. Joel Rahn, Song Yuzhu

Abstract: In previous papers, various approaches to studying the relationships between an aggregate dynamic model and an underlying, stochastic system have been reported. These approaches include the use of a Master Equation model to derive the aggregate model from stochastic hypotheses, and the summation over a population of dynamic sub-models to estimate the aggregate behavior. In this paper, a commodity cycle model is re-formulated as a stochastic, discrete simulation model to study the effects of stochasticity on the aggregate behavior of the system. Global variables provide aggregate information links to control the arrival and departure of new entities (commodity units and capacity units). A comparison of the aggregate dynamics of the stochastic and the equivalent system dynamics models is made under conditions in which the dynamic models is made under conditions in which the dynamic model is oscillatory and undergoing period-doubling bifurcations leading to chaos.

The Implementation of Welfare Reform Initiatives: A Preliminary System Dynamics Model
Sauwakon Ratanawijitrasin, David F. Andersen, George P. Richardson, Irene Lurie  

Abstract: Successful welfare reform is difficult to achieve in practice and to study in theory because the linkages between policy reforms and the actions of clients of the system are many, long, and loose. Reformers can change organizational structure, funding amounts and requirements, as well as mandates. They hope that these reforms will change the behavior of workers who will implement the reforms. In turn, changed behavior of employees and welfare agencies are presumed to change the behavior of clients. Evaluating welfare reforms requires that information about policy changes, organizational changes, changed behavior by workers, and ultimately changed client behavior all be examined empirically and the results combined into a coherent whole.
This paper proposes that system dynamics models may be a new tool in the analyst’s toolchest that can help to create integrated theories of welfare reform as well as help to integrate results from empirical studies of welfare reform. Below we present a first cut system dynamics model of the implementation of portions of the welfare reform legislation of 1988. This effort is designed to illustrate how system changes, changes in worker behavior, and client behavioral choices might be simultaneously analyzed within the context of a singe feedback system. Of course, the hard work of elaborating and empirically validating the structure of this simple model still remains before us.

Systems Thinking: A Critical Set of Critical Thinking Skills for the 90’s and Beyond
Barry Richmond

Abstract: The problems we are facing at all levels in the world today are growing more intractable. In particular, our problems are becoming increasingly resistant to unilateral solutions. I will argue that this growing resistance and intractability result from the fact that while the evolving web of interdependencies, of which we all are part, is rapidly tightening, the development of our capacity for thinking in terms of dynamic interdependency has not kept pace. As the gap between the nature of our problems, and our ability to grok this nature grows, the planet will face increasing peril on a multitude of fronts. System Dynamics and System Thinking — the larger framework of which it is a subset — are an important part of an effective strategy for closing the gap between challenge and capacity for addressing challenge. Unfortunately, we as System Dynamacists and Systems Thinkers have been woefully inadequate in transferring our framework, skills and technology to the population at large. Although we have “seen the light” for some thirty years now, we have not opened the door to our inner sanctum wide enough to let others share in our insight- generation capabilities with respect to the inner workings of closed-loop systems. In order to be more effective in transferring our very valuable capabilities to a broader swath of humanity, we need to see more clearly precisely what these capabilities really are, and also to understand the forces driving the evolution of the education system into which these capabilities — if they are to be transferred on a board scale — must be assimilated. My purpose in writing this paper is to shed some (hopefully new) light on both what it is we have to bestow, and also on where the educational system that is to receive our bounty is headed. My intended audience therefore is both Systems Thinkers and educators. My highest hope for the paper is that it will serve to further eradicate the distinction between the two.

Teaching Experiments with a Simulation Model of Universal Commodity Production
Alexander V. Ryzhenkov  

Abstract: The paper considers how students learn commodity production and circulation via gaming experiments. We review two of them.
In the first, players run into reproduction on a decreasing scale aggravated if not caused by their non-cooperative behavior. In this economy social and private benefits and costs diverge. Undertaking an investment a capitalist firm chooses typically that technique which maximizes profitability, while the society is interested in that which requires the minimum input of labor.
In the second, players bring up extended reproduction receiving incompatible norms and setting new priorities with associated strategies of cooperative behavior. Social and individual interests draw together consequently.

Bringing Practicum to Theory-based Social Science Disciplines: An Illustration with a User-friendly Simulation Laboratory on Issues of Economic Development
Khalid Saeed

Abstract: This paper suggests that the possibility to experiment with relationships using system dynamics should lend the method easily to introducing practicum in the theory-based disciplines. This would however, require modifying teaching formats and creating new text materials and user-friendly computer programs suitable for use by students with little computer or mathematical expertise. A simulation laboratory consisting of a text and a user-friendly simulation program developed recently by the author on issues of economic development is presented as an example of material needed for integrating practicum with teaching.

Is Deterministic Chaos Only a Property of Models?
Khalid Saeed, Nguyen Luong Bach

Abstract: This paper presents results of extended experimentation with selected models of social phenomena widely used by the system dynamicists in their studies on deterministic chaos. The models selected include various versions of a simple model of migratory dynamics and a model of resource allocation in a firm, and a simple model of long-term economic fluctuations. Chaotic modes seem to appear in each of the experimented model, either due to non-robust or unrealistic rate formulation, or from unrealistic parameter or input specifications or both. Minor changes on the models experimented with, which improve their correspondence to reality, eliminate chaotic modes. The paper raises the issue of the relevance of the chaotic models to real-world phenomena and policy design for system improvement.

Comments on the Close Similarityy Between Indian Population Projections from the Constrained Coalition and Logistic Model and the Census, Government of India and U.N. Estimates
V.K.C. Sanghi

Abstract: The close similarity between the Indian census, Government of India and U.N. population estimates and those from the Constrained Coalition and Logistic Model (CCLM) has been demonstrated which enhances the usage of differential equation modeling for studies on population growth processes. The CCLM incorporates the legitimate requirement of an upper bound for the aggregate population thereby implying the rate of natural increase to reach the zero level. The numerical value assumed for the upper bound is based on food supply – arable land availability, and accounts for advances in agriculture productivity. However, other factors such as quality of life, environmental degradation, per capita income, etc. can also be used to arrive at an upper bound. The model holds good promise for usage for other developing countries.

A Dynamic Model to Evaluate Mixed Automobile Fuel Market in Italian Environment
Habib Sedehi, Alessandro Gambaro, Federico Lanza

Abstract: The automobile fuel market in Italy is appreciably different from that in other European countries and even more unlike the American context.
As a matter of fact, the alternative and available automobile fuels in this country are the following: -gasoline (petrol),-gas oil (diesel oil),-liquefied gas (LPG), plus a very small amount of natural gas, each with its own price. In addition, price differences are considerably greater than in other countries.
In view of the fact that gasoline is the most expensive fuel and gas oil the least expensive, the Italian Government has adopted a peculiar tax called “Superbollo” meant to penalize car owners with diesel powered engines and those with both gasoline and LPG powered engines, but to a different degree.
The alternatives access by drivers (car-users) to different fuel resources has influenced and countries to influence the automobile industry’s approach to the Italian market.
On the other hand, the different fuel prices, plus the varying annual amount of the ‘Superbollo” tax, influences the motorist’s decision in buying and using differently powered cars.
The decision is obviously affected by the consumption rate for each type of fuel and the driver’s expected mileage per year.
This paper aims to underline and analyze the hypothesis on the mix of the three main fuels used in Italy, trying to give results principally on the basis of: -price-changing of each fuel, -tax-value of “Supperbollo”, -different driver-mileage taking into account the pollution-cost of each of the three fuel solutions. The system, which is the subject of the study, will be analyzed using System Dynamics methodology, with a dynamic model.

Volume 3

Systems Thinking and Organizational Learning: Acting Locally and Thinking Globally in the Organization of the Future
Peter M. Senge, John D. Sterman

Abstract: Eroding competitiveness, declining productivity growth, explosive technological, political and environmental change, and dissolution of market and national boundaries form the familiar litany of problems which threaten traditional organizational structures and management practices. In the turbulence at the close of the century it is widely argued that organizations must change more rapidly than ever before.

Synthetic Policy Design in System Dynamics Model: Some Observations
S.K Sharma, P.K.J. Mohapatra, M.D. Tyagi

Abstract: The paper suggests a novel approach to policy design in system dynamics models. The approach is based on optimal control theory to evolve synthetic policy structures and then design realistic policies for the famous production – distribution model of Forrester. New policy sets have been presented for purchase decision rate at retail and distributor sectors and manufacturing decision rate at factory. It is shown that the suggested policy sets show a marked improvement of model behavior over that obtained by Forrester. The approach suggested here will enhance the art of policy design.

Simulation Model of Japanese Welfare Annuity System
Toshiro Shimada, Saburo Kameyama, Kinya Machida, Akira Uchino, Minoru Watanabe

Abstract: Japanese old age population is gradually increasing and this tendency weakens economic conditions of Japanese welfare annuity system. Therefore it is important for us to study future conditions of this system.
This model contains 4 sectors: Demography, total premium income, total pension expenditure and reserve of the welfare annuity system.
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. This sector was first formulated for a simulation model of dental diseases and is now applied to this model. Total premium income for the welfare annuity system is the sum of premiums of workers, employer contribution and government contribution, for which populations of five-year age groups are used. Total pension expenditure is the sum of base pensions and earning related pensions. Here is used population of 60-64 age group. Total premiums plus interest income of the reserves of the welfare annuity system minus total pension expenditures flow into the reserves of the welfare annuity system.
The length of the simulation is 63 years from 1963 to 2025.
This study is a research project of the Japan Productivity Center.

New Technologies in Simulation Games
Kenneth L. Simons

Abstract: Advances in computer software allow modelers to design, with relative ease, sophisticated, realistic educational tools. With these advances, new issues arise about how to make this educational software productive and stimulating, without limiting the freedom of the user or creating simply a computerized workbook.
Such simulation games have great educational potential for people who play video and home computer games, and sometimes for students in classrooms. The games must address three information levels: (1) real-world details, (2) simulation of model, and (3) conceptual understanding of structure and dynamics. The systems viewpoint on the particular model must be clearly explained; otherwise users will have much fun but learn little. Feedback during the game teaches this system understanding without requiring textbook readings. Such feedback requires new modes of “expert” computer analysis which need to be developed. Other tools need to be developed to help in creation of simulation games and to give the games abilities that they do not yet have, such as access to database of models, pictures, and text, and connections between simulation games.

Application of System Dynamics to an Integrated Economic and Environmental Policy Assessment
William Steinhurst, George Backus

Abstract: An integrated system dynamics policy model was developed for a state level economic activity, population, energy demand, supply, and price with realistic feedback mechanisms. Environmental impacts and influences on technical and economic efficiency were also modeled. The model and its use to perform a joint analysis of several interacting policies, including electric and gas utility least cost planning and the construction of an interstate natural gas pipeline are described. A number of interesting results from a variety of perspectives are presented. These include an evaluation of the economic development; air quality and energy efficiency impacts of the pipeline proposal; their sensitivity to fuel prices; and some novel observed feedback relationships between energy price and air quality. The lessons learned in model development, implementation and utilization in both policy and regulatory arenas are discussed. The benefits of fully integrating economic and environmental impacts for policy modeling are evaluated.

The Spread of ‘88 Shanghai Type-A Hepatitis: A System Dynamics Model And Analysis
Mao-Kang Su, Huan-Chen Wang

Abstract: In this paper, first of all, a qualitative analysis is done on a general infections disease SD model, and a new epidemic threshold value and an epidemic scale forecasting formula are proposed. Then in consideration of the properties of type-A hepatitis and its eruptive spread SD model is put forward. A lot of work in various aspects is done, for example: the problem to simulate the type-A hepatitis incubation period is solved practically; the simulation results fitted in with the reality are achieved; through simulation analysis and qualitative analysis, the reason for that the predicted 2nd peak of this spread didn’t appear is found out; the short-term and long-term prospects of Shanghai type-A hepatitis situation are brought forward; especially, hypotheses about the mechanisms of the periodic epidemic and the eruptive spread of type-A hepatitis are put forward. These results are imbued with guiding significance for prevention and control of the type-A hepatitis and other infectious diseases.

Children’s Creative Development Training Program
Orasa Suksawang

Abstract: This paper reports on the annual summer training program of children’s creative development conducted since 1986. The training targets per program are between 80-100 children aged between 9-14 years coming from various urban and rural parts of Thailand to join the 8-10 day program for moral and technical development. The program is planned and coordinated by the author with considerable inputs from Buddha’s teaching in self-reliance: the potential of human being prevent their defilement; and from people who expertise in architecture and technology. The method approached for explaining human performance in nature, is a simulation game designed by the author with the help of her colleague in computers. The model concept is derived from a system dynamics method as a tool for dissemination of the law of cause-effect action in Buddhism. The children evaluated joyfully and rapidly understand the mechanism of mind in decision making whether to conduct good or bad actions according to the Buddha’s principle by playing and thinking themselves with this simulation game in a better way than they do in the traditional method of lectures by monks or teachers. The game simulates the interaction relationship between a human’s performance and his life expectancy. Later the workshop practice of the electronic application is approached for systematic problem-solving about peoples’ needs in terms of technological development in relation to promotion of moral values.

Dynamics of Cooperative Development
Orasa Suksawang

Abstract: This paper describes a System Dynamic approach to the study of the relationship between people participation in Agricultural Land Reform Cooperative performance and the economic performance over time. Two Cooperatives are examined- “successful” and “non-successful” -and policy changes are discussed in terms of the performance of these two Cooperatives.

System Dynamics Modeling of Group Behavior: A Conceptual Framework
Sushil and B. John

Abstract: This paper attempts to highlight how system dynamics methodology is useful in modeling and testing the dynamics involved in group interaction process to explain its behavior over time. Out of the prominent group models, Gladstein’s model of groups in context is taken as reference model. The SD model of group structure which is a system component consists of six modules; roles, goal clarity, specific work norms, task control, size and formal leadership. This paper deals in detail, the module of formal leadership, and studies how the interrelations and interdependence influence the system behavior.

A Conservation Model for Black Rhino
John Swart, Peter Goodman, John W. Hearne

Abstract: Over the past thirty years the black rhinoceros (Diceris bicornis) population in Africa has declined from about 30,000 to less than 3,000. In contrast the South African population has increased four-fold to 600 over the same period. The recently developed national conservation strategy for black rhino has as it main goal the increase of the current population to at least 2,000 in as short a period as possible. To achieve this, the growth rate of the population as a whole will have to be maximized. This involves removing animals from areas where the population is approaching the ecological carrying capacity and establishing new viable populations in other suitable reserves.
A model, incorporating what is known about the population biology of black rhino, was developed to give guidance to managers on the most appropriate harvesting strategy to adopt for their populations; in particular, to determine the rate of removals and the age and sex of individuals to be removed to attain a 2,000 strong Southern African population as soon as possible.

Mode-Locking and Chaos in a Periodically Driven Model of the Economic Long Wave
Jesper Skovhus Thomsen, Erik Mosekilde, Erik Reimer Larsen,John D. Sterman

Abstract: We have investigated the complex dynamic phenomena, which arise when the economic long wave model is perturbed by a sinusoidal variation in the orders for capital to the goods sector. The modulation represents a coupling to more short term oscillatory modes in the macroeconomic system. As the period of the external forcing is changed, a devil’s staircase of frequency -locked oscillations develops. For higher amplitudes of the perturbing signal, period-doubling bifurcations, simultaneously existing periodic solutions and deterministic chaos can be observed. The distribution of modes is determined as a function of the frequency and amplitude of the external signal. The phase diagram reveals characteristic bumps on the Arnol’d tongues, where they approach each other. The Lyapunov exponents are calculated, and the influence of noise is discussed in terms of the lock-in time for the periodic solutions.

Teaching Theory Building Modeling: Instructional Materials and Software for Theory Building
Robert F. Tinker

Abstract: This report is based on results of the TERC Modeling Project funded by the National Science Foundation grant MDR-8550373. Any options, findings, or recommendations expressed herein are those of the authors and do not necessarily reflect the views of the Foundation.
We gratefully acknowledge the support of Apple Computer, Inc.
Apple, Macintosh are trademarks of Apple Computer, Inc.
Stella is a trademark of High Performance Systems, Inc.
Excel is a trademark of Microsoft, Inc.

Interactive Multicriteria Optimization in System Dynamics Models
M. Toro, A. Ollero, J. Aracil

Abstract: In this paper we present a program package which combines System Dynamics Simulation with programs for Interactive Multicriteria Optimization (IMO)
The program package incorporates conventional well tested routines for nonlinear optimization, that do not require previous computations of derivatives, and methods to optimize a set of objective functions by progressive articulation of the user preferences between different criteria.
To facilitate the user interaction, a special purpose man-machine interface have been included in the package. By means of this interface, the user can impose the required preferences structure by only expressing, in a linguistic way, his/her opinion about each objective in the current solution of the Interactive Multicriteria Optimization algorithm.
The program package can be used to optimize a set of objective functions both in problems concerning the estimation of model parameters from historical data, and problems related with the search of optimal policies.
The man-machine interface and optimization programs have been written in C and linked with the DYNAMO continuous systems simulation language to configurate the program package. The package can be used in IBM PC (or compatible) with a hard disk.

Some Conceptual Problems in the System Dynamics Models Building Process
Margarita Vasquez, Javier Aracil, Manuel Liz

Abstract: System modeling and simulation is a complex technological activity, which methodological and conceptual analysis could suggest some new and interesting perspectives about the philosophical subject of the relationships between knowledge and reality.
Of the three kinds of knowledge involved in the system dynamics model building process (mental models, reference modes and operational knowledge), mental models look like specially important, because they let us to express the ideas we have about the internal interactions we find in a real system and that produce a known behavior. From this mental model, we build the formal model, the system dynamics model.
But, after that, it is very difficult to find out formal restrictions that let us to select a single model, because a behavior can be generated by different structures ( Searle 1980,1984; Zeigler 1976,1984). The internal realism of Hilary Putnam (Putnam 1981,1983,1987) allows us to understand why there is not an unique model able to pick up every single aspect of a real system and to clarify the interactive character of the modeling process and the important role that mental models, as a kind of knowledge, play.

Eliciting Group Knowledge in a Computer-Based Learning Environment
Jac A. M. Vennix, Jan Gubbels, Luc D. Verburgh, Doeke Post

Abstract: A key issue in building computer models for decision support with client groups is the elicitation of knowledge from the mental models of participants. The system dynamics model-building process is quite complex and consists of several stages each demanding different types of knowledge to be elicited from the client group. In this paper we discuss a structured approach, employing various techniques, for the elicitation of knowledge in formulating and analyzing a system dynamics model of the Dutch Health Care System.

Modeling as Organizational Learning: an Empirical Perspective
Jac A.M. Vennix, Willem J. Scheper  

Abstract: Many system dynamics modelers consider the process of model-building more important than the model itself. Model-building is supposed to generate considerable learning about a policy problem. Not only at the individual level but also at the organizational level. From the point of view of empirical evaluation research the question is how the occurrence of organizational learning as a consequence of a model-building process might be established. In this paper we will explore some of the key issues and difficulties involved in establishing organizational learning from model-building empirically.

Model-Based Analyses of the Dutch Health Care System
Luc Verburgh, Jan Gubbels, Doeke Post, Jac Vennix

Abstract: In the paper, a system dynamics model of the Dutch health care system will be discussed. The description of the model will start with so called ‘patients flows’. It will be followed by a description of the most important factors that affect the patient’s flows and the costs generated by the system. Having outlined the system dynamics model, the outcomes of three policy alternatives aimed at reducing the costs of health care will be examined. They will serve to demonstrate that the system dynamic model does have the potential to be used in workshops to elicit and increase the knowledge policy makers have regarding the problem of rising costs of health care.

A Simulation Support System for Public Education Investment Strategy Analysis
Wang Dingwei , Pei Weiming

Abstract: A simulation model of education and economy is used to analyze the education investment strategy in a region of China. The simulation results show the proportion of educational fees and investments must be suited to the economic developing level. Thus, it is necessary to continuously increase the proportions with economic growth. In order to be convenient for decision makers, a functional simulation support system is proposed.

Studying Decision Making of Enterprises Under New Circumstances
Qifan Wang, Huimin Fu, Ti Shi  

Abstract: This paper is focusing on study of influence of China’s recent economic adjustments and industrial structure changes on enterprises, particularly on these engaging in manufacturing. The paper analyzes major difficulties facing Shanghai, the largest industrial centre of China, and, using it as background, studies the decision-making strategy of a typical enterprise of Shanghai.

Studying the Impact of Science and Technology on the Economic Growth in a Central City
Wang Qifan, Xiao Chen, Yu Lijuan

Abstract: This paper study how to develop education, technology and economy coordinativetly in central cities. It outlines the kind of issues which analyze and study the ways of describing science and technology level. The importance of the paper has two points: out is an new method being applied to calculate industry output, another is the study guiding line to the three sectors(science and technology, education and economy) in their entirety. The policy suggestions will have significant reference to make central cities’ long term development strategies.

Strategy Study on Entire Coordinated Development of China
Wang Qifan, Li juan Yu

Abstract: By means of system dynamics, main development modes and strategies on entire coordinated development of science, technology, economy and society of China have been studied. The paper studies the existed development mode and the long term possible obstacles, unfavorable factors and some constraints to the development in its different stages are analyzed quantitatively in the paper. Some long term and short term strategies and policies for continuous and entire coordinated development are presented, based on the system simulation and quasi-optimization.

The Study of Dynamical Systems’ Nonlinear Characteristic
Wang Qifan, Yao Zhiping

Abstract: Nonlinearity is the source of complexity. It gives rise to the change of the system behaviors, the evolution of structures and such phenomena as bifurcation, catastrophe, and even chaos. It is these phenomena, dovetailed with others, that weave out our multicolor and multifold world synergentically. With the development of science and technology, people become more and more interested in and capable of the study of nonlinearity so as to shed light on the nature of the world. In order to deal with nonlinearity more systematically, this paper elaborates a comprehensive description for the dynamical system. Then, we focus on the relationships between the characters of nonlinearity. We have successfully expounded some controversial concepts, cast new light on some important relations, and unified several concepts which are the central topics of many modern theories.

A System Dynamics Model of Socio-Economic Development of Harbin in China
Wang Yanjia

Abstract: A system dynamics model of socio-economic development of Harbin in China has been Presented in the framework of the integrated economy-energy-environment system planning.
The model simulates the activity mechanism of national economy of Harbin by taking the fixed capital of each industrial sectors as a major variable and controls the system behavior by taking the gap of energy supply and the gap of energy investment as feedback signals. Therefore the pre-established development targets of national economy can be reached by readjusting the investment allocation and production structure towards elimination of the energy and investment gaps.
Through a series of policy stimulation, several socio-economic development planning scenarios of Harbin for year 2000 have been Compared with each other by examining some key issues, such as growth rate, investment ratio, investment allocation tenancy and production structure readjustment ad well as the improvement of scientific, technical and managemental level, etc. the resulted policy suggestions were proposed with much attention being paid by decision maker authority.
This model can run on the personal computer under the support of the Professional DYNAMO Plus software, and try to connect SD model to other technical model, such as energy forecasting model, multi-object optimum energy supple model, etc. An idea which is about SD co-operated with other methods has been presented and that is the direction of the system dynamics method development.

The Application of a Dynamic Methodology to Assess the Benefit of a Logistics Information System in Defense
K.M. Watts, E.F. Wolstenholme

Abstract: This paper describes the application of a system dynamics based three-stage methodology (Wolstenholme, 1990) for the assessment of computerized information (CIS), to a proposed military logistics information system.
The system in question was nearing the end of the Requirements Definition phase of the System Life Cycle process. A Benefit Assessment had been carried out by the consultants responsible for the design of the system. The Tools used by them had, however, encouraged the conclusion that any improvement in the information system must have a positive effect on organizational effectiveness directly proportional to that level of improvement, and that the overall level of improvement is the sum of individual gains. No study of the interaction of the physical operation and the information system had been carried out.

Introduction of System Dynamics in Urban (Regional) Coordinated Development Planning
Wei Hongsen

Abstract: This article presenting a summary and analysis of the theory and method of System Dynamics on the author’s experience in planning of the coordinated development of science, technology, economy and social advancement in such cities as Beijing, llarbin, Anshan and Baotou, is aimed to find out the advantage disadvantage of the S.D approach to urban planning as well as to improve upon it.
System Dynamics which is considered in this article to draw on system theory, information science and cybernetics, especially the feedback control principle and computer simulation, is a scientific theory and method that can find an effective application to improving and planning a multi-factor, non-linear, dynamic and/or strategy. In actual planning of coordinated development of the Chinese policy or strategy. In actual planning of coordinated development of the Chinese cities and regions, S.D is found superior in six (6) points while left five (5) respects to be desired, so the idea of establishing the S.D. dominated comprehensive model system is this developed to enhance and strengthen the above planning process.

System Dynamics in Dispute Resolution
Henry Birdseye Weil, Rayford L. Etherton, Jr.

Abstract: Since the mid 1970s, System Dynamics has contributed to the resolution of a wide range of business and legal disputes including contract claims and re-negotiations, management prudency hearings for nuclear power programs, and inquiries into the effects of government regulations on various industries. In these settings, a System Dynamics model can provide an objective, “transparent” view if a complex and emotional situation. The model can represent what happened and why, and what would have happened if certain events or conditions had not occurred. It can provide a basis for determining responsibility for delays, cost escalation, poor product performance, reliability and safety problems, complex situations are easier to understand and evaluate. The models and analyses become frameworks for debate and settlement.
This paper describes the context, processes, and behaviors associated with many business-related legal disputes. The role of System Dynamics is dispute resolution is discussed in general terms, and then illustrated with a recent example. The example is a large contract claim for “delay and disruption.” That term refers to the indirect, secondary, or ripple effects of events or conditions (e.g., design changes) impacting an aerospace, shipbuilding, software development, or similar program. Delay and disruption impacts can be very substantial. They are the most difficult aspect of a change negotiation or claim to handle, and are the source of the most acrimony and disagreement in such disputes. The background of this case, the lawsuit, how the model was introduced into the legal proceedings, and how it helped to achieve a settlement, are described in detail. The paper concludes with a discussion of the practical results obtained from using System Dynamics in dispute resolution.

Consensus Building in the Planning Process
Graham W. Winch

Abstract: This paper examines the role that building and using a System Dynamics model plays in developing consensus within the management teams facing key strategic decisions. It considers the concept of the shared view that emerges within the team as their individual views of the company, its industry, and the socioeconomic climate are articulated and compared as part of the model development process. Examples are given based on two actual consulting assignments in which differing views held with the team concerning the competitive environment and the general outlook for the business initially pointed to quite different strategies. During these studies the emergence of the consensus and an agreed strategy was considered a major benefit alongside the forecasts and quantitative evaluations the model provided. By adding to the commitment of the team, by assisting in the communication with others and in improving human resource management and organization design, the approach also offers further benefits in the implementation phase of strategy management.
In its analysis and use of examples drawn form consulting situations, this paper has emphasized the dual benefit of this approach in the hard sense of providing forecasts and an objective framework for quantitative evaluations, and the soft sense in terms of building consensus in the management team.

On the Very Idea of a System Dynamics Model of Kuhnian Science
Jason Wittenberg

Abstract: The appearance of Thomas Kuhn’s Structure of Scientific Revolutions engendered considerable discussion about the nature of scientific change. Kuhn challenges the prevailing view of science as a continuous, logical enterprise by attempting to debunk science’s myth of rationalism. As an historian as well as philosopher of science, he attempts to explain science’s extraordinary success not by developing methodological cannons divorced form scientific practice, but by looking at how scientists actually work.( Lakatos and Musgrave 1970, 236-237).
Acknowledging the philosophical importance of actual scientific practice is controversial. Kuhn’s critics question both his characterization of science as mostly “puzzle –solving”, as well as his claim that such practice is necessary for scientific development. It will not be the task of this essay to rehearse these still unresolved debates. That is better left to the historians and philosophers. Rather, I would like to recognize another important contribution to the discussion, one that is orthogonal to any other that I know of. In “The Growth of Knowledge: Testing a Theory of Scientific Revolutions with a Formal Model,” John Sterman has built a model of Kuhn’s account of scientific change. He asks not whether Kuhn’s theory is dynamically consistent. He is interested in whether the behavior Kuhn describes (i.e. , paradigm emergence, normal science, crisis and revolution) actually follows logically from the assumptions Kuhn makes. To do so he constructs a system Dynamics computer model.

The Design of a Dynamic Model Methodology for the Assessment of Computerized Information Systems
E.F. Wolstenholme, A. Gavine, S. Henderson, K.M. Watts

Abstract: The last decade has been the accelerated development of what Yadav and Chand term “Organization Support Systems”- large scale, complex and extremely expensive computer based information systems (Yadav, 1989). The cost associated with such systems has increased the requirement for a sound methodology to evaluate the expected operational benefits and drawbacks resulting from their implementation, at as early a stage in the system life cycle as possible.
An extensive survey of the literature in the field of information system evaluation, with a particular focus in the methodologies, tools and performance measures being used in practice, preceded the development of the methodology reported in this paper, and is presented in full elsewhere(Watts 1990).
This paper comments on the findings from the review and reports on the development of a system dynamics based methodology for the assessment of proposed computer-based information systems (CIS), in terms of their potential to support organizational objectives.
The methodology has been evaluated by application to two military CIS, at different stages in the system life cycle. These cases are reported separately(Watts and Wolstenholme, 1990; Henderson and Wolstenholme, 1990), but the indications are that the methodology can contribute throughout the system life cycle y providing a continuing reminder of the relevance of the CIS to the real-world system which is intended to support.

Modelling Patchy Ecological Systems Using the System Dynamics Approach
Wu Jianguo, Yaman Barlas John Vankat

Abstract: A System Dynamics model of an ecological system consisting of two patchily distributed populations is constructed to study the effects of inter-patch colonization on the persistence of the species. The model structure is primarily composed of the negative feedback loops dominant in local (within-patch) population regulation and a regional positive feedback loop coupled with two negative loops which regulate the inter-patch species colonization.
The simulation results show that with colonization the population system always persists if at least one of the populations is larger that a minimum viable population size (MVP). If the species has sufficiently large colonizing ability, the populations are always able to reach the carrying capacity. Otherwise, the population with below MVP, there are two possibilities depending on the magnitude of species colonization ability: (1) both stabilize at the carrying capacity level and (2) both go extinct. The simulations also demonstrate that delays in colonization and population regulation may have distinctive impacts on species persistence and dynamics of the population system. The study may provide useful information for species conservation and design of nature reserves.

Sowing Supply: Compensating Responses by Rural Coca Economics to Intervention in the Cocaine Market
Eric A. Wuestman

Abstract: In recent years, increased public awareness of the health and productivity costs associated with the use of cocaine and its potent derivative “crack” has served to heighten concern and renew debate over the most effective strategies for managing the drug problem. This paper presents a preliminary system dynamics model of the international cocaine trade. The initial model incorporates the various stages of the cocaine system from source country production to final consumption including: primary resource allocation and production; cocaine production; cocaine production and export; and U.S. demand, import, pricing, and consumption. The model is used to examine an ensemble of policies proposed by the National Strategy for Drug Control (White House 1989). Simulation results show the capacity of the system to exhibit a wide array of behavior modes depending on the type of intervention being applied and the aspect of the problem being targeted. Of particular interest from a policy standpoint is the implication of delays in physical and information flows for generating divergent short and long term policy results. Findings suggest a comprehensive approach combining demand and supply side policy leverage represents the most effective management strategy.

System Dynamic Research to China’s Inflation
Yan Guangle

Abstract: Inflation is one of the most troublesome problems China is recently faced with in the course of the economy reform. The inflation takes place in the form of general price rising. It becomes more serious and is greatly obstructing the healthy development of China’s economy. This situation results from many factors including the biased trend of the reform strategy, the deviations in implementation policies, the defects of the economic system, etc. The conventional theory about money amount has been used to analyze inflation before. This analytic method specially indicates the view point that inflation with no exception is a kind of money phenomenon by stressing the causal relationships between money amount and general price level, but it considers money supply as an exogenous variable controlled by the government’s policies and ignores the effect and restrictions from other economic factors. Therefore there are some limitations of this method in real uses. For this reason a new approach of system dynamic is put forward in the present paper. A dynamic model composed of a monetary market section, a commodity market section and a regulation section is developed. On the model a series of policy tests mainly concerning the two economy levers of price and interest rate are simulated with the consideration of china’s special situation. The cause and mechanism of suggestions are also made for elimination or controlling the inflation. The results of the paper may provide worthful references for China’s further economy reform.

A System Dynamic Approach to the Environmental Problems in Taiwan
Jen-Shou Yang and Showing H. Young

Abstract: The rapid growth caused very serious environmental pollutions in Taiwan. This paper attempts to use the system dynamics methodology to construct a simple model to study the trade-offs between economic growth and environmental pollutions. The model is structured with feedback loops among three sectors; The government, the general public, and the industries. Environmental regulations with various implementation times and strengths are tested in the model to examine their effects on the smoothness of the economy and pollution changing pattern. The results show that a timely not-so-strict environmental regulation combined with an environmental education measure focused on lowering expectation on economic rate may be a better choice for Taiwan to go through the tough time more smoothly.

System Dynamics Simulation for the Management of a College
Xiaoyong Zhang, Yu Zhang, Guangbin Mong

Abstract: This paper constructs a system dynamics model on macroscopic management of a college which is based on an actual system operation of the college. The students, staff, fixed capital, finance, teaching and research as sectors are included in the model. Facing several important problems influencing development of the college various policy experiments are operated on the model. The experimental results show that the key factors influencing the system and what the possible approaches solving these problems are.

Generic Computer Tools as Aids in Negotiation: The Issue of User Adoption
J.D. Nyhart, D.K. Samarasan

Abstract: Negotiating group can use generic computer tools to aid decision-making and problem solving activities in negotiation management. In attempting to create, apply, and evaluate such computer tools, the authors have had to address the issue of user acceptance. This paper reviews the basic framework of negotiation management and locates the issue of user acceptance within that framework. Focusing on system dynamic simulation models as tools for negotiators, the paper analyzes the reactions of potential and prospective users.

Negotiation as Discovery and Design
Dhanesh K. Samarasan

Abstract: The use of computer tools to aid in decision-making and problem-solving activities suggests a view of negotiation in which parties collaborate to improve the quality of the information and knowledge on which they base their joint decisions. In this view, negotiation is characterized as a process of discovery and design. The effectiveness of negotiation is defined in three dimensions: legitimacy, feasibility, and efficiency. Computer tools are discussed in the context of information strategies, or ways in which negotiators use information in their efforts to ‘discover and design’ solutions.

last updated by ng on 11/5/08
System Dynamics Admins
System Dynamics Admins

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