The 3rd International Conference of the System Dynamics Society
1985 Keystone, CO USA

The following papers were presented at the conference. The original printed proceedings, edited by Merrill E. Warkentin were printed in hardcopy and distributed at the conference. Below please find the Paper Index for these proceedings including abstracts. Available papers are Acrobat (.pdf) files and can be read using Acrobat Reader available from http://www.adobe.com.

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

Volume I

Catastrophe Theory and Public Policy: The Dynamics of Provider Behavior in the Nursing Home Industry
William Ammentorp, Paul Gunderson

Abstract: Major changes in the demographics of aging in the United States have created demands for geriatric care which cannot be met by existing services. Most states have elected to address this policy issue by offering incentives to providers to promote investment in long term care facilities. These offerings have been only marginally successful due to the relative attractiveness of competing investment options. This paper explores provider reaction to policy incentives using a System Dynamics model derived from Catastrophe Theory. Provider behavior is seen as unstable under competing investment options; a behavioral condition which conforms to the typical “Cusp Catastrophe”. 

Modeling a Public Employment Office: Report on a Pitfall
Raul S. Andrade

Abstract: How and why an attempt to build a system dynamics model of the operation of a public employment office resulted in an econometric model.

Combined Multidimensional Simulation Language, Database Manager and Sensitivity/Confidence Analysis Package for System Dynamics Modeling
George A. Backus, Jeffrey S. Amlin

Abstract: A fast, interactive, large-scale, data-base-oriented simulation language (LAMDA) for IBM compatible microcomputers has been developed for System Dynamics' applications. Sophisticated output features include high-resolution graphics, full report generation capabilities with textual explanation, and user defined screen menu options, An integrated sensitivity/confidence package allows parameters or structures to be evaluated as a function of time and as a function of all other parameters for their impact on model results. Confidence intervals are determined along with the time and circumstances where certain information is critical. An integrated statistical package can be used to estimate model parameters based on historical information or, in combination with the data base, used to test model hypotheses and statistical inferences. LAMDA can also interface with FORTRAN applications. Extensive dialogue capabilities allow the model builder to make the model user-friendly and fit the need/sophistication of the client.

Comparing the Observed and Model-generated Behavior Patterns to Validate System Dynamics Models
Yaman Barlas

Abstract: Model behavior evaluation is an important component of System Dynamics (SD) model validation. SD methodology has often been criticized for its lack of quantitative/formal behavior evaluation tools. System Dynamicists have responded by stating the relative, subjective, qualitative, nature of model validation. We argue that using formal quantitative behavior tools is not inconsistent with a relativist, holistic philosophy of model validation. We suggest a multi-step, quantitative behavior evaluation procedure which focuses on individual pattern components of a composite behavior pattern. The procedure is relatively easy to apply and to interpret. We then test the performance of the procedure through a series of simulation experiments. The experimental results suggest that the multi-step procedure is appropriate for SD model behavior evaluation. The experiments also give us an idea of what the expected value and the variations of suggested quantitative tools are.

A Dynamic Approach to Investigate Household Car Ownership and Usage
Mark A. Bradley

Abstract: Many features are necessary in a behavioural model of household car ownership and usage patterns. A description is given of the features of conventional equilibrium-based models, followed by a discussion of the most important dynamic issues underlying travel choice. These issues include household travel and activity budgets; state-dependent factors such as information search, cognitive processes, habits, attitudes, and inertia; and the role of the household lifecycle as a choice catalyst. Recent dynamic modelling approaches are described, followed by a description of a system dynamics modelling approach which incorporates the dynamic hypotheses discussed throughout. Finally, a direction of research is laid out, in which the model can be used to simulate household panel data as a basis for hypothesis training.

Gaining Acceptance for a Systems' Dynamics Models
Andrew S. Breiter

Abstract: This paper discusses the reasons why Systems' Dynamics models frequently encounter considerable difficulties in gaining acceptance and suggests several ways for overcoming this obstacle. Resistance to models within organizations is usually generated by one or several of the following causes: insufficient credibility of model's proponents, inability to grasp model's usefulness, cultural background, fear of losing power and negative previous experience with models. In the special case of models addressing issues of wide public interest suggestions are presented on how to plan a communications strategy designed to generate support for the model or for the conclusions derived with its help.

The Dynamics of Robots' Introduction in the Electric Appliances Industry
Andrew S. Breiter, Mariangela Gasparotti

Abstract: This paper discusses some dynamic effects of robot's introduction on a company in the electric appliances industry. Two key aspects are analysed. The effects on cash flow are explored first, the conclusion is reached that under certain conditions it could represent a controlling element that would slow down the rate of robots' introduction with the respect to the ideal rate suggested on the sole basis of economic convenience. The availability of skilled personnel is considered next. This availability increases through on the job training as more robots are installed. Under most circumstances, however, the availability of skilled technicians represents a controlling element that definitely slows down the introduction of robots. The effectiveness of training technicians therefore represents a variable of strategic importance.

The Importance of Feedback in the Pacific Northwest Electric Conservation Planning Model
Mike Bull, Andrew Ford, Roger Naill

Abstract: This paper describes the importance of feedback loops included in a policy model constructed for the Office of Conservation of the Bonneville Power Administration (BPA). First there is the description of the region and the responsibilities for conservation planning at the BPA, and then a description of the purpose, structure, and use of the policy model. Several feedback loops involving customer response to higher electric rates are selected for our discussion of feedback. The system dynamics treatment of these feedback loops is contrasted with the treatment found in most electric utility planning models in the USA. The paper concludes with an assessment of whether the inclusion of feedback has been important in BPA's application of the model.

System Dynamics Modelling Analysis Techniques-- A Pragmatical Appraisal
A.S. Câmara, J.A. Fernades, M.G. Viegas, A.P. Amaro

Abstract: This paper reviews techniques that may assist the system dynamics modeller in defining variables and functional relationships, parameter estimation, validation, sensitivity and policy analysis. The evaluation was made in the context of water resources management modeling effort for the Guadiana basin in Algarve and based on scientific, economic and operational criteria. In general, it was difficult to point out the most appropriate technique but rather recommend combinations of methods for each modeling stage.

Linguistic Simulation in Planning Theory and Application
A. Câmara, M. Pinheiro, P. Antunes, J. Seixas

Abstract: This paper introduces a new linguistic dynamic simulation methodology, SLIN which deals with systems defined in either qualitative or quantitative terms. The simulation mechanisms proposed in SLIN include a set of logical rules and fuzzy set theory. An application of SLIN to Sado estuary showed its promise but also some of its present limitations. Future developments including an appropriate diagrammatic representation, a new linguistic simulation computer language, implementation in parallel computers and subsequent real-time multi-expert based simulation are also discussed.

A System Dynamics Model to Examine the Effectiveness of Research and Education in Reducing Societal Costs Due to Low Back Pain
William L. Cats-Baril, Wifred Roth, Richard H. Zeliff

Abstract: Low Back Pain (LBP) is the most common cause of work loss after the ordinary cold, and it is the single greatest source of compensation payments. In the U.S., it is estimated that one million workers sustain a low back injury every year, and that 217 million work days are lost annually at a cost of 11 billion dollars for males aged 18-55 alone. In an effort to better understand how to control the economic impact of this disorder, a System Dynamics model is being developed. It is hoped that the model, by generating scenarios on the cost effectiveness of different interventions, will provide useful insight into specific policies to fun research addressing the causes of LBP disability.

The Dynamics of Transportation Systems
J. A. Charlesworth

Abstract: The techniques currently used for the management of urban road transportation systems are briefly reviewed, and the extent to which they take account of the dynamics of the system examined. Recent work on the development of mathematical models of urban traffic systems is described and the applicability of the model to real-life traffic systems explored. In particular, the ability of these models to reflect temporal as opposed to spacial properties of the system is examined, as well as their ability to assist in the formulation of strategies for system control. The role of system dynamics might play in overcoming some of the problems encountered is then discussed.

Defense Resource Dynamics
Rolf Clark, Albert A. Pisani

Abstract: Models based on a logic relating military ownership costs to active force assets were developed. Historical budget analyses provided relationships to tailor the models to each military service. The models, validated through projection of the 1980-85 defense growth period, were then used to predict 1986 to 1995 appropriations using top line fiscal levels as inputs. The models can explore policy options such as reduced fiscal growth, altered readiness policy, and changed innovation plans.

Adjustment Dynamics in a Static Input-Output Model
Ernst W. Diehl

Abstract: Traditional economic theory emphasizes the determination and characterization of static equilibrium. In contrast, understanding of economic behavior can be enhanced through the use of models that explicitly take into consideration the underlying physical and decisionmaking structure of the system and that allow for disequilibrium. This paper presents an example of such a model. A typical static, open input-output model is translated into an equivalent disequilibrium model. It is shown that objective individual decisions can lead to unintended oscillatory modes of behavior of the overall system. An assumption of perfect information can prevent such undesired oscillations.
This paper also demonstrates a way of communicating system dynamics thinking to an economics audience. The model is developed in progressive steps, a procedure that is widely found in economic literature. First, stocks are added to a model that originally considers flows alone. Each of three succeeding model changes is then motivated by the results of the previous model and presented as a logical next step towards a more consistent theory. Thus, it is not only the result of the final model as such that is of interest, but also the way the model is developed. Model development is presented as a learning and communication process.

A System View of Transportation System
Paolo V. Dolci

Abstract: The Le Moigne's theory of General System is presented and applied to the transportation system. A model of this system, using accessibility and generalized cost as the variables to be controlled is also sketched. 

INFLOW: from Influence to Flow Diagram in System Dynamics
Paolo V. Dolci, Maria A. Puddu

Abstract: In this paper we review the algorithm to identify the type of variables (levels, rates, auxiliaries) which appear in the influence diagram. This algorithm has been implemented on a personal computer at the Cagliari University.

Linear Analysis and Model Simplification
Robert L. Eberlein

Abstract: There has been a great deal of work done in the simplification of linear dynamic models. Given that most models that are in use are nonlinear this has restricted the applicability of the available techniques. By concentrating on a particular nonlinear phenomenon, in this case shifting loop dominance, it is possible to use the techniques of linear analysis for the simplification of nonlinear models. The theory for this is developed and it is shown how this can be applied to the model. For purposes of exposition the market growth model is used and the results are encouraging. Though there is still a good deal of work to be done it seems feasible to develop simplification techniques for nonlinear models that address directly the nature of the nonlinearities.

Statistical Estimation and System Dynamics
Robert L Eberlein, Qifan Wang

Abstract: Much of the work done in system dynamics has been criticized for making insufficient use of statistical estimation techniques. There have been various responses to this criticism concentrating on the other sources of information available to the model builder. One of the major hurdles to the use of statistical estimation techniques is an understanding of when they are likely to be useful in system dynamics modeling. In this paper we consider different estimation techniques and how useful they can be in system dynamics modeling. The work is meant to be a practical guide that will allow the modeler interested in statistical estimation to gain some understanding of the different approaches available. We concentrate or attention to the special problems that the system dynamics modeler is likely to encounter in estimation.

Period Doubling and Approach to Chaos in a Simple Context
John C. Eidson, Charles H. Braden, Dale F. Schultz

Abstract: Studies of deterministic systems which apparently exhibit chaotic behavior are attracting much interest in disciplines ranging from physics to economics. A particularly interesting case of a simple electrical network has been studied recently in the physics literature with the objective of isolating minimal characteristics essential to chaotic behavior. A system dynamics formulation has been given to the numerical simulation of this system. Instructional laboratory exercises comprising both observations on the electrical circuit and computer simulation of the circuit are being implemented for the upper level undergraduate and graduate students.

A Report on the Utilization of the MOSES Computer as a Tool in Development and Dessimination of System Dynamics Models
Hans Esmann Eriksen, Erland Hejn Nielsen

Abstract: The Jutland Technological Institute (JTI), Aarhus, Denmark, has embarked a project to promote the utilization of System Dynamics models in Danish Industries. The vehicle of this projekct is a new type of hybrid computer, the MOSES (Modular Symbolic Electronic Simulator) system, developed at the Technical University of Denmark. In ongoing projects the MOSES system has demonstrated itself as an invaluable “discussion” partner. We have performed a series of seminars with managers from medium and large sized Danish companies. At these seminars some of the generic structures of growth companies have been discussed and related to Danish conditions. This report contains a brief description of the MOSES system and a description of the ongoing project.

The Banking System: A System Dynamic Profile
Douglas Franco

Abstract: This is a report of several applications of System Dynamic Methodology to banks, with particular emphasis given to their structure and their Decision Making in terms of System Dynamic concepts. Aplications range from policy design and long term planning to the design of Decision Support systems. The first part presents relationships between money flows and accounting information. Next, some policy design results are presented. Later on, the estimation of the parameters of the SD model is transformed into the heart of a Decision Support System.

Economic Development and Financial Deepening: A Study of Causation and Dynamics
Richard G. Fritz

Abstract: The direction of causality between financial deepening and economic development is tested. Using factor analysis, two indexes are developed to represent the two economic phenomena for the Philippines. Time series causality tests are used to evaluate the direction of causality. The results indicate the causal pattern reverses over the history of the sample. Reversal is viewed as the result of financial repression. The structural dynamics implied by the empirical time series test is evaluated using a system dynamics model. The growth promoting and growth inhibiting roles of the financial sector are simulated in the dynamic structure of a dynamic economic development model.

A Reduced Dynamic Model for Evaluating the Impact of Man on the Environment
L. Gardini, H. Sedehi, R. Serra

Abstract: A representation of socio-economic systems using reduced models allows a “qualitative” type of analysis to be carried out. It is often the case, especially in the long term process, that the main interest is directed towards the asymptotic behavior of the solutions as a function of the initial state and to evaluating the properties of stability of stationary states. In this article, after a short outline of the procedure and methodology adopted, we describe the application of these techniques in the construction and use of a dynamic model for the design of a tourist village. The model, which mainly deals with the impact of man on the environment, serves to evaluate the social and economic effects of the construction of a tourist centre in a national environment which must be conserved.

Dynamics of Power Supply and Demand
Krishan Kumar Garga, N. K. Gupta, B. Thapar

Abstract: Power demand forecasting methodologies which are currently being used by electricity authorities are end use method, trend method and Scheer's formula. These methodologies being static in nature, do not take into account the future power supply position, while becoming an important instrument of economic change the growth of power generation activity itself is totally dependent upon the overall economic development thus forming an important feedback loop in the economic system. Present paper discusses a power economy system dynamic model for estimation of future demand and supply position of Power.

On Relations Between Feasible Observations and Decisions
H. Górecki, A. Korytowski

Abstract: The paper is an attempt at a theory of relations connecting feasible observations/ or measurements/ and feasible decisions/ or controls/ in general cybernetic systems. The theory gives a formal framework and a tool for quantitative analysis of the following facts:
1. An increase in observation possibilities, e.g. an increase of the precision of measurement, enlarging the scope of observation etc., results in an increase in decision possibilities by making more effective decisions possible. This works also in the other direction: if there are more feasible decision, new observations or measurements become available.
2. In the framework of a cybernetic model no decisions and/or observations which generate antinomies can be simultaneously feasible. This creates interesting and important constraints on measurements and decisions in systems which include man or where a human or automatic decision maker is an object of observation, and where the results of observation may be known to this decision maker.
3. The observation/measurement/ takes tome and changes its object and thus the result of observation always refers to past rather than to the present. This normally is due to physical effects through other phenomena, like psychological, may also be important depending on the nature of the object.
The facts of group 1 are in a sense opposite to those of groups 2 and 3. This leads to the existence of optimum decision-measurement possibilities. Conditions for this optimum to exist together with its significance for biological and technological system will be discussed.
The subject of this paper is of interdisciplinary interest and has been studied, partially and from particular angles, within the framework of control theory/facts of group 1/, mathematical logic/theory of antimonies, principles of mathematics-mainly facts of group 2/, physics/theory of measurement, principles of quantum machanics-mainly facts of group 3/ and philosophy/the classic problems of free will and consciousness/. The relevance of the presented theory to these fields will also be discussed.

Artificial Intelligence: A Tool for System Dynamics
Janet Marjorie Gould

Abstract: This paper presents the findings of my research in artificial intelligence applications for system dynamics. The sudden appearance of microcomputers in homes, schools, and businesses has opened an opportunity for dissemination of system dynamics to a wider audience than we could have ever hope to reach with the earlier computer technologies. This opportunity should not be lost by clinging to obsolete, or soon to be obsolete, technologies. User-friendly micro-based software should be immediately available to those individuals, schools, and corporations who are interested in systems thinking. The demand for such systems far surpasses the current supply. Artificial Intelligence software is now available for microcomputers. This new software development can significantly improve current and future systems for the novice and the experienced system dynamicist.

Generic Models as Educational Tools: Teaching About Managing Technology Conversions
Alan K. Graham, D Neal Scogin

Abstract: “Generic models,” as the term is emerging, denotes a model representing the underlying causes of commonly occuring sets of problems, whose purpose is for education, rather than for policy analysis per se. Preliminary uses of generic models have been an exciting and efficient means of transmitting insights. This paper is a status report on the modeling of a company's conversion to a new production or product technology. Based on information sources including in-depth interviews within such companies, the authors' previous experiences, and published surveys and cases, the planned model focuses on management goals, staffing, and acquisitions of the skills necessary to deal with the new technology or product. Although the model does not explain every (complete or partial) implementation failure, it seems relevant to a significant fraction of such failures. The authors intend to develop the model and curriculum materials for management education and portions of university courses on technology management.

Future of Aluminium Demand in India-A System Dynamics Approach
N.K. Gupta, Krishan Kumar Garga

Abstract: Although there are more than 3000 end uses of aluminium in the world and more than 300 in India, yet there are five sectors viz. power, consumer durables, transport, building consturction canning and packaging which account for more than 90% of aluminium consumption. To study the dynamics of demand of aluminium in these sectors, system dynamics model having various sectors viz. Population, economy, power, consumer durables, construction, packaging and canning, transport and aluminium consumption model has been simulated from 1970 to 2000 A.D. using dynamo.

System Dynamics National Model Interest Rate Formulation: Theory and Estimation
James H. Hines

Abstract: Within the MIT System Dynamics National Model, the risk-free interest rate is determined jointly by the normal interest rate and by liquidity. The normal rate is the rate which agents believe would obtain under normal circumstances, in the absence of transitory pressures. The normal rate continually adjusts to new interest rate conditions. During times of deficient liquidity, agents will increase the risk-free rate above the normal rate. The converse also holds. The risk-free rate will continue to adjust until pressures in the system are relaxed. Estimation results support the national model theory of interest rate formation.

“By Prescription Only”: A Computer Simulation Game for Understanding the Emergence of New Medical Treatments
Jack B. Homer

Abstract: This paper presents a computerized system dynamics game in which the player makes "annual" decisions controlling the availability and evaluation of a new medical product with uncertain potential and possible (though initially undetected) side effects. The game has been implemented using the popular spreadsheet program Lotus 1-2-3. This program has on-screen display capabilities allowing for the construction of a user-friendly game that requires no knowledge of system dynamics. A detailed discussion of game mechanics is followed by a description of a classroom experience which led to further development of the original version of the game and some general insights about game-building.

An Application of System Dynamics to the Construction Management of a Major Building
Jean-Claude Huot, Yves Sylvestre

Abstract: In the past, the most popular computer models for the construction management of major buildings were large models based on the graph theory and their consequent discrete event simulation on the mainframe computer to have a view of the operational level. We think that in the future if we want to remain competitive on the world market the trend will be the use of small system dynamics generic models in relation to micro-computers at the strategic management level that can generate the reference modes i.e. the project control baselines.

Bringing Systems Thinking to a General Audience
Allan Jenkins

Abstract: The long term success of System Dynamics is largely dependent upon the dissemination of systems thinking to a considerable segment of the general public. A strategy for exposing a non-academic, adult audience to the basic characteristics of systems is developed, using the ADAPT Learning Cycle, System Dynamics, and the Social Fabric Matrix.

An Analysis on the Impact of the Population Control on Chinese Economic Development
Liu Jiaoliang, Yin Liuying, Liu Yongkang

Abstract: China has the greatest population in the world. The impact of the population on Chinese economic development is great. Based on Chinese National Economic Model NATN3, the relationship between the population control policy in China and Chinese economic development are obtained by simulation of the policy analysis.

System Dynamica Generalized Modeling for Forecasting Multiproduct Substitution
Zhao Chong Jie

Abstract: The System Dynamics Generalized Substitution Modeling is presented. This modeling considered the influence factors of circumstance by introducting action function. The methodelogy is based on the System Dynamics with econometrics, combining three postulates in product substitution and decomposing multi-product into several two-product substitution. Parameter estimation, which existed in all System Dynamics Modelings, is one important but still unsolved problem. Now this problem has been solved in our paper by orthogonal simulation, it is based on the orthogonal theory and generalized least squares (GLS)

Disaggregating a Simple Model of the Economic Long Wave
Christian E. Kampmann

Abstract: A multi-sector, input-output version of Sterman's simple Long Wave Model is developed to investigate the validity of the capital self-ordering theory for a more realistic system with diverse capital types. Simulation experiments with varying capital lifetimes and input-output coefficients tend to reproduce the characteristic fluctuations in capital production, caused by self-ordering, with a period in the 30 to 70 year range. However, complex patterns of oscillation with wide variance in period can emerge, explained by varying dominance of self-ordering loops. The analysis thus confirms the destabilizing effect of self-ordering and its significance for long term fluctuations while raising issues and generating new insights about the-long wave.

System Dynamics in Urban Transportation Planning and Policy Analysis
Indra K. Khanna, N. Singh, Prem Vrat

Abstract: A simulation model of the passenger transportation system is presented. The model has been built in order to carry out a series of simulation experiments. The purpose of these experiments is to compare the effects of sore transportation policies on road congestion, modal-split, air pollution and transportation fuel consumption. System dynamics principles have been used for simulating the model. The statistics of Delhi urban area have been used to calibrate the model.

A Microcomputer Workshop Exploring the Dynamics of Arms Races
David P. Kreutzer

Abstract: This microcomputer workshop is being developed to encourage exploration, testing, and discussion of the impact of alternative arms-building policies. The model allows participants to adjust parameters that reflect a number of psychological, technical, and political factors. For example, participants can represent one country's tendency to overestimate the strength of the other and underestimate its own strength. Before releasing the model to the public, we are reviewing its conceptual soundness and its educational effectiveness to be sure that it reflects empirically supported technical, psychological, and political realities. The presentation of this paper and the early versions of the workshop are part of this preliminary review process.

Information Network and Risk Management
Hironori Kurono

Abstract: With a new information system, the "order-production-distribution" system can be managed as a whole in terms of corporate performance. But there is a possibility that such a system can be damaged easily from degraded information conveyed through an information network. This paper is concerned with an approach to dealing with degraded information in light of risk management with the system dynamics philosophy.

A Model of Burnout in the Work Place
Ralph L. Levine, Mary Van Sell, Beth Rubin

Abstract: Burnout is a problem associated with work in social service organizations. It is characterized by loss of energy, negative attitudes, and decreased performance. This system dynamics model encompasses the literature on burnout and belongs to a general class of stress and motivational models which describe problems of alcoholism and sexual harassment in the work place, etc. The gap between performance and professional expectations generates physical and psychological fatigue, which decreases involvement and performance. Supervisors frequently ignore the workers' problems, but will initiate structure when quality is perceived to decrease. The gap between expectations and performance may account for burnout initially, but cannot account for maintaining burnout after expectations decrease. Learned helpless may be the mechanisms that sustains burnout.

Finding Qualitative Behavior Modes: The Use of Interval Analysis to Perform Sensitivity, Stability, and Error Analysis on Dynamic Models
Weldon A. Lodwick, Ralph Levine

Abstract: A method is described and illustrated for explicit incorporation of and computation with ranges of initial conditions, functions, and parameter values in dynamic models using interval analysis. This approach is neither a statistical nor fuzzy set analysis but instead utilizes interval arithmetic which is particularly well suited for computerization. When a dynamic model is couched in interval analytic terms, ranges of all possible solutions are generated allowing not only an analysis of ranges of behavior modes but for sensitivity and stability analysis to be performed as a natural part of the model. Moreover, uncertainties such as specification, numerical method (e.g., numerical integration), and roundoff errors can also be analyzed in conjunction with or separate from the interval dynamic model.

Leverage and the Performance of Electric Utilities: How Feedback Assumptions Affect Policy Conclusions
James M. Lyneis

Abstract: Many electric utilities have a heavily debt-laden capital structure. A number of factors have contributed to this situation, but chief among them is the theory that increased debt improves a corporation's earnings per share. This theory is derived from a relatively simple financial model which relates earnings per share, capital structure, interest costs, and income. Using a more comprehensive model, this paper shows that reducing debt as a percentage of capital structure can improve the interest coverage, earnings per share, and market price per share of electric utilities.

Dynamic Scheduling of Flexible Manufacturing Systems
Clarence J. Maday

Abstract: Mid-volume, mid-variety operations characterize flexible manufacturing systems (FMS) or job-shops found in most factories. Profitability of FMS depends upon effective scheduling of material flow, machine use, staffing, and buffer capacities. Many systems adjust to changes in demand and equipment failure in the long term. In the short term, however, large changes may occur in inventories, staffing requirements, and machine utilization. In general, these large changes reduce production efficiency and profits. An approach is demonstrated for attenuating or eliminating changes or swings in a system when there occurs some abrupt change. Delays and delay parameters in the system model are adjusted, subject to practical constraints, to produce a smooth and rapid transition after the change. A simple econometric model is used for illustration. A symbolic and algebraic manipulation language is required to implement the approach.

National Development Policies for Developing Countries
Purnendu Mandal, Eric F. Wolstenholme

Abstract: The work described in this paper is an extension of earlier work by the same authors on analysis of national development planning. A brief description is presented here of the system dynamics model developed for this earlier work as a basis for explaining its recent application to development policy design. A taxonomy of development policies is presented and the results of analysing seven policies, within an adaptive model framework, are presented, which are aimed at improving and achieving both growth and equity. Each policy is examined under conditions of continuous proportional control and discrete control based on a sector criticality.

Volume II

A Conceptual Framework for Modelling the Dynamics of Environmental Systems
I. Moffatt

Abstract: A conceptual framework for modelling the dynamics of environmental systems is presented. It is argued that apparently stable systems can evolve via bifurcation when critical thresholds are exceeded. When a system is forced further away from equilibrium dissipative structures emerge. These dissipative structures are characterized by stochastic, non-linear feedback mechanisms which have the capacity to transform an apparently stable environmental system into a relatively more complex one which evolves. Some examples of these structures are simulated using system dynamics and the implications for further research are discussed.

Predictability and Forecasting
Foster Morrison

Abstract: Forecasting for complex nonlinear systems has proven to be elusive. Investigators have assumed the causes to be too little data and overly-simplified models. Recent studies in climatology reveal that nonlinear systems behave in ways quite different from the linear or static systems of traditional science and engineering. The behavior of nonlinear systems can be cyclical or essentially stochastic and usually is a mixture of both. New techniques, such as "attractors," are being devised to facilitate analysis. Methodologies must be applied with due consideration to the structure of the system under investigation.

Chaotic Behaviour in a Simple Model of Urban Migration
Erik Mosekilde, Steen Rasmussen, Henrik Joergensen, Flemming JaIler, Claus Jensen

Abstract: By analysing the dynamics of a simple problem of urban migration, this paper illustrates how chaotic behaviour can be internally generated even in a relatively small (4-level) System Dynamics model.
Two different groups of minority families are considered to move around between three sectors of a city. This migration occurs in response to changes in certain social indicators which we take to be related to the number of families already living in the respective sectors. Type I families, for instance, prefer to live in areas with many households of the same kind and tend to avoid neighbourhoods with many type II families. Type II families, on the other hand, although also they like to live together, are at the same time attracted to areas with many type I families.
For normal parameter values, this system has an unstable equilibrium point. In base case it exhibits a limit cycle behaviour with the non-linear limiting factors associated with a slowing down in the rate of emigration from a certain sector as the number of remaining families approach zero. We show how the system develops through a Feigenbaum cascade of period doubling bifurcations as the inclination of type II families to move into areas with many type I families is reduced by. 15%. By calculating the largest Lyapunov exponent for the system we finally show how the chaotic behaviour is quantitatively distinguishable even from the most complicated limit cycle behaviour.

A Simulation Model for Corporate Planning in a Steel Plant
R.M. Narchal

Abstract: A Simulation Model for Corporateing Planning has been designed for a Steel Plant based on System Dynamics principles. This Model has been designed for Material flow that takes place through a group of 12 production shops arranged in six stages of production. The Model requires a time variant input of Demand of 17 categories of finished steel products and 3 categories of Raw materials. The Model generates behaviour of various objectives based on the assumptions of the environment. The Model can be used for simulating the impact of various strategic policy decisions on the corporate objectives. The Model also guides the management in designing their long term investment policies related to expansion, modernisation and debottlenecking. 

A System Dynamics Model for Corporate Planning for an Engineering Company
R.M. Narchal

Abstract: This paper describes the design and application of a System Dynamics Model in simulating the future of an Engineering Company. The stress has been given in this paper to explain the application of System Dynamics principles in designing long range policies of the company. The Model is being used by the company in testing various strategies to be adopted by the management related to new projects for expansions and modernisation by simulating the impact of these strategic decisions on the objective variable. The Model assists the management in designing their long range policies to achieve the corporate objectives.

Dynamics of Dental Care in the Netherlands: A System Dynamics Approach
G.O. Nijland, J.H.G. Klabbers, G. J. Truin, A.J. M. Plasschaert

Abstract: During the last five years a system dynamics model of the dental health care system of the Netherlands has been developed.The model consists of six submodels, capturing the major demographica1, pathological, psychological, sociological and economical processes of supply and demand of dental care. Two income-categories differentiating between two classes of insurance ("Sickfund” and “Non-Sickfund”), and six age-categories are distinguished. The model comprises ten types of dental treatments. Alternative policies with respect to restoring the lost equilibrium between supply and demand of dental care are tried out, and compared with the base-run. Dependent on the considered time-horizon, and the interests of different parties (dentists, dental students, dental hygienists), different policy-scenario's turn out to be more attractive in redressing the balance.

A Dynamic Model of the Atlantic Salmon Fisheries Under Distant and Home Water Harvesting
Lars Olson

Abstract: This paper uses a dynamic model to study the effect of distant and home water fishing on the Atlantic salmon fisheries. Under open access, capacity in each fishery oscillates due to overfishing and adjustment lags in capital investment. It is shown that development of a feeding ground fishery imposes significant costs on home water fisheries. In a regulated environment, joint operation of the two fisheries can result in higher total catches and profits than when a moratorium is placed on feeding ground fishing.

Using STELLA and System Concepts to Teach Microeconomics
Steven Peterson

Abstract: Despite the power of our framework as a tool for learning, system dynamics has yet to penetrate into the economics discipline. A different approach to dissemination of system dynamics into the microeconomics mainstream is presented. In contrast with the traditional product-focused strategy, the new approach uses microeconomic theory as a context for the development of student modeling skills. The approach relies heavily on the STELLA software. It is embodied in a book for introductory and intermediate microeconomics students. The general specifications and design of the approach are presented. To illustrate the approach, a sample laboratory session from the book is provided. 

An Analysis of Congressional Process based on the Work of Karl W. Deutsch: A System Dynamics Model
Sonja C. Powell

Abstract: In The Nerves of Government (1963), Karl W. Deutsch postulated the crucial problems of "steering" and of the "creative intelligence function" - the ability to invent and carry out fundamentally new policies to meet new conditions, the ability to combine items of information into new patterns so as to find and recognize relevant new solutions - that increasingly confront government institutions and that constitute an essential aspect of the decision- and policy-making processes on which the political system may depend.
This paper is an initial effort to conceive a System Dynamics (S/D) model of the U.S. Congressional system from this perspective, to promote further investigation of Deutsch's work in this area, and thus to effect appropriate change in Congressional institutional structure and function in this respect.

Packaged System Dynamics Models
Alexander L. Pugh. III, D. Ross Hunter, Craig A. Stephens

Abstract: One constraint on the growth of System Dynamics as a methodology can be removed by enabling non-professional users to make use of System Dynamics models with reduced professional involvement. Such use requires that models be disseminated in packaged form, that is, with supplementary software that gives English-language access to the model, guides the user in its intelligent use, and performs automatic analysis of simulation results. A new generation of the DYNAMO simulation language contains tools that assist the model builder in the packaging process. Experience has shown that while the benefits of packaging are considerable, it is easy to underestimate the effort involved.

Developing Nation: A System Dynamics Model
John M. Richardson Jr.

Abstract: This paper describes a model of a prototypical developing nation. The purpose of the model is to understand why violence and violent repression are so pervasive in the development process. Further it is intended to show how violence affects and is affected by other aspects of development. The model, which is programmed in micro dynamo, has three sectors, POPULATION, ECONOMY, AND GOVERNMENT. Preliminary results show that fluctuations in economic growth can lead to outbreaks of violence and deteriorating economic performance.

STELLA: Software for Bringing System Dynamics to the Other 98%
Barry Richmond

Abstract: A revolutionary new piece of software called STELLA is introduced. STELLA-which stands for Structural Thinking, Experiential Learning Laboratory with Animation -- is a system dynamics "expert system," embodying expertise in the areas of computational and structural logic, conceptualization, equation formulation and model analysis. STELLA is designed to facilitate efforts to bring the system dynamics framework to a much broader audience. The software enables even those lacking computer experience or a quantitative orientation to conceptualize, construct and analyze high-quality system dynamics models, while accelerating the development of an intuition for dynamics. Several STELLA-based products targeted at audiences in both formal education and business are described. 

Forecasting the Demand for a New Drug in a New Market: When History Does Not Repeat Itself
Mark Rose, Phil Merk

Abstract: The past offers few guidelines for forecasting the future of a drug in a new therapeutic category, but a systems dynamics model that counts patients instead of prescriptions can help predict demand for the product.

Poverty, Hunger, and Development Policy
Khalid Saeed

Abstract: This paper attempts to explain the pervasive problems of poverty and hunger of the developing countries in terms of the internal tendencies of their socicio-technical organization. The analysis is based on a generic system dynamics model of an agrarian economy which determines income distribution and food adequacy endogeneously but treats government policy as exogenous. It is suggested that the policies such as agricultural development, financial and technical assistance for the poor, and population control, that directly address the symptoms of the problems of poverty and hunger, may be defeated in the long run since socio- technical arrangements of the system favor persistence of poverty and vulnerability to food shortage. These policies will, however, be successful if concomitant efforts are also made to reduce income inequality through fiscal measures and to build up a food slack in the system through obtaining food calories uneconomically from cereal production.

Aids for Customizing Generic System Dynamics Models: A Community Development Example
Fahriye H. Sancar, Robert J. Cook

Abstract: The general considerations for the development and customization of a generic system dynamics model for rural community development are presented. A preliminary version of a generic model is presented. Alternative customization strategies based on problem complexity as perceived by the community are discussed. The customization involves generating a network representation of the problem using a modified version of interpretive structural modeling and a pattern transfer procedure to enhance the generic model. The entire procedure is based on cognitive criteria to overcome human information processing limitations; to provide a rational and systematic approach to the simplification of problem complexity, and to promote a shared understanding of the problem situation among the participants.

Cognitive Criteria for Structuring System Dynamics Models
Fahriye H. Sancar, Robert J. Cook

Abstract: This paper discusses the development of cognitive criteria for use in guiding the problem definition phase of System Dynamics modeling. The System Dynamics modeling process is presented as currently defined in the literature. The problem definition phase of the process is then isolated because of its overriding influence on model structure. Topics relating to information, information processing and group decision making are discussed and the shortcomings of human judgment and inference are identified. These shortcomings are related back to the tasks required for problem definition and criteria are identified which can serve as guidelines for the development of cognitive aids for structuring System Dynamics models. The paper closes with a brief discussion on operationalizing the concepts of cognition, creativity and social interaction as tests of the relative value of these criteria.

An Evaluation of the Management of Stocks in a Chemical Company
H.Sedehi, P.Verrecchia

Abstract: The present article describes an example of the application of the MDS approach (Modelli Dinamici per Strategie - Dynamic Models for Strategies) to the study of criteria for a supply policy and for a consequent economic evaluation of the different supply policies which may be adopted. The aim of the study is limited to an evaluation of the direct economic effects of the different hypothetical policies, excluding those associated with the market and with different production steps. The results of a series of simulations using the model are presented along with an outline of the economic benefits deriving from the adoption of a "tight-rein" stocks policy carrying a reasonable level of risk.

System Dynamics, Mental Models, and the Development of Management Intuition
Peter M. Senge

Abstract: This short paper is intended to stimulate thinking and hopefully more serious efforts toward understanding how systems thinking tools can most effectively catalyze the development of management intuition. This effort draws from an on-going research program, the program in Systems Thinking and the New Management Style, aimed at advancing systems thinking as a practical tool for developing a more wholistic, long-term, and creative (as opposed to reactive) orientation in organizational leadership. The program involves a network of organizations, many of which have been pioneers in developing more visionary nonauthoritarian work environments. The organizations serve as laboratories to explore innovations in management education. The central premise in these explorations is that the localization of management responsibility will require transforming an organization's capacity to learn, so that local control and understanding can advance together. The research at M.I.T. is focused on developing a library of "generic structures," relatively simple models of organizational dynamics that recur in diverse settings, which can provide a foundation for that education. This paper discusses basic assumptions about learning that underlie the program.

The Financial Dynamics of Small Business Growth and Survival
Raymond C. Shreckengost, Ray Thompson

Abstract: The failure rate for small businesses is extremely high. Inadequate financial control is a major contributory factor. The pattern of interactions between a fluctuating sales rate and the levels of receivables, payables, inventory and cash is highly complex. A model is described which simulates the experience of a small business in managing current assets and liabilities. It demonstrates the way in which liquidity changes over the operating cycle, how cash flow, and profit are dynamically different and how the firm's need for financing is constantly varying. System Dynamics is a useful tool for understanding and improving the financial management of small firms.

What is Economic Energy?
Georg H. Sichling, Petra Sichling

Abstract: The law of the conservation of energy has great practical importance in physics. Is a similar law applicable to economics? For an answer, System Dynamic-related methods were applied to the economic Two Sector Diagram. They show the forces of Supply and Demand operating on the economic flows of money, goods and labor. The demand can be expressed quantitatively by a utility function, which shows that economic forces and flows are informational concepts. Consequently, the two main forms of energy in any economic system are code transport and numerical code values. Only the latter are essential.

Systems Simulation for Regional Analysis. An Application of Matrix Input-Output to Istmo De Tehuantepec
Jorge Silva-Midences

Abstract: This work is the application of systems simulation to regional analysis and its constains the philosophy and approach of the report dealing with economic growth in the Susquehanna River Basin prepared by Battelle Memorial Institut-Columbus Labs but a new look: the subsystem Input-Output matrix into the framework and with the demands (usually exogenous variables) like endogenous and with no necessarily fixed technical and capital coefficients over the time and its resolved by no conventional methods The application was in the Istmo De Tehuantepec, México.

A System Dynamic Model of Blast Furnace for Project Evaluation
Gopal Sinha, Goutam Dutta

Abstract: Production of pig iron in a blast furnace is a complex phenomenon. This paper identifies the major interdependencies forming a feed back structure, leading to a system dynamic model of blast furnace. The model has been used to evaluate projects on an overall and long range basis.

A Skeptic's Guide to Computer Models
John D. Sterman

Abstract: Increasingly, citizens and policymakers are faced with the results of computer models and must make judgments about the model's relevance and validity. How can such decisions be made in an intelligent and informed manner? Can modeling be made accessible to the ordinary person or will it remain the special magic of a technical priesthood? This paper offers tentative answers to these questions. It first highlights the characteristics and capabilities of computer models such as are used in foresight and policy analysis. The advantages and disadvantages, uses and misuses of formal models are presented. What are the fundamental assumptions of the major modeling techniques? How appropriate are these techniques for foresight activities? What are the crucial questions a model user or model consumer should ask when evaluating the appropriateness and validity of a model? The paper is designed to help model consumers peek inside these computerized black boxes.

STRATEGEM-2: A Microcomputer Simulation Game of the Kondratiev Cycle
John D. Sterman, Dennis Meadows

Abstract: The economic crisis of the 1980s has revived interest in the economic long wave or Kondratiev cycle. This paper describes a simulation game which demonstrates how long waves can arise. The game vividly shows how the investment and production policies pursued by individual firms, though rational from the point of view of the individual actors, interact in the context of the whole system to produce "irrational" behavior--periodic over and under-expansion of the economy. The game illustrates te theory of capital self-ordering developed in the System Dynamics National Model Project. The paper describes the structure and rules of the game, including protocols for operating the game. The game can be played manually or on personal computers. The paper includes virtually all the materials needed to play the game, in either the board version or the personal computer version. The game board, record sheet, and a listing of the computer program (in BASIC and suitable for IBM PCs) are included.

An Experiment to Evaluate Methods for Estimating Fossil Fuel Resources
John D.Sterman, George P. Richardson

Abstract: Estimates of petroleum and natura1 gas resources vary substantially, both over time and across estimation methods. This paper develops a simulation model of global oil resources to evaluate different resource estimation techniques. Protocols for the Hubbert life cycle and USGS geologic analogy methods are developed and applied to synthetic data generated by the model. It is shown that the Hubbert method can generate an accurate estimate as early as twenty years before the peak of global production, but the geologic analogy approach overestimates the true resource base over the life cycle of the resource. The results show the applicability of simulation and the synthetic data approach to the problem of evaluating forecasting methods.

The Application of System Dynamics to the Analysis of GERT Networks
Feixiang Sun, Shaozhong Jiang

Abstract: The relationship between system dynamics (SD) .and other research areas is a subject of universal interest. Attention of the paper is to the possible links between SD and GERT (short for Graphical Evaluation and Review Technique).
A new simulating design for a class of GERT network is proposed and the equivalence of GERT networks to SD models established, thus a new solution to the network obtained.
According to the approach, a GERT network is converted into a SD model in which levels are used to model the random variables associated with the network, such as the expected time to realize a node and the probability that it is realized. The resulting basic model can be used for calculations of any parameter of interest in the analysis of GERT networks.
Its advantages and implications are discussed.

Sensitivity of an Ecological System Dynamics Model to Combination Parameter Changes
Johan Swart

Abstract: The question as to how sensitive a System Dynamics Model is to combination parameter changes in general is a complex one. A recent technique due to J.W. Hearne enables one to find the combination of parameter changes to which the system is most sensitive. The technique is applied here to an ecological model and a perturbation of the system along the most sensitive direction in parameter space is compared with single parameter perturbations of the same magnitude. The method may be useful in population control.

Using STELLA to Create Learning Laboratories: An Example from Physics
Peter Vescuso

Abstract: STELLA is a new software program that has been designed to bring system dynamics to broad-based audiences. A series of books is being developed to disseminate STELLA and system dynamics into one of these broad-based groups -- the college educational market. The books center on a "learning laboratory" approach to learning. This approach uses STELLA as the basis for an experiential, learner-controlled learning process. One of these books, "Learning Laboratories In: Physics," is described in this paper. The book contains three sections: mechanics, thermodynamics and electromagnetism. Within each section are five to six lab sessions. The lab sessions progress from simple structural models of fundamental concepts to more complex models that integrate the work from the previous labs. A sample session on Newton's laws is presented to illustrate the approach.

The Analysis of the Accumulation Rate in China
Qifan Wang, Xiaoting Wang

Abstract: The purpose of this paper is to identify the main important variables and quantities which interact with the accumulation and accumulation rate, and then to analyze the intrinsic relations among them which are important in accumulation rate decisionmaking. Especially we concentrate on the relations among the accumulation rate and energy, total consumption and effectiveness of accumulation.

Studying Technological Progress and its Impact on Economic Growth in China
Qifan Wang, Yang Xin Nong

Abstract: In this article, we analyze the tendency of technological development and the possibility to catch up with the advanced level in China. The technology progress has been playing an important part in the future, in turn, the economic growth has significant influence on technology level. According to the policy test results, we give the proposal and get the conclusions about developing technology in China. 

Stimulations and Obstructions to the Economic Growth of China
Qifan Wang, Xiaobo Zhang, Xiaoting Wang, Xingnong Yang, Yuqing Xiu

Abstract: This paper tries first to put some key factors together in an integrated system (The System Dynamics· Socio-Economic Model of China), and then reveals the dynamics of stimulations and obstructions. The stimulation results of the model show that the stimulation function of different factor changes with time, and at different times, different stimuli will be the leading factors. Overpopulation, shortage in energy supply, transportation backlog, and severe pollution are all serious problems troubling China currently and in the future. The paper also studies some possible ways to remove those barriers.

MRP and JIT: Teaching the Dynamics of Information Flows and Material Flows with System Dynamics Modeling
Merrill E. Warkentin

Abstract: System Dynamics modeling is used as an instructional aid for the teaching of production and inventory management techniques. The roles of Material Requirements Planning (MRP) and just-in-time (JIT) systems in production and inventory management are presented and discussed. By modeling these manufacturing systems, the student can acquire an appreciation of the dynamic relationships between the elements of each system. Some elements of the Dynamo models of these systems are presented. The future opportunities and research needs are discussed.

The Irregular Disturbance of Control Policy in a Dynamic System
Frederick P. Wheeler

Abstract: The control policies of a dynamic system are manifest in the rates of change of state variables or levels. Irregular variation in a control will introduce random delay of the flow into the related level. Of particular interest are exogenous rapid disturbances to the rate constants of feedback loops. These disturbances lead to small random delays which build up as the system develops in time. A statistical description of this process can be obtained for a simple feedback loop as a function of the spectrum of the time series of exogenous disturbances. An understanding of this behaviour is useful for modelling stochastic systems.

Algorithmic Control Modules for System Dynamics Models
E. F. Wolstenholme

Abstract: The purpose of this paper is to describe a proposed framework for policy analysis and design in complex systems based on the transfer to such systems of control modules developed for simplier and more easily quantified systems.
The framework is demonstrated by outlining the development of a dynamic allocation algorithm within a system dynamics model of an engineering system and describing its application in a much larger scale amanagement system. A generalised form of the algorithm is presented based on this experience which serves to highlight its isomorphic qualities.
It is suggested that this framework provides an integrated approach to structural policy analysis in complex systems which can also be used to generate significant insights and perspectives into both the physical and control structure systems.

A Methodology for Qualitative System Dynamics
Eric F. Wolstenholme

Abstract: This paper is based on the premise that there is a need to formalise the procedures used in system dynamics. outside the area of computer simulation analysis, to create a stepwise procedure for systemic analysis. This need arises within the subject when applications encroach on areas where quantification is difficult or unacceptable or when a full qualified analysis is not an economic proposition or limited by time factors.
The paper suggests that qualitative system dynamics should be propogated through the medium of a general framework for system enquiry. The need for general systemic methodologies is examined and the major elements of system dynamics are used to formulate the basis of such a methodology. This formulation presents a means for qualitative problem analysis in terms of the organisational structure and process control structure of systems using generally proven results developed from quantitative system dynamics models.

Some Applications of the Macro-socioeconomic Model-SD to a Province of China
Jien-Chung Wu, Huan-Chen Wang, Mao-Kang

Abstract: Northwest will be a strategically key region for the economic: development of China in the early next century. The Macro-soeioeconomic Model-·SD for a northwestern province (abbreviated to MASEM-SD) has been built. The main purpose of the model is to research into the internal and external conditions and the proper policies which are necessary to realize the great goal in 2000 set by the People's Government of the province. The model further exhibits prospects for the province in the next century and put forth some potential problems that should be paid attention to.

KBSIM- A Knowledge Based Tool and its Use in Model Preprocessing
David F. Young

Abstract: This article describes a tool called KBSIM and its use in model preprocessing. KBSIM consists of a knowledge acquisition system and a systems knowledge modeler which translate the responses of human tutors into structural models and facts housed in a system knowledge base. KBSIM accesses and manipulates the knowledge base through an iterrogation engine to produce information on the structure and function of a described system. KBSIM's knowledge base is a hierarchical set of matrix mapped structural models of a system to an expert level of detail. The tool is useful in integrations and strategic management, technology selection and systems modeling and analysis.

A Simulation Model for Managing the Parking Systems of Kaohsiung: A System Dynamics Approach
Showing H. Young, Tai Ma, Chien M. Chao

Abstract: This paper tries to develop a simulation model for managing the parking systems for the city of Kaohsiung . The system dynamics methodology is employed to formulate the model. The causal structure is compartmented into five sectors: (1) the urban activity/travel sector, (2) the modal split sector, (3) the parking sector, which comprises parking supply and parking demand subsystems for both curb and off-street parkings, (4) the traffic/parking interaction sector, and (5) the financial management sector, which attempts to develop causal links between the revenue sources and expenses of the parking system. The model provides the city administrators a policy lab for parking systems management.

last updated by ng on 1/7/09

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