Conference Proceedings

The 9th International Conference of the System Dynamics Society
1991 Utrecht, Netherlands

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

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

  PAPER INDEX - listed alphabetically by first author:

Setting Inventory Levels for a Centrally Located Blood Bank of a Metropolis - A Simulation Approach
K. Shoukath Ali, Ramaswamy N

Abstract: Blood is a scarce and non-synthesizable resource which would perish eventually when kept under artificial storage.  The major problem encountered in blood bank administration is that of making decision on policies for setting up inventory levels to meet the needs as soon as they arise and simultaneously keep the expiry of blood on the shelf within reasonable limits. The selection of such policies is greatly influenced by demand, daily transfusion, shortages, outdating and shortage-outdate rates.
A true mathematical inventory modelling is nearer to impossibility due to the complexity of interaction between these variables and the stochastic nature of the processes involved.
Early works have shown that there exists a universal relationship between these variables that holds for all blood types. Statistical methods will yield the inventory levels to be set up on the basis of these variables.  But this warrants cumbersome analysis of extensive data collected over a minimum period of 12 months.  The volume of work involved makes this method unwieldy. Simulation tending towards a systems approach appears to be more effective and efficient in the analysis of such inventory situations.  The objective of this study is to investigate and analyse with the use of computer simulation, the relationship  between inventory levels , mean demand and shortage-outdate rates  for all Rh system blood types in at centrally located blood bank of a metropolis like Bombay. Environmental study of present day management of independant blood banks has also been performed.

Dynamic Modeling for Development of Java Island Ecosystem (An Approach to Development of Archipelagic Nations)
Fuad Amsyari et al

Abstract: As an archipelagic nation, Indonesia consist of thousands of island ecosystems. The development of the nation is supposed to consider such a specific existing ecological condition of the country. Therefore, as an alternative effort to promulgate a strategy for sustainable development of the nation, a study of Java as a complex island ecosystem has been conducted using dynamic modelling approach. The objective of the study is to delineate and assess the prospects of various dominate development variables of the island based on complex but measurable interactions among the components of the ecosystem to determine the most effective development strategy for the area.
A dynamic model for Java Island Ecosystem has been set up based on 14 level variables in the model that represent five components of the island ecosystem, i.e. population variable for population component, food, houses, and fuel variables for population basic need component; industry-capital agriculture-capital, and business-capital variables for economic component;  schools and criminals variables for social component; forest arable-land, agricultural-land, city, and pollutants variables for ecological component. Each level has either has two or four rate variables is then interrelated by 72 multiplier variables that sum up to 30 rate variables. In addition, these variable is then interrelated by 72 multiplier variables. A computer program has been developed using a complied basic language to exercise simulation process. The result of study indicated that the best strategy for development of Java Island Ecosystem should be focused to the intensive program on modern agriculture rather than the industrial establishment of the area. (The computer simulation program will also be demonstrated to the conference ). 

Note: This study is conducted by an inter-disciplinary team that consist of ecologist, economist , engineer, statistician, computer programmer, etc., and funded by Ministry of Population and Environment, from 1986-1989.  The list of the team is on the annex.

Policy Analysis of Petroleum Industry in Indonesia
Aresgianto, Widjajono Partowidagdo

Abstract: The role of oil has been traditionally dominating the economic development in Indonesia sine the country launched its first national development program in 1969. Now with the increasing domestic oil demand and the dwindling oil reserve in the country, the future prospect of oil supply is quite alarming. Natural gas which emerges to take part of oil role has not gained substantial market in the domestic market, although export shows a promising figures. This paper is endeavored to analyze the policies in oil and gas sector to help decision maker formulate his policy to get the most achievement of his objectives.

Development of Petrochemical industry in Indonesia: A Policy Experimentation
Arsegianto, Ram M. Shrestha

Abstract: This paper analyses the roles of key policy measures for the development of petrochemical industry in Indonesia based on indigenous oil and gas resources. Policy experimentation for the petrochemical industry development is carried out through a simulation model of the industry. The results show that a combination of policy instruments is needed for achieving the various objectives and that the performances of policies can vary widely between the short-run and the short long-run.

Study on S. D. Model on the Capacity of City Population
Xie Hong Bin, Li Zhou Wei

Abstract: The rising population and the expanding pace of the cities lead to the environmental deterioration. The serious environmental problem has increasingly brought attention to people. This paper provides an effective model for studying and the solving this problem.

Performance of Indian Tea Industry over the Last Decade -- Actual and Predicted
M.C. Bora

Abstract: A system Dynamics (SD) model was developed in the beginning of the eighties to study and analyse the system behaviour and also the suggest policies for future growth of the Indian Tea Industry. The findings from a Delphi study were used in constructing the SD model and in formulating policies for the desired future growth industry.  This paper makes an attempt to compare the actual growth industry. This paper makes an attempt to compare the actual growth pattern of the Indian Tea Industry vis-a-vis the growth of other relevant factors with the predictions made by the Delphii panelists and those generated by the SD model. The reasons for variations in the growth patterns have also been explored. 

 A Return to the Dynamics of Escalation and Withdrawal Behavior
Michael G. Bowen, Michael J. Radzicki

Abstract: This paper reports the results of additional work on a model of escalation behavior since presentation of an early version of the model at the 1988 International Conference of the System Dynamics Society (Radzicki, Bowen, Kuller, and Guerrero, 1988). Here we propose that four variables: (1) the expected total benefits which will accrue if a project is completed; (2) the expected total costs which will be incurred if a project is completed; (3) the expected total benefits which will accrue only if a project is stopped; and, (4) the expected total costs which will be incurred only if a project is stopped; may be crucial to recommitment decisions in terms of a decision maker’s perception of their interrelationships at any point in the evolution of a course of action

The Generation and Diffusion of Managerial Innovations: A System Dynamics Model
John E. Butler

Abstract: This paper presents a model that attempts to examine what happens when an innovation takes a less tangible form, such as a managerial method. Because it is more difficult to track the adoption or measure the benefits of such innovations, organizations often fail to use valuable knowledge when attempting to solve difficult problems. Existing research suggests that intangible managerial innovations are more likely to be adopted if a group of adherents develops to support and foster innovation. This research investigates the role that these groups, often called “invisible colleges” play in this transfer of knowledge.  A preliminary system-type model, based on the existing literature is presented and discussed.

STELLA Modelling Process for Manpower Strategy
Matthew Byrne, Andrew Davis

Abstract: This paper describes a process used by Shell Business Consultancy to model manpower in an IT department. The IT world has been undergoing rapid changes in the last decade due to a highly mobile job market, skill shortages and the widespread use of contractors. Given these problems, it is important that management understand the implications of personnel policies. Shell Business Consultants built a STELLA model with the managers involved to focus their attention on the key issues and to enable them to actively explore policy options. The paper focuses on the process used in this project and combines it with our other experience to draw some generally applicable lessons that should be of use to all practitioners. 

Formulation of System Dynamics Models
Antonio S. Câmara

Abstract: System dynamics models are usually formulated from verbal descriptions of problems. To define such models, one maps the verbal description into a set of equations. This mapping process remains much of an art despite the use of causal diagrams, to extract from the verbal descriptions the variables (nouns or noun combinations) and the direction, degree of independence and polarity of the relationships to be included in the simulation model. This paper presents an attempt to formalize the translation of verbal descriptions into causal diagrams. The proposed methodology is based on the decomposition of the text into a sequence of inferences. All the nouns and adjective-noun combinations in each inference are then identified and inserted into an adjacency matrix to facilitate the selection of the relevant variables and polarized relationships by the modeler. Implementation of this method on a computer is discussed. A preliminary solution is presented. The description a simple environmental impact problem is mapped into a causal diagram using the proposed approach for illustrative purposes.

Un Gala di Venezia: A Gaming Simulation on the “Expectations" of the Venetian Inhabitants
Arnaldo Cecchini, Alberto Recla

Abstract: This game falls into the category of analysis and participation techniques. As is well known, gaming simulations are one of the tools available to analyse and investigate systems behaviours, mainly socio-economic ones.

Support Method for Optimal Control of Linear Dynamical System
Nguyen Chan

Abstract: In this paper we construct a method for solving the problem of optimizing the maximal deviation of the real plan (or the trajectory, the technological process  . . . ) from some ideal one. The mathematical model of the dynamical system being considered is a system of linear differential equations with a control function. The method is based on some ideas of the so-called support method proposed by R. Gabasov and F.M. Kirillova.
After introducing support controls and establishing their relation with controllability of the system, we derive a criterion (which can be easily verified) for a support control to be optimal. Then we briefly describe an iteration for improving the existing control if it has not been optimal yet. Finally we present an illustrative example.

Construction Project Management: A System Dynamics Approach
Chang, Chui-Lung, Stephen Ogunlana, Khalid Saeed.

Abstract: This study reviews the R&D Project Model developed by Richardson and Pugh III (1981) with a view to apply it to construction project management. Analysis of the model behaviors is done taking into consideration the three prime objectives of project management: meeting specified performance, within cost; and on construction project management is made. Experimentation with the revised model attempts to identify appropriate policies regarding how to improve construction project management.

System Dynamics Model of an Urban Water Resources Use and IT’s Application
Zhang Chao, Lui Chong-Ming

Abstract: A new urban water resources use and forecasting model constructed by comprehensive considering the balance between the supply and demand of the water resources system to an industry city and the feedback relationship of the water resources control policy, and by applying DYNAMO language is presented in this paper. It can give more rational data of urban water resources simulation and planning than that given by the growth rate trend forecasting method.

Dynamics of Implementation of Quality Control, Circles: The Case of a Steel Plant.
Prasong Chatsirisakul, Khalid Saeed

Abstract: This paper uses a system framework to understand the performance of Quality Control Circles (Q.C.C.). A system dynamics model is constructed integrating the Q.C.C. with the production process; the previous studies have examined each system separately. The study partly based on previous studies and the data from the real case of Thailand Steel Plant. It incorporates some of the important factors interfacing each sector into a complete model. Interpretation of the model builds in a cumulative fashion, from computer simulation and testing of individual sectors, an understanding of the performance of Q.C.C. Sensitivity analysis and policy analysis of Q.C.C. is included in the experimental design. Those the sensitive and insensitive policies of Q.C.C. are studied. However, the model on basis for simulating the impact of various strategic policy decisions on the company preference. The model also guides the management in designing policies related to the implementation of Q.C.C. are also identified. It is expected that the model of this study will provide the understanding of the interaction between the Q.C.C. and the production process.

A System Dynamics Approach To Analyze The Relationship Between Transportation and Regional Development In Taiwan
Rueih-Shiarng Chiang, Shaw-Er Wang Chiang

Abstract: Disparities, both sectoral and regional, always exist during the process of national economic development.  The disparities between the agricultural and non-agricultural sectors of Taiwan have steadily increased due to the rapid industrial and economic growth encourage by the government. Awareness of the effect from the physical development on regional disparity has risen since the enforcement of the Six-Year Economic Development Plan in 1976. In the Taiwan Area, four regional plans have been drafted and successively enforced in order to decreased such regional disparities.
The purpose of this paper is: (1) to study the regional disparities in Taiwan based on average per capita income and employment opportunity as indicators on four regional planning regions; (2) to develop a system dynamics model to portray the relationship between transportation and regional development disparities in Taiwan; and (3) to provide a future direction for regional policy based on conclusions drawn from the result of (1) and (2)

STELLA, STELLA Stack and Hypermedia in Information System Design and Assessment
D. A. Corben, E.F.Wolstenholme

Abstract:This paper describes the contribution of recent Apple Macintosh and system Dynamics software to improving the interaction between analyst and user in the development and the use of strategic models for assessing and designing large scale computer information systems (CIS).

Using the System Dynamics Methods for Defining the AIDS Problem
Dorien J. De Tombe

Abstract: Defining new complex societal domain exceeded problems in fast changing situations is not an easy task. Problems like the exponential growth of the metropolitans and AIDS are very hard to define. Relevant data and knowledge is often missing. 
There is a large amount of uncertainty and blind spots concerning the different aspects of the problem. Yet these problems require guiding. Before one is able to guide a problem, the problem has to be identified. The way problems are guided depends on the definition of the problem. Managers and experts often mis the knowledge and experience on how to define these kinds of problems. Traditional education didn’t give much off a opportunity to learn defining these kind of problems.
Defining complex domain exceeded problems is teamwork.
Experts of different domains must work together to define the problem. This can cause a lot of communication problems concerning the context boundness of each others knowledge.
System dynamic modelling can be a tool in defining these kinds of problems. System dynamic modelling can be a guide for structuring the different mental models of the participants. It can serve as a mutual language for communication. Managers and experts can be trained defining complex domain exceeded problems in using system dynamic modelling tools in a special learning environment with real cases imbedded in a free-form game.
This paper will report also on some try-outs with system dynamic modeling for defining the AIDS problem by social science students of the University of Utrecht.

Transportation Impact Methodology for Measuring Users and Non-Users Benefits
Donald R. Drew

Abstract: A methodology for linking transport, user benefits, and succeeding economic development, so as to provide a basis for rational policy formation, is presented. The approach consists of developing relationships between variables in casual streams from policy parameters to measures of effectiveness and expressing them in the form of a generic model. The generic model is solved analytically and subjected to policy analysis.

The Life-Expectancy of Industrial Civilization
Richard C. Duncan

Abstract: The life-expectancy of industrial civilization is defined. A feedback model of the human life-support system is used to study system controllability at the global level. The inadequacies of control, calculations based on energy-use data, and other considerations are used to theorize that the life-expectancy of industrial civilization is less than 100 years.

Complexities in Periurban Dynamics
Issac Dyner, Diana Muñoz, and Alba M. Quintero

Abstract:Suburbs or areas in the periphery of the cities are troublesome to plan when urban growth takes place at fast rate. System Dynamics approach has been shown to be suitable to study Periurban Dynamics in spite all of all externalities in the system. Immigration, commerce and industry being some of the most important exogenous variables.
Early experiments for small dormitory periurban region prove the techniques to be appropriate, but when commerce and industry dispute themselves, along with housing, for a share of land, the problem becomes complex and interesting.
A simulation was carried out for the periurban commune of El Poblado, with a population of over 48000 inhabitants, in Medellin, Colombia. Good approximation was observed between historical data and model behavior. Few scenarios were explored in order to examine land-use policies.

Computer Simulation Model for Optimum Seaport Planning
Aysen Ergin, Ahmet Cevdet Yalciner

Abstract: The optimum port size (which has the minimum total cost) can be determined by computer simulation model. The softwares HARSOL and HARCON which are developed in METU, civil Engineering Department, Coastal and Harbor Engineering Research Center, determine the port size which gives the minimum total port cost by processing the phenomena such as random arrivals and sizes of the ships, queue discipline and service for loafing/unloading which fits to a statistical distribution. HARSOL runs for the general cargo terminal and HARCON runs for container terminal. The optimization models are performed for a case study. The sensitivity of the model is investigated concerning the random number generation.

Approach on Educational Economics by Using the Non-Equilibrium System Theory
Fang Fu-Kang, Li Ke-Qiang

Abstract: Under the framework of non-equilibrium theory, a model is adopted to analyse the educational economic system of China. By dividing the education levels into four parts, the high education, the basic education, the secondary education and the vocational -technical education, we study the relation between educational systems and economics. The development of chinese education and its economical benefits have been calculated and discussed.

A Model of Organizational Change
Henry Frechette, Frank Spital

Abstract: This paper reports on the initial results of a research effort to improve the long run effectiveness of organizational changes. The literature suggests that organizations frequently experience periods of stability that are punctuated by bursts of large scale change. Our objective is to understand what causes this pattern and what policies are likely to improve organizational performance through the change process. In this paper we present a causal loop diagram of the structure or our model, and discuss the reasons for this structure. This model does reproduce the behavior of patterns to which the literature refers. In addition, we report the results of some sensitivity analyses and policy tests of the model. These results have implications for managers. Finally, we discuss the limitations of our model in its current form, and the next steps that we intend to take.

Diffusion Analysis in Marketing
M. Govindarajan and N. Ramaswamy

Abstract: The system dynamics technique has been adapted to reflect the dynamics of the diffusion process from both behavioural and marketing strategy perspectives. The diffusion theory has helped in conceptualising and explaining the information process and in evaluating the various market interventions in the spread of new product innovations. The diffusion and adoption process has been studied with particular reference to the personal computer in India.

A General Equilibrium Analysis of Income Distribution and Development Policy
Sibel Güven

Abstract: This paper presents an empirical analysis of the interaction between growth and income distribution for the Turkish economy over the period 1973-1979. The analysis is based on at multi-period, multi-sector computable general equilibrium model constructed for the Turkish economy, that permit’s the evaluation of distributional as well as growth consequences of alternative policies. Along with empirical testing of the model, three sets of experiments are conducted with the model. Counter factual trade policy experiments, alternative wage policy experiments and simulations investigating the distributional and growth consequences of alternative potential redistributive policies indicate that the size distribution of income is stable and very difficult to change with the policy interventions considered. Agricultural terms of trade is one of the most important determinants of reducing overall poverty, and policy instruments conducive to higher growth is not necessarily in conflict with the policies aiming at more even distribution of income.

Development of Large Enterprise Finance Dynamics Model with the Workbench
Liu Hao-Jun, Li Xiao-Hua, Cao Pei-Dong, Yuan Qi

Abstract: Taking the financial system of large industrial enterprises as the example, this paper makes a detail introduction of the method, steps and crucial points of programming financial dynamics model with the simulation software development workbench. The financial dynamics of the large enterprise consists of submodel of cost, submodel of fixed assets, submodel of fund, submodel of tax and submodel of price.

An Application of System Dynamics Approach to the Development Goals and Policies of the Animal Husbandry
Wang Hong-bin

Abstract: In this research, the system dynamics for analysing the development goals and polices of the animal husbandry in Heilongjiang province is constructed by means of the theory and approach of system dynamics. In this model, the major relations of mutual effects and interactions existing in the processes of natural and economic reproduction of animal husbandry are described emphatically.

A Heuristic Resource Allocation Algorithm for System with Uncertainty in Request Timing; a Backtracking Strategy
Antti Huusko, Boris Segerståhl

Abstract: This report describes on object-oriented approach to model representation. An object’s behaviour is defined by sets of rules. The system provides control of the model’s dynamic behaviour by providing simulation monitoring facilities. The main performance assessment is based on a heuristic analysis of simulation data which creates a specification of refinements to the model in order to better satisfy the predefined goals.  The simulation life cycle is managed by means of a goal-directed rule system which examines the performance of a scenario. Based on the performance assessment, resources are reallocated by means of a backtracking strategy where the key features are the use of heuristic and domain-dependant search algorithms, and the concept of parallelism is used in the structuring of the optimal strategy.

System Dynamics Simulation Language --- DYNAMOC
Han Jiuqiang, Sun Guoji, Wu Biao

Abstract: This paper introduces a system dynamics simulation language - - - DYNAMOC developed by authers. In the paper, we first focus on discussing the program structure, software functions and features. Secondly, a simulation example is provided to illustrate our DYNAMOC.

A System Dynamics Based Model for Evaluating the Performance of an Engineering Firm
Saroj Koul, Prem Vrat

Abstract: This paper examines four policy options for evaluating the overall performance of a Public sector engineering firm in India. The major areas viz.  finance, production, human resources and research & development are taken up for the study. The System Dynamics methodology was chosen as the tool for conducting the analysis because it provides means for understanding the dynamic inter-relationships between key functional parameters thereby allowing to explore the impact of different policies.

Helping Management Teams to Model: A Project in the Consumer Electronics Industry
Erik Reimer Larsen, John D.W. Morecroft, John Murphy

Abstract: We have been using system dynamics with the management team of a consumer electronics company to investigate problems in training, inventory control and debt handling. In this paper we describes how the modelling approach was introduced to the company and subsequently used to support management team decision making. A small model of a direct mail campaign shows how the modelling process improved team understanding and inventory and demand dynamics. Building on experience from the project we comment on conditions for model building (training, team make-up, facilitation, model size, role of the computer) that encourage the active participation of management teams.

How to Increase Activity of Factory
Mingkai Lei

Abstract: Since society developing and technology progressing, product’s life period is going to short. Meanwhile market competition is getting more intense. Factory has to develop new products required by martket rapidly so that factory can get developing. This paper applies system dynamics model to simulate a process of new products developed in a factory, finds problems, put forward scheme of solving problems. The factory has carried out this scheme, the period of new products developed has been shorted 50 per cent.  Some new products have occupied market rapidly.

Urban Underground Space Development and Civil Defence Construction ----- a Special Problem’s S.D. Model
Cheng Liguo, Zhang Youmin, Yuan Zhengru, Yu Youshan

Abstract: Owing to development of the cubic construction of modern cities and the protective functions of underground space against the disasters such as earthquake and air raids by modern weapons, the development of urban underground space and the construction of protective sheltering against disasters have become an important policy for many cities. Nevertheless, contradictions between investment and benefit as well as between protection and economy will often occur as a result of the very expensive cost of underground space development. As managers of system, they tend to need to understand these problems and adopt effective measures to find out solutions for them. The method of System Dynamics is no doubt a useful tool for the studies of such problems.
This paper has established a system dynamic model about urban underground space development and civil defence construction, including development fund raising, fund distribution, urban underground space construction, subways (i.e., underground railway) construction, urban population and the other auxiliary business dealings performed by the development departments. The model has successfully solved the problem of offering methods for the efficiency of protecting against disasters, the social and economic benefits of urban underground space development and civil defence construction. It reveals the feedback and circulation mechanism and tendency of urban underground space development and civil defence construction.

Economical Quality Analysis for Industrial Enterprises
Yue Lu, Xinhua Fu

Abstract: In modern era, many system theories and methods have been applied in the industrial enterprise.  It is obvious that the quality problems, as one aspect of system, is the one deserving much more important considerations.
There are many reasons for studying the quality problem as a system. For example, the enterprises pursued benefits by the way of high quality, although over- done quality is not the best. We should consider it as a system problem. There are many modern management theories such as IE (Industrial Engineering), QC (Quality Control), OR (Operation Research), ZD (zero - defect), PERT (Program Evaluation and Review Technique). If these theories and methods can be applied under the thoughts of Economical Quality System Analysis, it will show the great potentiality.
This paper applying the SD theory and method, declares the concept of EQS, attempting to achieve three goals;
1. To analyze the relationship among the Quality-- Cost -- Profit, and seek the best combination of these two factors: Quality and Benefits.
2. To discuss, the appropriate quality level, the combina-tion of Quality and benefit in the process of product design, manufacturing, and sales.
3. To study the internal feedback structure, and the model of quality and benefit of industrial enterprises.

The Quantitative Analysis of Spatial Distribution of Population
Jiang Lu, Di Zengru

Abstract: According to the theory of dissipative structure and the features of the evolution of population in China, the evolutionary equations for the population of cities and towns in every province (except Taiwan and Hainan) of China are obtained. By these equations spatial distribution from 1980 to 1984 and future evolution are shown.  Some natures of population in China are discussed.

Designing Prototypes of JIT Systems Using System Dynamics Principles
Julio Macedo , Rafael Ruiz Usano

Abstract: American and European firms use just in time prototypes which are subsets of the japanese just in time system. Hence, these firms need tools to select those components of the japanese JIT system best suited to their particular characteristics and environments. This paper proposes one of such tools and illustrates its application on a case study. The proposed tool is a computer aided procedure that implements system dynamics principles using a continuous-discrete simulation language.

When Creating and Using Games, Are We Neglecting the Essential of System Dynamics?
José A.D. Machuca

Abstract: As it is well known, the explicit representation of systems structure (e.g.: causal diagrams) is one of the main features of System Dynamics. In my view, this precious tool is perhaps being neglected or, more precisely, not utilised to the full when building and using models and games. In this way, the structure of the systems is hidden and the transparency of the models is lost. This can be especially negative in games which not allow the players to access the structure. That can leads to a decision making not based on the causes but on the symptoms, as standard black box games do.

System Dynamics: Taming Expert Systems in the Business World
Mihran Markarian, Roman Koziol

Abstract: The paper reports on a new approach for the building of Decision Support Systems based on System Dynamics and Expert Systems. The power of this approach is illustrated by using it to identify problems that exist within the production processes of a manufacturing company. System Dynamics was used to simulate the production processes and build the expert system. The simulation identifies the process where the problem exists, and the Expert System suggests possible causes to the problem and the solutions required to bring production back to normal.
Stella was the System Dynamics tool used to gain a detailed understanding of the production processes and their interactions in order to build a simulation model. The influences from this simulation were used to structure the knowledge base of an expert system. While the expert system was an essential ingredient of the Decision Support System, the actual system that was used and its features were of secondary importance.
This paper will benefit System Dynamic practitioners who are interested in: 1) simulating a process within an organisation., 2) the application of System Dynamics to solve a manufacturing problem.,
3) the relationship between System Dynamics and building of Experts Systems., 4) the use of System Dynamics as a decision making/support tool in the manufacturing industry.

Dynamics of Development Cost Structure
Ali Naghi Mashayekhi

Abstract: A cost structure is presented for the development projects based on two kinds of cost: base cost and progress cost. The base cost is necessary to keep a project alive and ready for real progress. The progress cost is to make physical progress in the project. A dynamic model is made and simulated to show the behavior of this cost structure. The model shows that when development budget is not sufficient to pay for all the required expenses of an ongoing development projects, total cost of development projects would increase and completion time of the projects would rise. Insufficiency of development budget occurs either by decline of government revenues or by start of too many new projects. In the face of insufficient budget, it becomes very crucial to decrease the starting rates of new projects. By decreasing the number of starting projects, the behavior of the model in terms of completion time and unit cost of the projects improves considerably when budget insufficiency appears.

Learning and Understanding Innovation Dynamics: A Gaming Approach
Peter M. Milling

Abstract: Innovation management is a special task in several respects. Its success is essential for the survival of the firm. It deals with highly dynamic processes, and it requires a viable strategy from the very outset. Analyses of innovation dynamics have shown that market forces usually do not allow the search for a gradual approach towards a successful strategy. Frequently technology advances rapidly and the market changes so fast that no second try is possible.
In such a situation, the artificial reality of a management simulator provides a powerful environment to learn about the system under investigation. It allows deeper insights into the problem situation. In its virtual world, it alleviates the development of an improved understanding of the intrinsic aspects, and leads to a better feeling for possible reactions of the market.
The paper presents the coarse structure of an Innovation Management Simulator (IMS). The players represent four competing companies. At the beginning of the simulation, all offer a comparable product, no firm holds a competitive advantage. Among other policies, they can -through resource allocation for research and development - create additional, non substituting products. The product life cycles with their time patterns of profits and sales, market shares, etc. are endogenous variables, influenced by the players’ actions.
The decision to develop and launch a new product and the choice of the time for market entry are strategic variables of the players. Further decisions are required to budget product and process development, pricing and advertising, capacity allocation, personnel recruitment and financing. The game is played on a quarterly basis. The decisions are fed into a System Dynamics model, and the results provide the input for a new round of decision making.

Simple Quantum Chaotic Model for Fluctuating Dissipative Systems
J.C. Mora

Abstract: Energy dissipative systems are considered through a general approach. The one direction non-steady state equation for mass, heat and momentum transport shows that the energy used by system could be considered through “energy dissipation function”, comparable to the “wave function” used in Quantum Mechanics. A complex time scale is proposed. This permits to consider the fluctuations as being in a time scale which is different from our classical one. The non commutation of operators of the basic equation introduces quantification which supports the use of finite different equations instead of a differential equation. A discretized Chaotic Process is proposed as a model for actual systems. The example of a fluidized bed shows that quantum considerations through a ground dynamic state and an excited state could support the above proposal which is in agreement with the actual qualitative behaviour. The Chaotic Process can be put in agreement with the thermodynamics based principle when comparing the minimum energy dissipation of the actual system.

A Quantitative Analysis of Information Generation Properties of Structurally Different Networks
Michiya Morita, Nobuhide Tanaka

Abstract: This paper tries to examine information generation properties of the network structure usually shown by arrows and nodes by the dynamic simulation analysis. The information generation means the augmentation of information stock (we call “base”) of the network brought up by the network members. We introduce behavioral aspects into the analysis. In the past several researchers have approached to the task performances of the network structures by the experimentations involving actual persons. Our research puts emphasis on the information base on which tasks are accomplished. Therefore we will not touch the performances of achieving tasks explicitly. Our objectives are to examine how the structure of network has influences on the information base for accomplishment of tasks by its communication channels stipulated by the structure.

System Dynamics Computer Simulation Model of Croatia
Ante Munitic

Abstract: The proposed model is a scientific attempt to apply the methodology of System Dynamics to research one of the most complex organization system of management, with the aim of finding out the most suitable scenario of the management by economic migration flows. The problem of economic migration is one of the most important problems both for the countries of origin and for the receiving countries. Computer simulation of the proposed model confirms most of the results achieved by Andre Sapir, but pointing to the possibility of multilateral consultation of the managers of the regional system, as well as of the society to which it belongs, in this case: REPUBLICA of CROATIA, and the managers of the countries which absorb the economic migrations flows. The result of these multilateral consultantions would be very useful for the countries of origin, and for the countries that receive economic migrants as well!

DYSBASE: DYnamic Simulation with DataBASE (A Software for System Dynamics Modelling)
M.V.S.L. Narayana, Sushil

Abstract: System Dynamics is one the methodologies for behavioural research. Some of the important steps for the behavioural analysis under system dynamics framework are system conceptualization, model fabrication, model simulation and finally the policy analysis. Out of these steps model simulation usually involves massive computation and hence it may necessitate usage of the computers. When it is a question of the usage of computers there is a need of a language for computer oriented model preparation and simulation.  To cater to this need a software viz. DYSBASE (DYNAMIC SIMULATION WITH DATA BASE) has been developed. This paper chalks out an overview of DYSBASE. The language syntax and the operational procedure of DYBASE software is described in the DYSBASE manual available with the authors.

Complex Dynamics Hyperchaos and Coupling in a Microbiological Model
Anne Bjerring Nielsen, Heidi C.K. Stranddorf, Erik Mosekilde

Abstract: Interacting populations of bacteria and phages (i.e. vira) play an important role for many biotechnological applications. The homogeneous and well-controlled bacterial cultures used in modern cheese production, for instance, are often extremely sensitive to attacks by phages, and considerable efforts are invested in the search for more resistant cultures.
In order to examine different strategies in this search we have simulated a variety of growth, competition and selection processes that may arise in interacting populations of bacteria and phages. Our model considers a culture containing several variants of the same bacterium, each sensitive to a specific phage. The culture grows in a chemostat with a continuous supply of nutrients. Surplus bacteria and vira are removed through dilution.  Depending on the rate of dilution, the model exhibits periodic behavior, quasiperiodic behavior, deterministic chaos or hyperchaos.
To study phenomena related with incomplete mixing in the chemo state we have coupled behaviors associated with different compartments. In particular, we have investigated how the behavior changes when we introduce a diffusive coupling of a periodic attractor to a quasiperiodic and a hyperchaotic attracter, respectively.

The Dynamics of Indebtedness in the Developing Countries: The Case of the Philippines
Phares P. Parayno, Khalid Saeed

Abstract: The relationship between foreign capital inflows, the build-up of debt, and economic growth in a developing country are analyzed using a system dynamics model of the pertinent processes. The Philippines serves as an empirical case to apply the model. The model incorporates the macro-structure of economic growth, the micro-structure of market-clearing mechanisms, and an accounting of the money flows. The study shows that economic policies enhancing debt-servicing ability create better economic performance than those limiting loan giving. Increasing capital-intensity is the most important part of such policies. They are further facilitated by encouraging investment through decreasing taxes and enhancing demand through increasing government spending and promoting exports. Thus, augmentation of domestic resources by foreign capital inflows appears to be a viable economic strategy.

An Alternative Method for Policy Synthesis of a Production-Inventory System via Model Control
H. Paul

Abstract: The feedback control concept is central to both modern control theory and system dynamics. Several attempts have been made to utilise modern control theory in developing some formalised procedures for system dynamics models. Some studies on the application of control theory to a simple production-inventory system have been reported. These studies were able to discover some important policy decisions to improve the behaviour of the system. This paper presents an alternative procedure based on modal control theory for designing useful policies for the production-inventory system. The results obtained in this study are generally similar to those obtained in earlier studies reported in the literature.  

Macrosystem Approach for Modelling of Regional Dynamics
Yu. S.  Popov

Abstract: Formulation of the general scheme for developing dynamic models of macrosystems with selfreproduction and resources exchange, using the local equilibria principle, is proposed. Regional system, where reproduction and exchange processes have significantly different relaxation times, is considered. The model of regional system, where dynamic exchange processes are described as the evolution of local stationary states, is presented. Calculation, classification and bifurcation of equilibrium points of regional dynamics are studied. Results of computational experiments are given.

The Impact of Transportation Projects on Jabotabek, Indonesia
Bambang Slamet Pujantiyo, Yoshio Hanzawa, Atsushi Fukuda

Abstract: The lack of transportation facilities has been the slackening force to the economic development of most Southeast Asian countries in recent years. A lot of transportation projects has been purposed to alleviate this pressing problem. However, each project is being appraised individually without considering its economic importance with other proposed projects. Economic evaluation is considered on a short term basis neglecting the effects of the project to the whole transportation system on the long term. There is no coordination and systematic implementation to analyze whether a project is important or will be approved first considering the limited funds and resources available. On this research, a system dynamics model is proposed which can analyze the coordination of some projects in terms of economic evaluation.
The reliability of this model is tested in Jabotabek, Indonesia which is composed of one urban area and three surrounding areas. The transportation facilities that are considered in this study area are the port which serves as an import-export terminal for products and resources, the trunk roads which provide the link between the urban area and the suburban areas, and other urban transportation facilities located within the urban area.
Comparing the trend of the socio-economic growth and development of each expected scenarios is the defined areas, the result shows the importance of coordinating the implementation of transportation facilities.

A Simulation Software Development Workbench to Dynamics System
Yuan Qi

Abstract: In the paper, We discuss characteristic, structure and application of simulation software development workbench for dynamics systems on the computer -- a new tool software. This workbench is mainly composed of four parts.  1) initial information management part, 2) three library structures, 3) model design tool, 4) running table.

Macroeconomic Multifunction Equilibrium Growth Model of Wuhan
Guo Qincai

Abstract: <<Macroeconomic Multifunction Equilibrium Growth Model of Wuhan>> and its application is the first development application, it also the continuation of theory research and method research. This application model consists of 8486 parameters and 2689 equations. The results can be gained just one time by microcomputer. The sample period of the model is from 1978 to 1989. The prediction period of the model is from 1990 to 1995. They are both an entirety (whole). Its calculation results are output simultaneously.
This application research report is written in 200 thousands of Chinese words and consists of four parts: 1. Macroeconomic multifunction equilibrium growth model of Wuhan; 2. The lab of macroeconomic system of Wuhan; 3. The prediction policy-making report of “the Eighth Five-year planning” of Wuhan; 4. 607 kinds of indexes output from the model.
Because the paper length is limited by conference, only first part is translated into English. It mainly introduces the theory characteristics and structure of this application model, and the examination of the model as well as the new function of system software. The frame graph, flow graph and mathematic equation of the model are also introduced in theory and method research. Thus many places in this report are not detailedly discussed and are cited in the reference (1).

Dynamic Process, Tempestuous Relationship, and System Dynamics
Michael J. Radzicki

Abstract: This paper describes two exercises that are useful in an introductory course in system dynamics. They are centered around two models of a couple engaged in a tempestuous relationship. Although the models are quite simple, the exercises can be used to introduce and practice a surprisingly large number of system dynamics skills.

Growing with Debt: Strategies for Argentina
Juan C. Rego

Abstract: Argentina’s economic growth is seriously threatened by the service of the external debt, when this is compared with Argentina’s payment capacity. The difficulties in the accomplishment of the mentioned payments has caused the decrease of the value of the Argentine debt’s bonds in the secondary markets. This has carried on to the formulation of repurchase strategies of the debt, proposed by Fernandez (1987) and Rodriguez (1988, 1990), which are examined here. For this purpose a simple growth model type Harrod-Domar is coupled to the debt, which grows in function of the unpaid service. Meanwhile, the market price of the debt is governed by a behaviour equation, formulated by Rodriguez ( 1990). A resulting System Dynamics model, which continues a previous work (Rego 1988), permits to simulate alternative scenarios for the economic growth and debt management.

Graph Theory Analitics of SD Flow Diagram
Jia Ren’ang

Abstract: The article advances and discusses a theory that using diagraph theory to analyse SD flow diagram. First, on the basis of the concept strongly connected digraph generation out-tree and extreme out-tree, we prove two existence generation out-tree theorem and three relative propositions of flow diagram generation out-tree. The method to define the extreme out-tree and feedback loop set are obtained in complicated SD flow diagrams, also the general laws are advanced that each variable produces corresponding increment that in the feedback loop and extreme out-tree and at the different simulation moment, one increment ∆x is given certain variable x. All these conclusions are useful to the debugging and the result-analysis of SD model and are also useful to analyse the effects of controll variable in system.

System Dynamics and Statistics: Recovering the Aids Incubation Time Distribution from Right-Censored Data
Carole Roberts, Brian Dangerfield

Abstract: The identification of the AIDS incubation time distribution, together with its parameters, is a vital component of any mathematical model designed to portray cases. A dataset on Transfusion-Associated AIDS cases in the USA is available and can be utilised in this identification process. However, the task of achieving a best fit using either parametric or non-parametric statistical methods is hampered because, in particular, the data are right-censored and this leads to an extremely complex maximum, likelihood estimation procedure. By employing an appropriate system dynamics software tool an optimising simulation approach to the fitting process is available as an alternative. This enables the resolution of a number of complications which hamper the maximum likelihood approach.

A System Dynamics Model of a Public Sector in India
Jalal Sajedi Sabegh, Sushil K. Sharma

Abstract: In this paper a system dynamics model of working of a public sector in India is presented and it behaviour has been analysed. The public sector in India are suffering from low productivity, overstaffing and excess capacity. The quality of managerial input, selection process and compensation offered and flexibility in decision making are some of the major causes of under performance. The state owned enterprises have often not to compete with private sectors and the growth in market share is not so emphasized.
Apart from this the motivational cycle of the employee working in public sector undertaking is not well pronounced. The socialistic norms of control, which substantially affects the security need over a need pattern of the employee, which is essentially the need pattern closely correlated with free enterprise systems. The situation of conflict arises in case of a state owned company working under a mixed economy systems as obtained in India. This causes low productivity.
The paper concludes that each unit should be treated as a separate autonomous body, with flexibility in decision making, better managerial talents have to be attracted. The level of competition should be well pronounced if at all productivity has to be improved. Productivity awareness has to come from the top political circle of the Government and productivity should be treated as national gain.

Towards a Functional Form of Capitalism
Khalid Saeed

Abstract: The performance of a capitalist system is explained using a system dynamics model of economic growth and income distribution which generates numerous patterns of behavior subsuming both capitalist and Marxist economic views. Extended experimentation with this model then serves as a basis to identify critical policy instruments that make best use if the system potential and avoid dysfunctional developments. Issues of income and wealth distribution and entrepreneurial performances are discussed.

Measured Contribution of Technology for Policy Analysis
Nawaz Sharif, K. Ramanathan

Abstract: Technology is nowadays considered as an important strategic variable for development. The growth of the developed economies is said to be due to productivity enhancement which is largely attributed to technological innovation. Thus the need emerges for a fuller understanding  of the contribution of technology. For improved decision making a new set of technological data will have to be made available and a reorientation of traditional thought will have to be fostered.In the economic production context, technology is simply a means for achieving transformation of available inputs (natural resources and semifinished goods) into desirable outputs (consumer, semifinished and capital goods). To gain a better insight into the role of technology in economic development, it is necessary to view technology as a comprising of four embodied forms (object-embodied physical facilities; person-embodied human abilities; record-embodied documented facts; and institution-embodied management techniques) which interact dynamically at any production system.
A framework for measuring the contribution of the four embodiment forms of technology in a production system is presented in this paper. The procedure requires an assessment of the status and interrelationships of the individual components of technology being utilized by a firm vis-a-vis the best practice elsewhere and then to determine the overall “technology contribution coefficient” (TCC) of the transformation operation. The paper suggests the use of the TCC measure for assessing the technological capability of a production system. A careful analysis of the interaction among the four components of technology in relation to the market and policy environment may lead to a better understanding of the technological behaviour of firm with significant policy implications. For such an analysis, the “system dynamics” approach is considered to be suitable because of its ability to deal with complex, interesting and dynamic behaviour of the variables.

System Dynamics Teaching at a Japanese University
Toshiro Shimada

Abstract: For about 20 years I have taught System Dynamics modelling at a seminar cource., faculty of commerce, Meiji University , Tokyo. About 6-10 sophomore students used to be divided into 2 groups and each groups and each chose an optimal company or an urban city, for which students tried to formulate a System Dynamics simulation model, and its results were seen every year in a magazine published in Japanese by the faculty of commerce, Meiji University . There were about 30 papers of students, for such companies as super-market, watch, drugs, newspaper, transportation, brewery, bank, gas, restaurant, tobacco, airline and so on, or for a suburban city near Tokyo.
Students gathered historical data, had interviews with objective cooperations, formulated models, for which they analysed feedback loops and simulation results. They did all by themselves. These systems thinking studies were of very much value for students.
I will explain a few examples from my student’s works and some other Japanese research case studies.

Applying Systems Dynamics to Climate Change Issues
Toufiq A. Siddiqi, Phares Parayno, Hartmut Bossel

Abstract: Global climate change has emerged as a major policy issue in industrialized as well as developing countries. The increasing emissions of greenhouse gases such as carbon dioxide, methane, and CFCs are believed to be the primary cause of Man’s contribution to climate change. This trend would have to be slowed down and subsequently reversed, if the earth's climate is to remain relatively stable.
System dynamics can be used to calculate future emissions of carbon dioxide (CO2) from the use of fossil fuels and to examine the effects of introducing new energy technologies on such emissions. In this paper, we illustrate this approach by estimating the future emissions of CO2 from energy use in the transportation sectors in India, the Republic of Korea, and Thailand . The sensitivity of such emissions to improvements in automobile efficiency, and to the relative use of public and private transportation is examined.
The approach discussed in the paper can be easily extended to other energy use sectors, such as electricity generation, or industrial uses. Studies of this type can provide valuable input to policy- makers for optimizing the allocation of scarce resources to meet the challenge of global climate change.

Integration of Raster-Based GIS and System Dynamics and Its Application
Pitan Singhasaneh, John E. Lukens, Apisit Eiumnoh, Harvey Demaine

Abstract: At present, Geographical Information Systems (GIS) and System Dynamics (SD) can still be considered as scientific tools in the developing stage which are gaining popularity because of their utility in their own separate fields. GIS deals with the data, their position in a coordinate system , their attributes, and their spatial interrelation with each other, while System Dynamics is used to understand problems which are dynamic (involve quantities which change over time), and also involves the notion feedback.

A System Dynamics Approach to Teaching of Settlement Geography
Orasa Suksawang

Abstract: This paper explains an effort to approach system dynamics as a tool for designing a curriculum and integrating experimental learning in a course titled Geography of Settlements. The course is offered for undergraduate students in the field of Social Sciences at Kasetsart University . Its contents deal with change over time and space and integration of physical and social contexts of change. The lectures incorporate experimentation in computer-based learning for understanding theories and information relationships existing in the spatial organization, settlement problems and developments. After students have learned system dynamics concepts and feedback system, they are asked to formulate the causal loops and simple models of settlement growth and urbanization with policies for environmental control, before coming up physical planning and designing a town or a city. The responses of students in class and groups discussion as well as exercise outputs are examined and compared to the control group of students who have no experience with this approach.

A System Dynamics Model of the Efficiency of Primary Education in Latin America
Ben Terlou, Etzel van Kuijk, Jac A.M. Vennix

Abstract: In this paper the problem of low efficiency of primary education in Latin America is described in a Stella model. With this model several policy experiments are conducted, the results of which emphasize the need for a careful consideration of the alternative policy options. Problems of the translation of the conceptualization into the Stella model are resolved only in part. Further lines of development of the model are suggested.

Urban Dynamics of a Developing Country
 A. M. Thirumurthy

Abstract: The magnitude and complexity of urban problems developing countries general and India in particular have not received the attention they deserve from policy makers especialy in the context of the vital role of Essential Environmental Facilities in promoting Socio-economic and political development of the country. The basic need for Essential Environment Facilities in adequate quantity and quality is the driving force behind much of the economic activity which is vital for sustained urban development. Creation and maintenance of Essential Environmental Facilities have traditionally been considered to ensure health and safety to the urban dwellers. In recent years, the delivery system of such facilities has seen greater set back. Increasing population both natural and social has been a major cause for concern. Obsolete taxing system, poor returns from the investments already made and large scale investment on unproductive social welfare and public protection schemes coupled with improper devolution of financialpowers between governments at various levels have aggravated the problems. Lack of drive towards identification of new source of finance and ineffective urban management system have added to the severity of the problems.
Past efforts directed towards ameliorating the urban sickness directed towards ameliorating the urban sickness has not yielded the desired results as they were limited in scope and piecemeal in nature with adhoc financial support. The acute shortage in all segments of the Essential Environment Facilities sector is giving rise to social tension, impeding economic development to the extent of increasing urban poverty and decay. Reversing the trend with a positive direction towards enhancing the quantity and quality of the facilities stock becomes imperative. This calls for long and short term programmes deviced to ensure adequate reach to the different cross section of the population. Operational efficiency and effectiveness for optimum returns should be the prime concern of the programmes. To state the obvious, it is not an easy task to achieve all of them within a short period given the socio-economic and political fabric of the cities.
In this paper a small attempt has been made to bring out the major problems arising out of the process of urbanisation and the impact on the economic activity, the Essential Environment Facilities which include the ’Basic Services’, 'Complimentary Services' and 'Special Urban Services' and the kind of Urban development programmes relating to Indian conditions. This methodology is intended to serve as an approach for the much needed research work using the principles of system dynamics particularly for developing countries.

Supply and Demand of Computer Personnel in Africa Developing Countries
-- A System Dynamics Model --

Alphonse Tousséa-Oulaï

Abstract: In this paper, we propose a system dynamics model to deal with the main factors which influence critically the education and training of computer personnel in African developing countries (ADC). In the model, the needs of industry for skilled computer personnel are determined. According to these needs the required education infrastructure and facilities are provided and the appropriate number of students and professors are planned and educated. Factors like standard of living of the population and resources allocated by the organizations for worker training are taken into account in the model because of the importance of their influence on the results of the education and training system. The model will allow the managers of IT field to design and select the more appropriate policies to match the education and training requirement of the computer personnel in the country.

Mathematical Formulations of System Principles in System Dynamics
Yoshiaki Toyoda, Shizuo Mawatari

Abstract: Almost 35 years have passed since J. W. Forester published his paper “Industrial Dynamics” in 1958, which was the first paper in this field and which later became “system dynamics”. While many books and articles in the field raised its methodology, most of them have described models and discussed applications of system dynamics to specific areas. As a result, evaluation of system dynamics has been obscured by inconclusive debate about particular models. The efforts of many practitioners are leading system dynamics to a better understanding and more comprehensive presentation. But, its methodology needs further development and codification for revealing general characteristics of complex systems. Particularly, stronger links are necessary to the control theory and to enhance the system’s mathematics.
This paper constructs a mathematical theory for thoroughly and precisely analyzing such general models as produced by system dynamics. First, we formulated mathematically, as the axioms of system dynamics, all principles of systems from which “general” characteristics of complex systems are generated. Secondly, we attempt to adequately express the essential mathematics of system dynamics, based on the axioms mentioned above. That is, we investigated the structural stability and the discontinuity of dynamic behavior of complex systems using the concepts in the Catastrophe Theory. And we mathematically explained some important results described in past articles of system dynamics such as the characteristics of complex systems initiated by Forester. Furthermore, we describe a new theoretical method to elucidate structural characteristics in SD models using concepts of Combinational Topology.

Computing the Optimal Production Rates in a Complex Production System
Rafael Ruiz Usano, Adolfo Crespo Marquez

Abstract: It is very well known that setting of the optimal production rates in a complex production system is one of the most important and difficult decisions to be taken. This decision making process frequently seems to be an artisan job as it is necessary to take into account many influential factors simultaneously. In this paper we discuss the way of setting the optimal production rates, by applying optimization techniques and system dynamics methodologies. We study the effects of this approach on costs in order to minimize them and obtain good overall results, even for non-financial measurements. Simulations results are presented.

Long Term Transmission of the HIV/AIDS Epidemic
A System Dynamics Approach

Yamuna Vallipuram

Abstract: The computer simulation model presented in this paper,facilitates the quantitative understanding of the population dynamics of epidemic outbreaks of AIDS. This model provides public health authorities with the predicted consequences of different available control strategies,thus helping to select optional policies and better choice of intervention strategies. As the AIDS epidemic grows to alarming proportions in many parts of the world, causing social and economic losses, widespread disruption and repression of community life, it is important to have an understanding about the underlying causes of the disease and to predict the future trend of the development of the epidemic.

Modelling Diffusion of Energy Technologies: A System Dynamics Approach
Anil K. Vij, Prem Vrat, Sushil 

Abstract: This paper presents an approach to model the spread of new energy technologies in an economy using System Dynamics methodology. Empirical studies on the process of technology diffusion lend evidence to sigmodial diffusion curves e.g. Gompertz's curve or logistic curve. Two major approaches reported in the literature concerning the process of technology diffusion are: ‘epidemic approach' and 'probit approach'. The probit approach is closer to the reality of the economic  world, and has been adopted in the present model. The principle of the model is that the firms are not alike in their expectations of return on investment or risk perceptions. Hence the initial adoption of a new technology is low. But various exogenous and endogenous changes, e.g. price rise of petroleum products, bring increasing number of threshold firms into the category of actual adoptors, which generates the diffusion path for the new technology. The model considers internal rate of return as the basis of such an adoption.

Analyzing the Mechanism of Joint-Venture and Township Enterprises in China
Qifan Wang, Xu Bo

Abstract: By means of the theory and methodology of system dynamics, we create a model which provides us with the study of hidden unemployment, control of production capacity and length of working time, and market promotion.

Enforcing Research and Development: -- The Important Way to Get Rid of the Current Predicaments for Chinese Enterpises
Qifan Wang, Xinhua Fu, Yin Jin

Abstract: Business strategy and management decision-making are of prime importance for enterprise to survive and develop in competitions. Under the new circumstances of macro economic adjustment, industrial structure adjustment, and worse operating micro economic environment in China , it especially shows overwhilming importance. The paper based on a generic S.D. model of machinery industry, discusses several problems the enterprises face, such as shortage of working capital, raw material deficiency and intensive market competition. Those problems bring many obstacles to enterprises. In rhe paper we explore a series of solutions concerning technological transformation and new product development. Then we suggest several alternative policies. Furthermore, the paper discusses the effects of technological transformation and new product development on Chinese enterprises under the new circumstances in the long-term. 

Study on the Model for Regional Programming
Li Zhou Wei, Zhou Yong

Abstract: The study on the development of the region is an enormous systematical project.
Therefore, the quantitative method must be used in integrating with the qualitative method to study it. As the conditions and the scopes adaptable to various quantitative methods of study are not the same, the level of solving problems is limited and it would be difficult to reach the goal of studying the regional programming if only one certain method is used.

A System Dynamics Model for Economic Development of Old Industrial Cities
Pei Weimin, Li Yangsheng

Abstract: This paper discusses the modeling problem for the economic development of the old industrial cities in China . A system dynamics model is applied to analyse the recessionary causes of the old industrial cities, and find the possible strategies of the technical progress and economic development in future. The paper gives the simulation results of an example, and discusses the system structure with adding policy loops in the causal diagram.

System Modelling on Analysis of Resource Allocation of Technological Innovation
Qingrui Xu, Jin Chen, Zhiping Wang,  Zhengcheng Lee

Abstract: Technological innovation is a decisive element with high value in modern economic society, and the effect of technological innovation has a great bearing on enterprise’s performance. Over recent years evidence has been accumulated to demonstrate that for a enterprise it is necessary to take a strategic plan, allocating the enterprises limited resource to R&D to promote technological innovation and monitoring the coordination among the new & existing products under the certain R&D expenditure. The issue is that management traditionally employs the static and experimental method to determine the input of R&D in terms of the ratio to sales. In China there existed a tendency to underestimating the role of technological innovation giving impact to the growth of the firm, e.g. in high-tech industry take only 1-2% or less R&D on sales into tech inno activity, and fixed to almost all kinds of industry with the same ratio of input.
In this paper, two system models are developed to solve such problems, which results in the conclusion of individual ratio is required for different industries.

 Urban Systems Model with Refernce to Essential Environmental Facilities of Developing Country
Etsuo Yamamura, A. M. Thirumurthy

Abstract: Urban management in the developing world has been snarled in the tangle of urban complexities. Phenomenal population growth, heightened urban poverty, insufficient essential environmental stock,over utilization of the meager facilities and consequent deteriorating living environment, escalating public welfare and protection cost, persistent financial constraints due to inadequate revenue, non-objective orientation of urban development programs, in efficient urban management system and chaotic social-political fabric are the common features faced by the urban areas of many developing countries.
Particularly in the case of the developing world it becomes important to understand the trade off between urban pressure and strive to find analytical tools which could separate feasible improvements from Utopian failures to reduce the widening gap between planning and management.
When the factors relating to the area of engineering and economics are combined with social factors, the System Dynamics approach is the most valuable tool.
It is within this context an attempt has been made to in this study to formulate an analytical tool which could address the problems of population, economic activity, essential environmental facilities and the urban development programs needed to redress the situation prevailing in the urban area of a developing country.
Towards this end, an attempt is made to formulate an urban development model and application to Madras city of India to asses the functional validity of model.

A Simulation Model of System Dynamics for Evaluating Dynamic Changes of Priority Sectors in Country Industry
Wang Yixiang

Abstract: As the developing speed of the country industry economy depends to a large extent on the developing speed of the whole country economy, .it is the key of success of the country economy planning that how to bring the region superiority into full play, and that which of priority sectors in industry should be developed under the circumstances of limited funds, resources and sources of energy. For this reason, it is difficult to get a united opinion when discussing that which is priority sector in undertaking a country economy planning.
A system dynamics model (SD2 model) suggested in this article is actually one of the model group of system dynamics. The model can be used to evaluate those priority sectors dynamically through being introduced the method of multiobjective decision analysis. In the article, the writer also introduce a simple a simple method of preference ranking about equality or inequality  weight targeted values in a time period of time, so the scientific quantitative basis can be supplied for working out the country economy planning.
There are several characteristics of SD2 model. It can be used to dialogue between person and computer conveniently, to compare and analyse multi-plannings, to give the user dynamic economy indicators and benefits indicators, e.g. fixed assets, labors, rate of profits and taxes to funds,etc. If cutting out the rate of output values of sectors in the evaluating indicators, we can obtain an evaluating indicator for general economy benefits.
The simulation results of the SD2 model have supplied an important reference for working out a county economy planning used in practice effectively. Of course, this model can still be used for the same questions in other sectors or in larger regions.

A Design of the Public Housing Policies through the Dynamics Analysis of the Intra-Urban Migration Structure
Showing H. Young, Kun -Tung Yu, Sy-Feng Wang

Abstract: To construct more public houses so that the low income population in the urban areas can have their own houses is one of the major efforts of the government of the Republic of China on the island of Taiwan . This good-will policy did solve some of the housing problems, yet remained some undesirable ones, such as, the large amount of unsold public houses. Those unsold public houses were primarily due to (1) delayed supply, (2) smaller sizes, and (3) unsuitable locations. This research attempts to study the “unsuitable location problem” and “too small size problem” in the city of Kaohsiung . The System Dynamics methodology is employed to study these problems through model building and policy testing. The model is composed of three sectors: (1) population and the zonal migration attractiveness, (2) housing supply, and (3) housing demand. All the three sectors are interacted with each other. The selection of the variables and the weight of variables are partly determined by field survey. By focusing on the structure of intra-urban migration, it is found that the intra-urban system has a very dynamic feature. The simulation results show that the behavior of the population flow is dominated by several feedbacks loops, some reinforce the growth of population, while others limit it. Through analyzing the simulation results of the model, some design principles of the public housing policy are suggested. From the demonstration of some policy tests, it shoes is the potential of the model to aid the formulation of a “dynamic” public housing policy design, that is, when to supply how much of a certain level public houses to which area of the city under a specific scenario. This preliminary study shows that system dynamics is not only a useful tool to have insights into this kind of complex socioeconomic problems, but also potential to deal with the spatial dimension of urban issues in addition to its mostly temporal applications.

Rural Energy Development of Strategic Research in Beijing Area
Fang Zhen

Abstract: This paper presents a rural energy system dynamics (RESD) model in Beijing . The system covers a wide range of aspects, such as economy, energy, pollution, water, population, labour and farmland. RESD model contains 8 sectors: electric industry, coal industry, building material industry, other industry, the third occupation, capital, agricultural production and people’s life, from which 788 variables were attained with 48 levels equations. The present study puts forward 4 suggestions and how to realize the 4 suggestions to the development of this system.

Forecasts of National Finance Income and Amount of Currency Circulation of China
Li Zhoug-lian, Li Jingshan

Abstract: This paper presents two approaches to forecast the National Finance Income (NFI) and the Amount of Currency Circulation (ACC) of China . Firstly it uses Combined Hierarchical Periodic Adjustment (CHPA) forecasting approach, which fully considers the periodic characteristics of the stochastic time-varying financial system, to forecast the national finance income, and then it uses Controlled Auto-Regressive models with Multi-Step Recursive (MSR) algothrim to forecast the amount of currency circulation, both have got better results.

The Feedback Characteristics of Accounting Dynamics
Saburo Kameyama, Takahiro Kojima, Akira Uchino, Kinya Machida 

Abstract: Just as the feedback concept is the single most essential characteristic of the system dynamics approach, so accounting feedback is the most crucial basis of Accounting Dynamics (AD), a methodology for modeling and simulating accounting using system dynamics. In this presentation, we focus on accounting feedback.
We should like to emphasize that accounting information has essentially feedback characteristics and that its origin can be traced back to the laws of Hammurabi. Since that time, the concepts of stewardship and accountability, for which accounting measurements are exclusively addressed, have formed the feedback nature of accounting information and effectively controlled resource allocation in social systems.
Conceptually, accounting feedback has three aspects, which correspond to the stages of AD model development. They are the formal requirements of double entry bookkeeping,  institutional regulations in financial statements and the real functions of accounting information performing feedback control over the economic resources. Formal feedback is the intrinsic nature of the account system. Based on double entry bookkeeping, the account system of an economic entity constitutes a constantly balanced closed system. Data entry into the account system must automatically occur twice so that the system is always balanced. This account system with debtor and creditor sides provides the formal requirements of accounting feedback.
Institutional regulations reflect generally accepted accounting principles. From the viewpoint of society as a whole, they introduce an approach of total optimization into individual accounting feedback. From the feedback viewpoint one of the most typical accounting principles is the principle of continuity, which forces continuous observance of the same accounting rule over consecutive accounting periods. Once one uses the straight line method of depreciation, for example, one must use it in the next period. Institutional accounting feedback substantially constrains business income.
Finally, the resource allocation feedback aspect of accounting information implies the real function of accounting in social system. Investigating the actual conditions of resource allocation in social systems through accounting feedback control is the very core of Accounting Dynamics. How is resource allocation in our society effected by accounting information? The answer to this question is the ultimate objective of our research. 

The Proper Role for System Dynamics Models in the Process of Policy Making in Business and Government.
Brian Dangerfield

Abstract: In the assessment of strategic policy, greater use of system dynamics models will not be encouraged unless attention is given to the role of the model in the policy process. It’s proper role is to offer improved understanding and insights in the milieu of policy deliberation, but not necessarily to offer ’answers’. System dynamics model can be seen as providing computer based scenarios of the future - - a range of possible paths of which none is assured. The ideas of boardroom systems and group decision support systems offer, respectively, a hardware and a software infrastructure which sustains the assimilation of a formal model into the policy process.

Design and Application of Emulation Model in Big City’s Economic Structure
Bai Tao

Abstract: Based on the participation in the research and design of the economic structure -- emulation model of Urumqi City , this paper was written. Regarding the general problems we met in the research and design and also focuing on the threes phrases; Economic theory, System dynamic Method and Application results in practice. this paper discussed the idea and principle. Method and system about the design process of the model was also presented in this paper.
The author thinks that the design of economic structure emulation model should follow six main thoughts and principles. Its model system should include six main parameter mode designs. And the close combination of economic theory and system dynamic method with the application result in practice should be taken as first consideration. The ability of using Dynamic method to solve the economic structure problems can therefore be enhanced.

Industrial Performance and a Market Structure ( A Review of a Gaming Experiment)
Alexander V. Ryzhernkov

Abstract: This paper demonstrates patterns of industrial performance and factors of competitiveness in representative gaming experiment carried out with a help of a simulation model of universal commodity production at Novosibirsk University . The paper inquires about disequilibrium dynamics of the modeling economy and concentrates on repeated decisions of players emphasizing the role of experience and learning in their behaviour. It analyses the intra- and inter- sectoral competition and path-dependent structures of production. The interpretation of experimental results is evoked by Marxian economic theory. The study shows that the applied theoretical framework can lead to propositions deduced or derived empirically in industrial economics.


Korea 2020: A Search for Balanced Future
Kyuhan Bae, Young-Myung Choi, Ku-Hyun Jung, Dalgon Lee, Kwang Seok Lee

Abstract: The 21st century is already here (Drucker,1989). Many people predict the 21st century will be fundamentally different from the 20th century (Drucker, 1989; Niasbitt & Aburdene,1990). Looking back upon the past, Korea entered the 20thcentury lacking preparations in the midst of the nation’s internal and external conflicts and confusion. As a consequence, Korea went through several periods of stagnation and difficulty during the first half of the century. However, Korea began to demonstrate its remarkable potential for modernization and development since the early 1960’s. Within a quarter of a century, Korea has emerged as a developing nation rapidly approaching advanced status. Now, Korea is facing another turning point dividing the centuries. Her future depends on her determination and preparation today. The 1990’s is the time for her to make choices and decisions that will promote the prosperity of the nation and the unification of two Koreas. It’s the time to establish a more mature society. It’s the time we should consider the public's demand for quality of life. It’s the time to consider her natural environment deteriorating due to urbanization and industrialization. All this will be realized only through her devotion to the establishment of a society based on a vision of optimism.

System Dynamics Models for Markov Processes
Pratap K.J. Mohapatra, Rahul Kumar Roy

Abstract: Markov models and System Dynamics models are apparently applicable to two completely different kinds of problems. However, structurally, they can be proved to be equivalent to each other. This paper establishes this equivalence. Critical observation have been made with regard to similarity and aparent differences between the two methodologies. The paper has also proposed a procedure for converting Markov models into system dynamics models. Examples have been drawn for the Birth-Death process, M/M/1 Queue, Poisson Process and Yule Process to illustrate the method. It has been shown that such a framework makes the model for stochastic processes much more transparent and enables the system analyst to understand the behaviour better.

Change of Japanese Dietary Life
Yuzuru Ooshika, Nobuyuki Shimizu, Junko Ooshika

Abstract: Change of Japanese dietary lives, especialy multifacialization, is one of the most interesting phenomena in the Japanese society. It is closely related to various social tendencies; contraction of the family size, shortage of the labor force, increase of aged people, rising up of the income levels, increase of the number of married women with occupation and of unmarried women, progress of the food technology, increase of the number of highly educated people, etc.
The present study is a trial of model building for the analysis of change of Japanese dietary lives, based upon system dynamics. Simulation was carried out up to the year 2005, for total dietary expense, expense for processed foods, expense for dining-out, etc.
According to the simulation results, the fraction of expense for the processed foods and dining-out in total life expenditure increases more rapidly compared with that of total dietary expense, and, in addition, it depends upon families’ income level. That means that social work division of preparing foods and meals, which has, so far, been housewives’ work, is now rapidly advancing in Japan, and that the tendency toward seeking pleasures in foods and meals is getting stronger. These results suggests, with other changing social tendencies, bipolarization of Japanese dietary lives, e.g.  professional cooking - domestic cooking; natural type- sophisticated type; tradition-oriented type- globalization type; isolate type- family type; practice type- pleasure-oriented type.

BYNAMO: System Dynamics Simulator for Beginners and Educational Use
Hisao Shiizuka

Abstract: It is well known that BASIC language is quite a popular one in the world. So it goes without saying that by using BASIC language, the system dynamics simulation can be provided more easily than DYNAMO does.
This paper describes a simulator for system dynamics, which is implemented by BASIC on Personal Computer PC-9800 series. We call the simulator “BYNAMO”. BYNAMO is designed by using many graphic functions of the BASIC language, so as to increase efficiency for programming the system dynamics equations.
It is a strong point of BYNAMO that operations for BYNAMO are simple and easy, so that beginners can study the system dynamics without much experience for programming.

Improvement of Badr’s Algorithm of Robust Control System
Xie Shoushen, Xu Demin, Yang Bingzheng

Abstract: Time- domain robustness of control system is studied in this paper. Badr’s algorithm is enhanced by using matrix perturbation theory and convex polyhedron idea, so as to suit the needs of multiple-parameter variations of high-order system. With matrix trace as performance criterion, a new synthetical algorithm of robust control systems is presented, an example based in this algorithm is also given.

ENSIGAME: A Simulation Game for Environmental Policy Making
K. Vizayakumar, Pratap K. J. Mohapatra

Abstract: This paper presents a system dynamics based simulation game for environmental policy making. Due to the increasing awareness among people regarding the deterioration of environment as a result of the use of modern technology, the government has to take some action against the industry to motivate them to take pollution control measures. This leads the government and the industry into a game situation wherein they take actions, perhaps every year, by observing the other’s reactions. Subsidy, tax exemption, and pollution taxes are found to be the viable options before the government. This situation is modelled here as a game in three modes, namely, both government and industry interactive mode, government only interactive mode, and industry only interactive mode. The results obtained by these three modes of the game are then compared with the model results. This game facilitates experimentation with different strategies for both the government and industry representatives. It is found improving the knowledge of the participants in decision making in such a conflicting environment.

Simulation for a Deadly Blow to Tokyo by the Coming Next Large Earthquake
Yasoi Yasuda

Abstract: After the Second World War, Japan has achieved a rapid economic growth. GNP of Japan becomes the second in the developed industrialized countries after the USA . Per capita GNP will be the first in the world pararelled with Switzerland . Following to high economic growth, Tokyo, capital of Japan has become a big monster concentrating many functions.
At present, Japan has 120,000,000 of population. And in the Tokyo metropolitan area, there are 30,000,000 of the population, in truth, 25% of the total population of Japan .
Tokyo is one the most softy city in the world on the field of crime. Homer Tokyo is one the most dangerous cities in the field of the earthquake like ITALY .

The Motivation of Project Managers. A Study of Variations in Project Managers’ Motivation and Demotivation by Triangulation of Methods.
Svein Arne Jessen

Abstract: Both practical work and literature studies have confirmed the project work gives rise to many motivational reactions, and that for the project manager many of them vary in a particular, recognizable way in the different phases of the project life cycle. This way in recognition behind the decision to make a thorough, scientific analysis at the PHD-level of the process by which project managers are motivated. The phenomenon was studied from two different angles by socalled “triangulation” of methods. One angle was a typical qualitative method, in which through “open interviews” with a limited number of Norwegian project managers their motivational reactions were examines. The other one was to apply a typical quantitative method in which a computer simulation model of a project based on the principle of System Dynamics was built and run, from which variations in managerial motivation in projects could be studied. Both approaches were initiated by a questionnaire survey of factors assumed to be important for project managers.

last updated by ng on 11/5/08

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