The 11th International Conference
of the System Dynamics Society
1993 – Cancun, Mexico
The following papers were presented at the conference in parallel and plenary sessions. The original printed proceedings, edited by Enrique Zepeda and Jose A. D. Machuca were printed in hardcopy and distributed at the conference. Below please find the Paper Index for these proceedings, including an abstract. 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:
Participative Modeling To Facilitate Organizational Change: A Case Study
Abstract: The main objective of most system dynamics modeling project is to support some kind of strategic decision making activity. This paper describes a modeling project where the primary goal was to establish an organizational platform for change. The project was conducted with a group of mid-level managers of a company at the eve of a period of organizational change. This group of managers engaged in a series of participative modeling sessions, facilitated by the authors. Extensive evaluation of the project results indicates that such a platform for change has been established.
Statistical Methods for Improving Confidence in System Dynamics Models – a Case Study on Blood Bank Inventory Management Systems
Abstract: The article discusses some statistical techniques applied as confirmatory tools to the System Dynamics modelling and analysis of Blood Bank Inventory Management systems. Instead of using arbitrary means, problem definition and statements are corroborated with statistical mehods of correlation and formulation of adjacency matrices. This is extended to the estimation of some of the parameters of the system. Numerical Performance Measures (NPM) used to evaluate the system response to various inputs are discussed. The response of the system is illustrated primarily as time series plots. System trajectories or phase plane plots are presented with statistical inferences in relation to the model. It is concluded that for SD model refinement and analysis statistical techniques can be used judiciously as a confirmatory tool in unison with judgmental evaluation of the system.
System Dynamics Analysis of the Development in Norwegian Rural Communities
Abstract: The purpose of this paper is to explain the expansion and the contraction of the population in Norwegian rural communities. A preliminary system dynamics simulation model with emphasis on migration have been developed portraying a population sector, and sectors for kindergarten, education, housing, business, resources, and regional policy. The results of our simulations is being compared to actual development in eight communities for the period 1976 to 1988 with respect to the total number of employed in the private sectors as well as the number unemployed and the number of migrants.
Historically and in our simulations the communities are relatively attractive in total up until 1982. During the last part of the seventies there was relatively low unemployment and the population increased due to immigration. The local labour market, however, was not sufficiently large to absorb increased in the supply of labour in the early eighties. Consequently unemployment increased, leading first to emigration and reduced unemployment and thereafter to higher unemployment due to the smaller local market.
On the basis of the model, we have suggested four strategies for stabilization of the population in the communities. In a period of declining population, a strategy that seeks to compensate for declining local markets by producing for external markets may reduce the negative effects and lead to a stabilization of the population.
Formal System Dynamics Education in Universities
Abstract: System dynamics, in spite of its solid philosophical foundations and a very promising practical prospect, has not experienced the growth that one would expect from its potential. I argue that a major cause of this relative stagnation has been the lack of formal, regular undergraduate system dynamics courses in universities. System dynamics community must spend more time and effort discussing issues of university-level system dynamics education. This paper is an attempt to start such process. In the paper, I first present a taxonomy of different types of university-level system dynamics courses. Then, based both on personal experience and published literature, I identify four groups of problems and issues to be addressed by the system dynamics community before the system dynamics education can proliferate. These are: lack of formal teaching material, insufficient literature on teaching methods, problems of terminology, and insufficient emphasis on undergraduate system dynamics teaching. Personal experience has taught me that system dynamic courses are extremely rewarding for both the instructor and the students. Once the above problems are dealt with, I believe that the university level system dynamics education will proliferate, which should be a major step toward initiating an exponential growth process in the field in general.
Dynamics of a Successful Turn Around Strategy
Abstract: A crisis in a previously successful enterprise occurs when the value generated by the company’s activities become insufficient to cover the total cost incurred during a certain period. Frequently, in our days management faced with this problems needs to modify company goals and reduce costs over a short time. The rapid changes of goals and aggressive cost reductions frequently cause unexpected and dangerous secondary effects. These may inhibit company growth for a long time after the costs are brought into line.
Simple qualitative models of typical situations encountered during the company restructuring are presented. Their understanding allows management to avoid the most common fatal pitfall. Managers facing critical situations such as those encountered in the early stages of turn around are very receptive to tools allowing systematic analysis of their problems. Thus system dynamics based way of thinking becomes a key weapon for managers at the very moment they enter the decisive battle for their career.
System Dynamics Modeling Using Multimedia
Abstract: System dynamic models are tools that allow one to explore the quantitative behavior of systems through time. However, real systems are usually multidimensional with both quantitative and qualitative variables. Recent development in digital video and sound processing suggest the enhancement of system dynamics models with streams of images and sounds related to the systems those models try to represent. A framework to integrate systems dynamics modelling and multimedia technologies is proposed herein. A multimedia systems dynamics water pollution model is included for illustrative purposes.
Lucumia: A Gaming Simulation for the Analysis of Conflicts Mangement Processes
Abstract: This article presents a family of variously structured gaming simulations for training which have been once used to teach and experiment the learning tools of System Dynamics Analysis. These games, names after their prototype, are called The Games of Lucumia. Here we present also the results of a game modelled by the participants based on System Dynamics techniques.
Continuos and Discrete Simulation ina Production Planning System. A comparative Study
Abstract: In this paper a JIT/KANBAN manufacturing process is simulated using both discret event, and system dynamics methodology. The results obtained are analized and compared. The purpose of this research is to determine the aspects to be more conveniently studied by modeling the system with each simulation approach.
Estimation, Validation and Stochasticity in a Model of Organizationsl Strategy
Abstract: This paper reports results of research on model building and validation applied to a complex system immerse in an environment of permanent change.
A model was built in the context of an organization operating under a highly centralized structure but with poor institutional integration and poor information technology tools. The conveniently articulated strategies chosen to dilute institutional problems are: decentralization, leadership and implementation of information systems.
Strategy Support Software: Enhancing Executive Dialogue & Debate
Abstract: Group decision making and discussion often leads to unanticipated ends. The use of strategic support software to improve such processes yields higher quality debate. Simulation technology provides for explicit mental models, the exploration of assumptions, and instantaneous analysis of “what-if” scenarios. This paper will look at how the design of executive support software is shaped by dialogue and debate, and how interactive strategic management tools shape such discussions.
System Dynamics Modeling For Energy Efficiency Analysis
Abstract: A System Dynamics model specially built to analyze residential energy policies is presented. The model allows to simulate substitution of household equipments for more efficient ones using two stage economic decision process. In the first stage the user select the most economic alternative and in the second stage the user compares the financial condition to acquire the chosen energy alternative considering his buying capacity during the period of analysis (delays are condidered). The model allows to examine several aspects such as: alternatives on technology diffusion, energy consumption growth and effects of pricing policies on diverse energetic demands. The model was applied to the Medellin Metropolitan Area, Colombia. Results are included.
Dynamic Modeling to Support Organizational Decision Making. The Stevedore Case
Abstract: This paper addresses a simulation study that has been carried out in the Rotterdam Port to assess the value of decision alternatives for terminal entrance facilities and procedures. The organizations involved in this project are dynamic systems by nature, so static analysis and design technique does not suffice when supporting decision processes. The Dynamic Modelling approach was therefore applied in a case study.
Abstract: System provides methods for Strategic Planning and Management. Lyneis (1980) presents robust ways to achieve time based strengths by minimizing delivery delays. Accumulations of matter and information conform the logistics and intelligence of Strategic Planning. Policies and Strategies are both rules to manage the system. The interaction with the environment is common to both fields and inclusion of the decision makers within the system enhances the strategic scope of the analysis. Feedback loops are new elements for Strategic Thinking. Now, they come packed in archetypes that are basic components of strategy formulation. s expand methods traditionally used by Strategic Planners, for instance the BCG matrix used to allocate investments. Peter Senges (1990) Fifth Discipline is a good example of a combination between the System Dynamics and Organizational learning, a traditional component of strategy development. Dynamics can also profit from Strategic Management. Managers are more familiar with Strategic planning than they are with Dynamics. So, it is a way to call the manager’s attention. Besides, the organizational use of Strategic Planing at the top of the organization opens the door of company headquarters to System Dynamicist. However, some caution is necessary to improve the use of the discipline by the learning managers.
Dynamics can deliver much of the promises made by strategic Management. Therefore, there is a need to open more channels of communication between both fields.
An Expert System to Aid in Model Conceptualization
Abstract: Using interviews and a Delphi exercise, valuable information was collected from experts concerning the problem definition and model conceptualization stages of system dynamics studies. This research examined when to select and use various knowledge acquisition techniques and knowledge representation structures. Now this information is being incorporated into a comprehensive expert system for training novice SD analysts. A teacher model and a student model are being incorporated into the expert system to provide pedagogical flexibility and intelligent tutoring. This paper reports on the initial work on the prototype instructional expert system, and plans to extend this prototype.
Modeling The Impact of Quality Initiative Over the Software Product Life Cycle
Abstract: This paper describes a System Dynamics model which forms the basis for a management flight simulator that explores the impact of two total quality initiatives, Formal Inspection and Quality Function Development and adoption process. The paper focuses on the new perspective on software development dynamics gained in the construction of the model. It describes the measures of performance used and the causal structure of selected sectors. The model links existing software projects management and market diffusion structures, adding an explicit representation of product functionality and evolving customer requirements based on Kano’s Dimensions of Quality diagram. A discussion of future goals for this research and an evaluation of the impact of this kind of work on the software industry is presented.
Analysis on the Policy for Reduction of Nox in Developing Cities.
Abstract: This research addressed about the policy to reduce the nitric oxides pollutant in developing cities. The model was developed based on the balance between development of domestic automobile industry and improvement of urban environment so as to simulate the nitric oxides pollutant level and the domestic economic level through the alternative policies. The result shows difficulty to reduce pollutant with economical development in developing cities.
Applying a System Thinking Approach to Business Process Re-Engineering: A Case Study of a Canadian Oil and Gas Producer
Abstract: This paper describes the work and experience gained by a team using a system thinking approach to developing a microworld to support a of business process re-engineering and corporate-wide reorganization of a Canadian oil and gas producer. The opportunity for this experience arose from an atmosphere of change produced during several years of depressed prices for oil and gas and the consequent need for the players in the industry to downsize. This work is intended to provide managers with strategic management learning laboratory of a newly designed decentralized business unit.
Perceptual Dynamics of “good” and “poor” Service Quality
Abstract: Service researcher support the necessity of integrating policy and design dimensions with service front-line variables in modeling service systems. Current research unveils multiple causes of good and poor service quality as well as the goal that service design for quality should attain. The goal is to neither to narrow nor to close, but to reverse the gaps among customer expectations and perception of service quality. Grounded on the contributions of conceptual and empirical research, a small three sector system dynamics model describes the interactions of policy and service front-line variables in a typical quasi-manufacturing service. The firm treats customers defections as measurable scrap and, in a company-wide effort to ferret out weaknesses against potential loss, its top management is committed to soliciting feedback from defecting customers. Computed decision scenarios trace the patterns experienced with performance to the inauspicious effects of pulling on internal policy levers too hard. The resulting dysfunctional behavior shocks the entire service system, including customers, defectors and profit per customer. A radical change in the firm’s average customer life (avgLife) target triggers a cycling-doubling pattern in the call soliciting feedback from defecting customers. This chaotic pattern forces the entire system to respond accordingly. System dynamics can provide the integrated-process view required for understanding self-inflicted problems in services. Along with its policy analysis and service design implications, the simulation output indicates the morphology of the topology possibly underlying customer perceptions of service quality.
Creativity and control dynamics in prime office-space markets
Abstract: The office-space valuation literature concentrates on office-building attributes, such as square footage, height, number of floors, perceived architectural quality and distance from business districts or transit stops. Real estate researchers combine central place theory with landmark proximity in an effort to explain the complex relationships underlying office-space pricing. Yet, existing models have been inconsistent in relating office-space rents to square footage, indicating the possibility of spatial autocorrelation among corporate economic activities. The dynamic behavior pattern of the commercial real-estate cycle signals the creative interaction of business firms in their locale. A system dynamics model describes the interaction of these relationships in a particular location, namely midtown Manhattan.The model incorporates a third-order cost function, central place theory and landmark externalities to describe the causal structure underlying the valuation of 103 office buildings in midtown Manhattan, from 1980 to the first quarter of 1990. To embody spatial autocorrelation among corporation economic activities, the model accounts for the migration of wealth controlling and wealth producing firms. The results reflect the complex interrelationships underlying prime office-space markets and place in perspective their long-term cycles as exemplified by the New York office market.
Communicating complexity through visualisation: the use of schematics in gaming/simulation
Abstract: This paper discusses visualisation as a key tool in the related fields of gaming/simulation and system dynamics. Using two gaming projects as examples, techniques and processes of visualisation from the gaming discipline are explaned. Conceptual modelling through the use of schematics us an important element of the system dynamics as well as gaming/simulation methodology. The authors conclude that both schools should invest in doing research and applying existing visualisation theory to their special styles of schematic building. The review of some concepts of ‘visual language’ shows that there is a lot of “we-in-gaming” or “we-in-stem-dynamics” take for granted when we work with schematics.
Consulting Groups: A tool for sharing vision and building alliances.
Abstract: In this paper were describe consulting groups, an effective tool used with great impact in different organizations to foster shared vision and the development of alliances. Through this tool, executives have the chance to present projects they want to strengthen, dilemmas of leadership and communication they want to understand or resolve.
Electrifying Learning: Computerizing the Beer Game
Abstract: The Beer Distribution Game is one of the most popular ways of introducing managers and students to system dynamics. One of the reasons for this popularity is its success at teaching, on an experiential level, one of the fundamental principles of System Dynamics–that structure causes behavior. It does this in an entertaining and engaging manner. Some players have become so engaged in the experience that they want to explore the dynamics of game further. Because of this interest computer versions of the game have been developed to accelerate the opportunities to explore the game’s dynamics and make it easier to use and facilitate. This paper will highlight some of the features of these games which facilitate learning by individuals or teams.
Entrainment in a disaggregated Economic Long Wave Model
Abstract: This paper investigates how mode-locking and other highly nonlinear dynamic phenomena arise through the interaction of two capital-producing sectors in a disaggregated economic long-wave model. One sector might represent the construction of building and infrastructure capital with long lifetimes while the other represents production of machinery, computers, etc. with much shorter lifetimes. Due to the positive feedback associated with capital self-ordering, each sector in isolation produces a self-sustained oscillation with a period and amplitude determine by the characteristics of that sector. However, the sectors interact through their mutual dependence on each other’s output for their own production. When this coupling is accounted for, the two sectors tend to synchronize or lock together with a rational ratio between the periods. While keeping the aggregate equilibrium characteristics of the system constant, we study how this locking occurs as a function of the difference in capital lifetimes and as a function of strength of the coupling between sectors. Besides mode-locking and quasi-periodic behavior, the observed phenomena includes cascades of period-doubling bifurcations, chaos, and intermittency. When the difference in capital lifetimes is very large, the system behaves like a one-sector model with a reduced capital content of production: Only one oscillatory mode remains, and it is much less pronounced than in the original one-sector model.
Changing Model Ownership When Needs Must: Experiences within the Business Consultancy Department of Shell International Program
Abstract: Advocates of the “Modelling as Learning” philosophy would not endorse a policy of handling over a ready-made model to a new client. In commercial environments, however, consultants and clients move on and there is pressure to maximise return on investment. This often means that existing System Dynamics models must be transferred between consultants and clients. Within the Business Consultancy department at Shell both the consultants and clients change jobs every three years or so and model handover is an issue that must be managed.
This paper details cases where, even thought the rules of problem-ownership are broken, a successful result can be achieved. The authors show that some of the learning experienced during the initial modelling process can be shared with newcomers after the event and a framework thinking through model handovers is offered.
Delivery Time Reduction in Pulp and Paper Mill Construction Projects: A Dynamic Analysis of Alternative.
Abstract: A system dynamics model was develop for a company looking to reduce delivery times in projects involving the engineering, procurement and construction of complex equipment systems for pulp and paper mills. The model has some original features, particularly its portrayal of a critical path determined the ‘gates’ connecting sequential activities, which should be of general interest to project modelers. The model has helped the company identify practical ways to reduce delivery times by at least 30% and do so without driving up costs.
Designing Management Simulators
Abstract: The form of the management flight simulator should follow from the functions it serves for the user. Interfaces designed to facilitate educational interventions should differ in functional form from interfaces designed to provide support systems for executives making real time decisions or conducting scenario planning exercises. Designers should consider the purpose of the interface, the nature of the interaction, the characteristics of the users, the context of use, and the style of presentation before developing the software application. This paper provides examples of how radically different design criteria lead a design team to choose different forms for several management flight simulators and executive-information systems.
From Discussion To Dialogue : How an interactive modeling process was used with managers to resolve conflict and generic meaning.
Abstract: Managers involved in the production and trading of a commodity had adopted conflicting positions regarding the macro-dynamic behaviour of output and revenues in their market. The tools of system dynamics were used to articulate the assumptions of the participants and, in so doing, support a dialogue in which the understanding that the managers had of the key variables could be altered. The eventual use of a small STELLA model allowed the managers to isolate two specific, micro effects from which the conflict emanated. Further idea sharing allowed a consensus to be achieved on those two and, furnished with this new understanding, the participants aligned behind a single view of the market’s behaviour.
With a Little Help From Our Friends: How third generation system dynamics and the problem structure techniques of ‘soft’ OR can learn from each other
Abstract: At its inception, the paradigm of SD was deliberately made distant from that of OR. Yet developments in ‘soft’ OR and systems theory now have much in common with current SD modelling practice. This paper briefly traces the parallel development of SD and soft OR and argues that a dialogue between the two would be mutually rewarding. To support this claim, example of soft OR tools are described along with some of the field’s philosophical grounding and current issues. Potential benefits resulting from a dialogue are proposed, with particular emphasis on the methodological framework of SD. The paper closes with some suggestion on how to begin learning from the links between the two fields.
Learning with Model Supported Case Studies
Abstract: Management Flight Simulators (MFS) are now being used together with model-supported case studies in learning laboratories as part of undergraduate, graduate and executive courses, and also with managers in learning organisations. This paper reports results with three groups of undergraduate and postgraduate students, in a business school environment. With one group, a multi-stage experimental design is used to collect a variety of process data, including:
- students’ evaluation of the learning experiences
- students’ perception of learning achieved
- objective testing of students’ understanding
Objective testing includes knowledge about the subject material and case-studies, and the direction of the relationships between variables in the MFS. The process data collected is analyzed and both quantitative and qualitative results are summarised. The results provide insights into the relative effectiveness of learning experiences that use model-supported case studies, as compared to conventional case-study discussion. Two further groups of students are used to compare performance in the MFS with scores on structured assignments (including questions on both the case study and the use of the MFS). A description of workshop protocols provides indications of how model-supported case studies may best be delivered in management teaching curricula.
Multimedia Management Flight Simulators
Abstract: The Management Flight Simulator is now being established as a tool to facilitate experiential learning with both undergraduate and postgraduate management students, and managers within learning organisations. Existing MFS provide user-friendly reports and graphical representations of historical data, designed to the limits of human computer interface (HCI) good practice. Although, existing MFS make use of sophisticated quantitative databases and models, but lack the softer data: managers’ in-trays, meeting notes, employee feedback, interviews with customers, press and television news reports, industry observers, financial analysts, and so on. Managers in real life rarely make decisions without going to look at a problem for themselves. Using multimedia MFS, users will be able to do the same, by interrogating and making observations using electronic-based media.
Multimedia provides graphics, sound and video interfaces to enrich the students’ learning experience. Desktop personal computers are now just powerful enough to incorporate these new multimedia technologies, including digitising and compressing video pictures.
This paper describes the current state-of-the-art as far as the multimedia hardware and software technology is concerned. The scope of applications possible using these new technologies are discussed. A prototype multimedia MFS is under development, designed to demonstrate the scope and nature of user interfaces possible through multimedia. The prototype will be demonstrated at the ISDC 93 conference.
New Barrels for Old Beer: The Beer Game as a Learning Organization
Abstract: In this paper we describe a modification of the Beer Distribution Game which we have used with MBA students and executives. In this version, we introduce a change in communication rules at the end of week 24. Our game debriefing addresses all of Senge’s five learning disciplines and stresses the basic question: how do we deal more effectively with underlying structure? This variation on the usual rules shows a way for designing experiments with the Beer Game to improve our understanding of how organizations learn.
The Beer Distribution Game is one of the most successful designs for conveying one of system dynamics’ basic themes: Structure produces behavior. It provides an excellent illustration of feedback mechanisms and delayed effects of decisions which are key components, though generally misperceived, of most dynamically complex systems.
We have used the Beer Game with MBA students and practicing executives, generating rich discussions about different managerial topics, especially the role of communication and coordination. The largest Venezuelan private sector company’s 1992 annual executive meeting provided us an opportunity for trying out a learning experiment with the Beer Game.
Our goal has been to answer a basic question raised by the Beer Game: What can we do to avoid the unhappy consequences of rigid structure and to improve performance? As Senge and Sterman stress: How do we deal more effectively with underlying structure? We have aimed at turning the Beer Game system into a learning organization that takes charge of its future.
A Dynamic Model of Technology Diffusion
Abstract: The diffusion of new technologies into the market is a critical factor in the success of any technology based company. This paper describes a system dynamics model which integrates a number of key concepts presently used to understand the diffusion process (e.g. technical progress functions, cost-experience curves). It shows how these concepts, together with management decisions regarding R&D investment, marketing, and pricing, drive the evolution of diffusion between technologies. It then illustrates how simulation can be used to understand the critical success factors in technology diffusion, and what this means for the management of technology-based companies.
The Savings and Loan Crisis: A System Dynamics Perspective
Abstract: The savings and loan industry has been the primary source of home mortgages for American families since 1932. Since 1984, however, 25 percent of the savings and loans, approximately 700 out of 2800, have failed. Although the total costs associated with these failed savings and loans have yet to be determined, estimates range from $300 billion to $1 trillion. This paper discusses a system dynamics model of the effects of interest rate risk and default risk focusing on the savings and loan industry. Using the model to test the effects of policy initiatives specific to the prime interest rate and the default risk on loans, the authors demonstrate that the savings and loan crisis might have been lessened or even avoided if the regulators had a better understanding of the system’s structure and the effect of that structure on system behavior.
A Competitive Intelligence System for Total Quality Manufacturing Strategies
Abstract: The function of a competitive intelligence system is to generate a manufacturing strategy which is superior than the competition. A competitive intelligence system consists of a set of tools that capture and synthesize the competitors manufacturing strategies in order to generate the desired strategy. A competitive intelligence system that uses reference models is presented here and its use illustrated with a case study. A reference model is a generic system dynamics model which includes the cause-effect relationships that explain the current quality of the competitors products.
Systems Thinking Learning for Management Education, What Are Our Ideas and How Are We Going About It In Sevilla?
Abstract: A great number of System Dynamicists coincide in our belief that the methods and tools presently used in virtually all management education centres insufficient to cope with an ever more complex reality. For some years now there has been a significant movement within our field which aims to provide alternative ways and tools which will serve to fill the existing gap. Working along these lines we created a work group and started, within the EC Comett framework in 1990, a project termed “Learning laboratories in computer-aided Systemic Business Management”, sponsored by numerous European firms and institutions. The aims of the project are multiple and interrelated: production of learning tools based on System Dynamics, facilitating reflection on causes, design of learning laboratories in business management following a systemic approach, trying out the tools created and checking learning processes for different circumstances, development of training courses, promoting training of trainers.
In a period when the time available to managers is scarce, and increasing complexity makes the need for learning more critical, open learning must play an important role. To this end we must consider creating tools which will allow the user, even in the absence of the teacher, to have as much access as possible to reflection on causes, to decision-making based on causes and not on symptoms, in short to systemic thought. The “transparent box” games mentioned above, together with proper documentation and a special attention to the training of trainers, may represent, in our view, an advance on present tools.
Some Modifications Introduced to Improve the Beer
Abstract: The Beer Game is still today, one of the tools with the greatest impact in demonstrating that the behaviour of a system is generated by its structure. However, we believe that in its original form too much time is needed to play it and carry out a proper debriefing. In addition, it is not always easy to guarantee the hypothesis of isolation for the different positions within the game. Finally, we feel that participants often have difficulty in picking up quickly and clearly the process characterizing the game. To deal with these and other problems we have introduced certain modifications which, in our view, totally or partially resolve these difficulties.
Microworld of an Open University: A Strategic Management Learning Laboratory
Abstract: This paper describes the work and experience gained by a team using a system thinking approach to developing a microworld to support the strategic planning of Athabasca University (AU), a fast growing opening university in western Canada. The opportunity for this experience arose from an invitation by the university President to teach an introductory course in Systems Thinking to a group of 30 senior management representing the faculty, administration, and the governing council. This work is intended to aid in understanding the dynamic forces which have allowed AU to double the number of courses registration in the past five years while lowering cost to government of providing access to AU from $1,179 to $635 per course registration (in constant dollars) since 1985. This work reports the experience of AU in building a Microworlds® system in order to accelerate organizational learning. The system is based on the system dynamics methodology and was developed using STELLA®. The system has been used to test different scenarios of strategic options which are almost impossible to evaluate otherwise. The system was validated against actual data and was used as management flight simulator to the system till year 2000. Repeated runs of the simulations have proved that quick fixes to one part of the system do not necessarily help its overall performance. It has been found that the process of constructing a simulation model is as valuable for problem solving as the final model itself.
Performance Decision System: An Intelligent to Decision Support System in Manufacturing
Abstract: Decision Support System (DSS) are commonly used in the manufacturing industry to assist management in decision making processes. There are several major types of DSS systems and each is useful for solving specific manufacturing problems. The development of intelligent DSS systems that can carry out high level reasoning is itself a challenge and a requirement by modern management. This paper illustrates the formulation of a DSS system (called Performance Decision System) that can be used for solving complex manufacturing problems. The DSS system is based on two major types of DSS; System Dynamics and Experts Systems.
Regional Land Use and Infrastructure Dynamics
Abstract: In almost all urban areas, existing infrastructure (transportation, water, sewer, social services) lags behind desired infrastructure. Planning new infrastructure depends on future land use forecasts. The distribution of future land use is also dependent of on available infrastructure. Due to this feedback, the infrastructure shortfall problem is resistant to solution through infrastructure improvement and local land use regulations. We have developed regional land use/infrastructure planning models that combine fairly simple system dynamics structures with spatially disaggregated databases. The models provide insights about the effectiveness of alternative policies, using detail of the local area that planners need.
Mistela-An Integrated Simulation Model For Telefonica De Espana
Abstract: The main objective of the MISTELA model is to integrate the different aspects of strategic planning of TELEFONICA DE ESPAÑA into one signal unit. By so doing one is obviously forced to give up many of the small details in order to be able to look at the larger picture. MISTELA uses a systemic approach to construct the model described in, this paper, Systems Dynamics was chosen, since this technique permits straightforward combination of different modelling procedures such as statistical inference, calibration by trail and error, linear and/or quadratic programming, etc. To give an idea of the size of the model, it handles about 1,500 equations, definition and identities. There are some 700 conceptual variables, and because many of these are vectors, in effect there about 4,000 scalar variables.
HARDEXP-A strategic Support Tool For Hardware Expansion
Abstract: This paper presents a system developed to design strategies for organizational expansion based on system dynamics and expert system methodologies. The tool was especially built to plan the expansion of a computing system network.
The prototype developed supports tasks related to strategies design, scenarios generation and system simulation. Examples are exhibited.
Dynamics Consequences of Pricing Strategies for Research & Development and the Duffusion of Innovations
Abstract: The development and diffusion of innovations is a highly dynamic phenomenon. It is influenced by various factors like price, product quality, and market entry time. The paper discusses the impact of pricing strategies on R&D performance and the diffusion of innovations. It is based on a comprehensive decision support model in the field of innovation management. The model consists of two components: (1) an evolution algorithm modeling the processes of corporate R&D, and (2) a DYNAMO-based modul mapping corporate policy making and the structural fundamentals of market dynamics. The integrated model is used to analyze the dynamic consequences of different pricing strategies on research and development, the readiness for market entry and the resulting competitive advantages.
Experiences Teaching System Dynamics At The UK Masters Level
Abstract: This paper describes what is meant by modelling at Sunderland and how System Dynamics fits into this ethos. The teaching and the examples covered in this System dynamics module are different the usual course and the paper deals with our experience in these areas. The reaction of Eastern European ( Bulgarian ) students to this type of teaching is discussed. Students must complete a project in a work placement to obtain a masters qualification. The reaction of companies to the use of System Dynamics ( a new experience for most ) is discussed and examples of the type of projects that have been completed are given. The paper concludes with a description of a Hypercard project which extends the use of System dynamics to Engineering students.
Application of System Dynamics on Policy Analysis of Resources Allocation of Scientific Research
Abstract: By the thought of coordinative development between Science & Technology, economy, education and finance, this paper first concerns the problems facing China on the resource allocation of Scientific Research. A comparative study on both developed and developing countries is made. In the meantime, the mechanism of the coordinative development between Science & Technology, economy, education and finance, the coordinative development between Scientific Research (Basic Research), Applied Research & Development as well as the priority of Scientific Research in different stages of social & economic development, a system dynamic model is constructed, focusing the analysis of scale & speed of resource allocation for Scientific Research in China.
A Portfolio Approach to Managing Technological Innovation: Linking Systems Dynamics to Organizational Learning And Group Decision making
Abstract: Innovation is a topic that has received much attention in the literature in recent years. For the most part, these articles have not solved an important problem facing the managers in today’s large organizations — how to manage a portfolio of interactive product- and process- innovations, addressing the interrelated forces, including monetary constraints, manpower planning & technology capability, to a dynamic environment. By systems thinking of these problems, the author first set up a generic S.D. model as a Microcosm for portfolio analysis of technological innovations. Based on this Microcosm, an experiment aimed at pattern selection of product-& process- innovations was conducted, drawing the conclusion different from the famous Abernathy/Utterback’s. Finally, the mechanism of group decision on project selection of innovation portfolio using the Microcosm was explained, and the group decision support system was constructed.
Evolutionary Economics and System Dynamics
Abstract: The purpose of this paper is fourfold: 1) to survey the literature on evolutionary economics in general; 2) to survey the literature on evolutionary economics modeling in particular; 3) to outline the contribution that system dynamics can make to evolutionary economic modeling; and 4) to present two original, evolutionary, system dynamics models.
This paper begins by noting that the evolutionary perspective has a long distinguished history in the field of economics. Well-known economics such Karl Marx, Richard Eli ( founder of the American Economic Association ), Thorstein Veblen, Joseph Schumpeter, Gunnar Myrdal ( “circular and cumulative causation” ). Kenneth Boulding ( general systems theory ), and Nicholas Caldor ( “increasing returns”), for example, have utilized the evolutionary perspective. Despite this rich history, however, the paper notes that the evolutionary perspective does not dominate economic theory. Two explanation for this are offered: 1) it is not in harmony with neoclassical theory; and 2) it has historically been seen as not amenable to formal modeling.
The paper then presents a survey of literature on evolutionary economics. The survey indicates that the writing on evolutionary economics usually involves one or more of the following ideas: 1) structural change versus change within a given structure; 2) time irreversibility; 3) the second law of thermodynamics; 4) hysteresis; 5) co-evolutionary processes ; and 6) the behavior of thermodynamically open, nonlinear, systems in a far-from-equilibrium state.
The paper next proceeds to survey the literature on evolutionary economic modeling. This survey indicates that economic models classified as evolutionary usually exhibit one or more of the following characteristics: 1) path dependency; 2) multiple equilibra; 3) the ability to self-organize; 4) the ability to behave chaotically.
Next this paper describes an overview of the field of system dynamics and noted that, among other things, it can bring an evolutionary economic modeling process to the field of evolutionary economics. Further, it can be used to create individual models that can be classified as evolutionary, given the criteria mentioned above. Care is also taken to discuss the fundamentals of system dynamics modeling, including the systematic and formal treatment of dynamics and feedback and the creation of models that portray realistic decision making structures.
The paper concludes with detailed presentation of two evolutionary system dynamics duopoly models that generate path dependency, multiple equilibria, and the ability to self-organize.
Fighting Inflation In Argentina: The Crisis of 1982: A SD version of a small monetary, Cagan’s fashion
Abstract: Periodically, at different times of its history, the Argentine economy has been dominated by a vicious circle, well known among developing countries. The Central Bank pays interest on money and such interest is financed through emission of more money thus, causing inflation. In one of these periods: the corresponding to February 1981-July 1982, the accumulated inflation increased to 250 per cent. In 1982, the government decided to reduce the interest rate abruptly, in order to achieve a quick reduction of the inflation rate. However, the year 1982 witnessed the failure of the application of this financial reform. Although the growth rate of liquid assets declined, the inflation rate of July 1982 duplicated the precious month rate. This article reformulates a small economic model, in the Cagan tradition, due to Rodriguez (1986). It was conceived to explain the historic dynamics of the financial indicators, after the reform. Hopefully, the readability of the model should improve, when compared with the original version. And, instead of attributing the dynamics globally to the complex behavior of the system, the paper identifies the cause of this dynamics throughout the causal structure that produced it.
System thinking and the organizational growth: personnel pressure and organizational Equilibrium scissors. A case of the company “BETA”
Abstract: The paper review the experience of a consultancy in the company called BETA. Two goals are pursued: cognitive and methodological. Cognitive goal refers to the System Dynamics methodology applied to a concrete case of the company growth and strategy making within a traditionally dominated accounting framework. Based on symbolic (though keeping similarity to real) data, the article presents the ithink™ model construction and simulation within 3 strategic scenarios: optimistic, realistic, and pessimistic. The methodological objective contains the use of the Partitioning and Tearing Method in the problem conceptualization and model preparation. Although the scope of the paper excluded a possibility of its detailed description, it is argued that this method has proved to be very useful in working with complex problems containing many variables.
A system Dynamics Based Methodology for Numerically Solving Transient Behavior of Queuing Systems
Abstract: The paper proposes a methodology, of building system dynamics models for queuing systems. The methodology is applied to a variety of queuing systems and it is observed that, the models so developed are more transparent than conventional state-transition diagram and incorporation of real life complexities are easier. In effect working out the transient and steady state behaviour of a wide variety of queuing system becomes easy without going into much mathematical tedium.
Modeling Hybrid Producing System. A Possible Characterization
Abstract: The paper describes the process of modeling, under the system dynamics point of view, a production planning problem which is managed using a hybrid “push/pull” approach.
The results obtained from the hybrid model are compared, for several production scenarios, to those obtained for push and “pull” schemes separately. Computational results are presented and discussed under financial and non-financial perspectives.
Transferring System Thinking And Circumscribing Problems: A Case Study
Abstract: This paper is a case study on the introduction of systems thinking tools into a research group within a large information service company. The central dynamics involved in this learning process was a continuous goal shift. We address the realities of trying to develop a shared dynamic problem definition, and show how would-be practitioners internalize the material in unexpected and often paradoxical ways.
The diffusion of system thinking in an organization is a slow and challenging process. The issues raised in this paper relate to a real world situation, which required unusual flexibility in the choice and application of learning tools. In addition there was a continuous, client-driven shifting of direction of the project. We found that the systems thinking can be applied simultaneously not only to the goals and the process with a project, but also to the process of defining the project itself.
We found that the system thinking approach enable us to continuously refine the problem definition without providing any resolution at all- which increased tension for all team members. And yet, the approach continued to promote team interest in system thinking as a valid means to address problems.
A Post Keynesian Model Of Macroeconomic Growth, Instability, and Income Distribution
Abstract: The purpose of this paper is to show that a well-known group of economists known as “Post Keynesians” or “Post Keynesian Institutionalists”, engage in macroeconomic modeling in a way that is strikingly similar to the system dynamics method. It will be argued, therefore, that system dynamics can be used to improve Post Keynesian macroeconomic analysis. In addition, this paper will present an original system dynamics model of macroeconomic growth, instability, and income distribution, that can clearly be classified as Post Keynesian. Of interest is that the model generates, among other behaviors, an economic long wave.
The Dynamics Of Collegial Systems In the Developing Countries
Abstract: This Paper develops a conceptual model of a collegial system working without external adjudication or an institutional charter governing the conduct of its operations. The model is applicable to many of the academic and research organizations established in the developing countries, which have attempted to emulate the equivalent professional organization in the advanced industrial countries but have achieved low efficacy. The analysis suggests that an unadjudicated collegial system is not sustainable, for it will tend to create an authoritarian administration which will impair the collegial norms and misallocate scarce resources to the activities fueling bureaucratization and expansion of administrative scope, while professional autonomy, innovativeness and self-actualized behavior are suppressed. Professional conduct tends to be more-value rational than the bureaucracy since it is subject to reviews by external peers. Thus, legitimation of referent power is essential to creating value-rational decisions which assure a balanced resource allocation that sustains a collegial system. Limiting scope of the administration through an external scrutiny of its conduct or a charter appears to facilitate this process.
Measuring and improving total productivity and integrated approach
Abstract: Productivity is a complex concept. In simple way productivity is defined as the quotient obtained by dividing output by all the factors of production.
Total Productivity = (Total tangible output) / (Total tangible input) Sumanth  defines output as value of finished units of product, value of partial units produced, dividends from securities, interest from bonds and other income added together. The inputs are human, material, capital, energy and other expenses taken together. In the same way the partial productivity is defined as “the quotient obtained by dividing output by one of the factors of production [OEEC, 1950]. In this paper the output factors considered are value of finished and semi-finished goods and the input factors are the cost of labour, managerial, material, capital (capacity), and other expenses.
Desert Island Dynamics: An annotated survey of the essential system dynamics literature
Abstract: What should every professional dynamicist know? What are the core works defining our field? This survey of the English-language system dynamics literature identifies and summarizes one view of the essential papers, book, games and software programs that have influenced the development of the field. Such a list serves as a means of reflecting on the foundation of current research and practice, thus providing a catalyst for a continuing discussion among system dynamicists on the major themes of the field and the contributions that define them. In presenting this bibliography, the authors encourage other researchers., practitioners and student to add their views to the present effort.
Developing Theory of Service Quality/Service Capacity Interaction
Abstract: Service quality cannot be measured and tested in as straight forward a manner as in manufacturing. This biases serve businesses to focusing on keeping measurable variables-typically, expenses and work flows-in control, while underinvesting in the intangibles of service capacity and service quality. In the long-term, results can be mediocre levels of service quality, poor customers satisfaction, high turnover of service personnel, and ultimately, higher total costs. In this paper we will present an emerging theory of interactions between Service Quality and Service Capacity, relate this theory to past research in both the System Dynamics and Total Quality Management traditions and outline ongoing empirical testing of the theory.
Stochastic Test on the model for Dental Dentist
Abstract: We reported the model for dental diseases at the 1987 and 1992 International System Dynamics Conference.
The model contained 5 sectors; demography, cavities, pyorrhea, baby teeth and technology. The demographic sector covered populations of 5 three-year age groups under 14 years of age and 13 five year age groups above 15 years of age. The cavities sectors and pyorrhea sector were composed of populations of five year age groups, on the other hand, the baby teeth sector used populations of three year age groups. By the technology sector we treated innovation effect on the model.
From the total number of defective teeth, total dental costs in Japan were calculated annually from 1963 and projected to 2025.
We added to this model random number variables, mainly in the demographic sector and we are testing stochastic changes on behaviors of various variables of the model. Simulation runs with random birth rate changes show how their results are changed frm the basic run.
Enhancing cash flow forecasting by the use of system dynamic modeling techniques
Abstract: This paper examines the use of a system dynamics modelling technique to enhance the contribution made by cash flow forecasts to decision makers’ mental models. It is argued that by making explicit and accessible the dynamic complexity in cash flow relationships, systems dynamics can provide valuable insights for decision making puposes. By permitting the exploration of behavioural responses to perceptions about the financial position of thee business, a richer picture of the decision outcome is developed leading to changes in decision makers perceptions about the riskiness of a proposed course of action. A case study of a commercial organisation is used to illustrate these insights.
A system dynamics approach to Kalecki’s Model
Abstract: This paper explores the behavior of the gross investment considerig the linear versions and two non-linear versions from Kalecki’s model. This model assumes that there is an average gestation lag of investment and it is formuled by means of a mixed differential-difference equations.
In each version, moreover we analize, the influence that a parameter has on the dynamics. The response of the model is different, there are cycles but, also, there are monotonic behaviors.
Abstract: Fuzzy numbers is presented as an alternative to probabilistic methods for the management of uncertainty in system dynamic model. Fuzzy numbers are particularly suitable to represent vagueness and qualitative values. Fuzzy numbers are used during simulation, but due to interactiveness among variables there is a need for global optimization methods. Some examples that illustrate the use of fuzzy numbers, both directly and as a means to represent qualitative values, are shown.
Genetic Models For Explanation of Complex Production System Dynamics
Abstract: This paper presents one middle term simulations model and its main results. We chose the production systems which produce complex capital goods, for example electrical equipement or household goods. The objective of this type of system is to build up stocks of finished goods which are put at the disposal of the customers. The corresponding macro model was designed by a systemic vision and split into three components which represent the operating, decision and information production sub-systems. The simulation of the generic model has permitted the improvement of system dynamics knowledge. We detected prominent decision loops and some unnecessary loops in production control.
Group Model-building: what does the client think of it?
Abstract: In recent years many system dynamics modelers have pointed out that for effective implementation of model results it is that the client participates in the model-building process. This has lead to various more or less successful approaches in group model-building. However, up to now little systematic research has been conducted in the area of effectiveness of group model-building. Systematic evaluation of group model-building is important in order to a) understand how clients and organizations are effected by group model-building; and b) improve the effectiveness of the group model-building proces. In this paper evaluation results are presented of four model-building projects based on clients’ opinions of the successfulness of these projects.
An approach to appraising, diagnosing and designing the structure and function of corporation
Abstract: Based on system dynamics, this paper creates an approach of combining qualitative and quantitative analyses, systems thinking, system analysis, synthesis and deduction with a set of models. First, We build up a generic model set with various economic indexes. About several dozen modern management methods have been applied to the different subsystems implied by their parameters and feedback structures.
Comprehensive methods of system analysis inference, synthesis and model sets for studying the socio-economic-ecosystem
Abstract: The author explores a comprehensive methods of system analysis, inference and synthesis and model sets for studying complex system. These methodologies and model sets can be used in studying the development strategy and planning of socio-economic-ecosystem. It has been successful in the study of Pudong Economic Zone of Shanghai.
Modification of the concept “change” as a Result of working with System Dynamics model in an Educational Setting
Abstract: This article concerns the problems that junior college students encounter when trying to understand and utilize the concept and insights traditionally provided by the teaching of mathematics. In this context, the concept “change” is significant because it is closely associated with the ‘derivative” and the “integral” defined in mathematical analysis.
Our hypothesis is that system dynamics contributes constructively to the formation of the “change” -concept, essential to mathematical analysis. In the study reported i this paper, we investigate how high school students develop their understanding and use of the concept “change” as a result of a course in system dynamics that includes a total of 30 hours of lecture an assignments.
Competition and Succession in the Dynamics of Scientific Revolution
Abstract: What is the relative importance of internal versus contextual forces in the birth and death of scientific theories? Elaborating on the analysis of a model of multiple paradigm competition and scientific development already developed by Wittenberg and Sterman, we find that situational factors present when a paradigm is launched largely determine a paradigm’s probability of rising to dominance. Stronger paradigms that survive the emergence phase live longer than their weaker counterparts, but this too is contingent upon factors present during the emergence period.
Towards a Core set of Archetypal Structure in System Dynamics
Abstract: Recent research in the field of System Dynamics has been concerned with defining archetypal structures by which toclassify insights in dynamical systems. For example, Richmond has proposed both infrastructure and activity archetypes, whereas Senge has defined eight relevsnt generic structures. Additionall,Wolstenholme has defined a number of management situations as being made up of actual outcomes which are opposed to those intended.
This paper attempts to condense archetypal structures to a minimum set. It is suggested that most archetypal structures can be reduced to a composition of two feedback loops. Given that these are sufficient, there are then only four possible archetyes which represent the four way or ordering a pair of feedback loops. Further, it is suggested that it is possible to classify all these loop combinations as special cases of ‘unintended consequences’.
A preliminary Design of CSS Production-Distribution Board-Type Simulation Game
Abstract: The coordination in industrial systems should be one of the major challenges for future competitive advantages. The issues of industrial system’s coordination have been studied in system dynamics at the very beginning of the field. However, system dynamicists had not put enough efforts to study the industrial “systems”. This paper attempts to use system dynamics approach to study the “dynamics complexity” issues in industrial systems. The Center-Satellite System simulation game (CSS game), which based on Taiwan’s center-satellite industrial system (a huge industrial system with over 120 Center-factories, each with up to 400 networked Satellite-factories) was developed. Future research directions are discussed.
Problems of Population Control in China
Abstract: Population is an element in the social system. There are a number of elements in the social systems which will influence the population growth rate. On the other hand, population growth will, in turn, exert influence on other social elements. We can, therefore, apply the system dynamics (SD) model to dealing with the problems of population control. This paper, based on the investigation carried out in Anhui Province of China, conducts a study of the policies concerning population control in China by use of the system dynamics model.
Model-Based Planning for Strategic Management An Integrated Simulation and Learning Toolkit.
Abstract: In a world of increasing complexity and turbulence organizations run the risk to loose effectiveness as well as efficiency when managed on the base of linear thinking and shortsighted decision making. System thinking and organizational learning instead will become a prerequisite for competitiveness and survival.
In our paper we propose an “integrated simulation-learning toolkit” to support strategic decisions in the field of flexible assembly systems.
With the help of this toolkit the user will be led through a structured modelling process in which he will develop his specific managerial microworld. Starting from a generic model the user follows different stages of abstraction and specification.
Expansion Policy for a Telephone Comapany
Abstract: Busy lines are a persistent and persuasive problem common to all telephone systems, whether it counts with the most advanced digital technology and network management or no, there will always be a period during the day on the week where telephone calls cannot be completed due to busy line with the resultant loss of revenue. If expansion programs for telephone lines were not in accordance to actual demand growth telephone calls, this problemwill grow to the point where retrials would seriously impairthe telephone system operation. This paper describes the use of a system dynamics model for designing and evaluating expansion policies that respond to actual demand and ameliorate problem.
last updated by NG on 4/8/08
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