Conference Proceedings

The 13th International Conference of the System Dynamics Society
1995 Tokyo, Japan


The following papers were presented at the conference in parallel and plenary sessions. The original printed proceedings, edited by Toshiro Shimada and Khalid Saeed, were printed in hardcopy (Volume I: Plenary Program and Volume II: Parallel Program) and distributed at the conference. Below please find the Paper Index for these proceedings, including an abstract. Papers are listed alphabetically by the last name of the first author. Available papers are Acrobat (.pdf) files and can be read using Acrobat Reader available from

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PAPER INDEX - listed alphabetically by first author:


Volume I: Plenary Programs


A Search for an Operational Environmental Policy Based on the "Limits to Growth" Study

Surya Raj Acharya

Khalid Saeed

Abstract: Experimenting further with the World3 model, this paper attempts to formulate the operational means to implement the critical recommendations of the "Limits to Growth" study. Using feedback as the organizing principle and the work of Daly (1991), Page (1997) and Saeed (1985) as guidelines, additional policy space was built into the model for self-regulating its critical policy parameters. The policies so created not only appeared to lie within the scope of the existing and potentially feasible regulatory institutions, they were insensitive to their receptive behavioral parameters and also the timing to intervention. The operational policy design procedures adopted in the paper is also seen to create an important heuristic for policy design in general, which should strive to create operational rather than power-cased intervention.


The Threshold 21: Sustainable Development Model

Gerald O. Barney

Robert Eberlein

Weishuang Qu

P.D. Sharma

Abstract: As we approach the turn of the millennium and pass the 50th anniversary of the Breton Woods and the United Nations institutions, none of our major development agencies have a comprehensive sustainable development model. The Millennium Institute, after a decade of assisting countries in long-term sustainable development studies, has developed a multidisciplinary national sustainable development model called Threshold 21. The model integrates economic production, national accounts, demography, agriculture, energy, health, education, nutrition, and environment in a single model based on the principles and methodology of system dynamics. It simulates the dynamic interactions of these variables for a period of 50 years. Threshold 21 is written in the Vensim simulation environment. The model is being applied first in an analysis of alternative futures for Bangladesh. The Millennium Institute, in collaboration with development partners, is planning applications in several countries, including Australia, China, and the United States.


Sustainability and lateral Issues: A Model

Nazli Choucri

Rebecca Berry

Abstract: This paper presents the generic framework for a national-level model of sustainability. The basic assumption is that there is not one model (or condition) but multiple possibilities; not one path, but a multiplicity of options. The countries of this world are diverse indeed, and the challenges facing them are both generic and idiosyncratic. In appreciation of the complexity and diversity of development, our approach is to depict underlying structural and functional linkage representing the profile of states, with the objective of exploring possible paths over time in response to structural conditional as well as policy choices.


Formulation Experiments with a Simple Climate/ Economy Model

Thomas Fiddaman

Abstract: Much of the science and policy debate around global climate change has focused on models. Most models focus is a single aspect of climate change- atmospheric physics and chemistry, macroeconomic effects of abatement policies, or impacts on land cover from changing temperature and rainfall for example. Only a few models attempts to make climate change fully endogenous by including both the influence of human activities on climate and the impact of climate change on human activity. The best-known climate-economy model is William Nordhaus' DICE model. The model is a conventional macroeconomics Ramsey growth model with simple carbon and temperature subsystems added. These create a negative feedback loop which tends to reduce economic output due to climate impacts on economic activity. Experiments with the model suggest that only limited effort should be addressed to carbon dioxide emissions abatement. While the DICE model meets some of the exogenous, such as the growth of population and emissions reduction technology. Output is generated by optimization, rather than by simulation with explicit decision rules. This paper explores the impact of structural changes to the model specification that attempts to bring it closer to the system dynamics paradigm. The impact of exogenous population and the technology drives is explored. Carbon flows are made more explicit, to demonstrate the importance of sink constraints and temperature feedbacks to the carbon cycle. A path dependent energy sector with endogenous technology is tested. Bounded rational decision rules are substituted for optimization. These tests generally yield results suggesting substantially higher abatement levels than Nordhaus concludes are necessary.


System Dynamics and the Sustainable Development of the Electric Power Industry

Andrew Ford

Abstract: This paper discusses the successful use of System Dynamics in the electric power industry. It begins with a list of studies and articles documenting extensive use of System Dynamics to aid corporate and government planners around the world. I then speculate on why this particular industry has been the focus of so many System Dynamics project for Bonneville Power Administration in the Pacific Northwest region of the United States. Reflecting on the Bonneville project, I observe two important trends. The first is a trend toward interactive models that are easier for group operation. The second is a trend toward more attention on the consumers of electric power. The paper concludes with results from a recent study of the world aluminum industry, an industry that consumes a tremendous amount of electric power.


Systems Thinking and the Case Method

Ari Ginsberg

John Morecroft

Abstract: To create more effective learning environments for a strategic management, system dynamics modelers have recommended the use of computer simulation models as a supplement to conventional case studies. Although custom designed simulation games provide students with the opportunity to investigate the effects of alternative actions, their creation involves considerable development efforts. Moreover, available simulations provide on direction for using case information to discover systems thinking issues and solutions. In this paper we demonstrate how instructors can introduce feedback concepts to students via conventional case discussion. Specifically, we show how feedback processes can be woven into a case discussion involving issues of corporate diversification and restructuring.



Soft Landing into the Twenty- First Century: The Requirements

Teruo Higa

Abstract: Since the Rome Club published its report. "Limits To Growth", the following have been accepted by the present generations as common goals to create a better world for future generations: the efficient use of our limited natural resources, and the control of the growth of population which shows a tendency to ever consume more and faster. This movement has so far led to variety of revolutionary changes in energy-saving technology as well as the adoption of birth control by governments in Asia, such as China, India, and Indonesia. Since the end of the Cold War, a typical representation of confrontation and competition, the concept of coexistence and co-prosperity have become more viable and acceptable. The goals we wish to accomplish may be difficult, especially, if we proceed with the present method and style of consumption-oriented economic activities and with the burden of an ever growing population. As barriers among nations, economic and otherwise, are being removed, it not only eliminates the conceit of an otherwise isolated nation but it helps to make one nation’s problem a shared and more easily and quickly solvable world problem. As we approach the twenty-first century, people have started accepting the idea of a common goal of creating a world where people thrive towards coexistence and co-prosperity beyond religious, political and ideological differences. In a world of limited resources, desires extravagant and beyond its permissible level would always lead to a state contrary to coexistence and co-prosperity. Therefore, unless we resolve the problem of shortage, we will not be able to firmly establish coexistence and co-prosperity. When we consider the phrase "soft landing into the twenty-first century," it is apparent that we accomplish the following: resolve the problems in our current education system, provide the technology to replace the consumption based economic activities with that of resource-recovery and recycling, and provide fundamental solutions to environment, food production, health care, and energy, all of which are presenting threats to humankind. Our present approach, the application of effective microorganism, has started gaining wide attention as the only technology available now. It has been applied in a wide variety of areas in environment, food production, medicine, energy, and industry. It is expected to be a breakthrough technology promising a soft landing for the people into twenty-first century.


Hierarchical Approach in System Dynamics Modeling

Dong-Hwan Kim

Jae-Ho Jun

Abstract: Traditionally system dynamists used two kinds of modelling approach; top-down approach and bottom-up approach. With top-down modelling approach (feedback loop thinking) modellers first draw a causal loop diagram and then details it down to the stock and rate variables and then auxiliary. Top-down approach forces a modeller to see forest rather than trees, while bottom-up approach forces a modeller to construct forest by planting trees incrementally. In general, system dynamics use both approach in modelling processes simultaneously or sequentially. However, most of previous softwares for SD modelling have focused on the bottom-up approach. The 'operational thinking' concept of Barry Richmond is most typical in this trend. In this paper, “a hierarchical modelling” is introduced as a new modelling approach which can integrate top-down approach and bottom-up approach. A hierarchical modelling approach extends the sector view concept proposed recently by Barry Richmond. In the hierarchical modelling approach, a sector can contain many sub-sectors which also can have their own sub-sector. A modeller can use a bottom-up approach or operational thinking in a sector. When a modeller wants to connect variable across sector or to extend a variable into a sector, he can use a top-down approach. In this paper, a hierarchical modelling approach is implemented with an object-oriented programming method. This paper explains why an object-oriented programming is necessary in implementing the hierarchical modelling approach and discusses some problems which should be resolved for developing a more easy and transparent hierarchical modelling approach.


Techno-Paradigm Shift and its Research Methodology

Fumio Kodama

Abstract: In order to express the radical changes in the way technology has been and continues to be developed, applied, and commercialized over time, the concept of a techno-paradigm shift is used. The techno-paradigm shift is distinguished into five dimensions: innovation pattern, and societal diffusion of technology. In order to obtain a comprehensive understanding of these dynamic characteristics of technology, we have to orchestrate a unique blends of scholarly tools- case studies, formal modeling, and insightful observations.


The Folding Star: A Comparative Reframing and the Extension of Validity Concepts in System Dynamics

David Lane

Abstract: The paper reviews ideas on validation in both mainstream OR/MS simulation and SD. A tetrahedron model derived from the former literature is adapted to SD and proposed in a new form; the Folding Star. This framework structures ideas on the elements of SD activities as well as the roles and validation measures required. Further structuring using a tabular and hierarchical format results in an interpretation of current SD validity test and the proposal of two extensions, concerning cultural and operational issues. The framework is able to demonstrate the validity aspirations of different SD activities and to indicate areas for future development in validation test. It also shows the respective strengths and weaknesses of different SD activities and leads to the proposal of a new form, Extended SD, an engagement between SD and 'soft' OR which aspires to a comprehensive notion of validity.


Managing and Understanding Technological Innovations

Peter M. Milling

Abstract: Controlling the development of new products, their growth and market penetration is a key task for corporate management. Its importance for the firm's survival triggered extensive mathematical modeling efforts to improve the decision making quality. Most models used in this field, however, lack crucial factors of success or failure of innovation; they frequently do not include managerial decision variable like rice, delivery delays, quality, etc. or do not reflect comprehensively the involved factors. The paper outlines the concepts of computer based Strategy Support and the role of management Simulators. A modularly composed simulation model of the innovation process is presented which reflects the tight interrelationships between corporate actions and market response. In explains how the dynamics of a product life cycle are generated, and how structure causes behavior. The model is relatively easy to understand in its elements and catches essential aspect of innovation dynamics. Its actual complexity results largely from the consecutiveness of the variables and the nonlinear relations. Its applicability to managerial problem solving is demonstrated by analyzing and evaluating different strategies like pricing, capacity expansion and the role of effective quality control. The model is extended to include the processes of Research and development and their relationship to resource allocation and market success. A management simulator- based on the comprehensive innovation model- is introduced which supports teaching and training and fosters Organizational Learning.


Communication Network Systems for Competitiveness: The Japanese World Class Manufacturing Case

Michiya Morita

Nobuhide Tanaka

Harunori Mori

Yutaka Takahashi

Abstract: The functioning of the communication systems has been thought as one of the most important management and operating processes for the firm's competitiveness. This paper is trying to identify the communication systems' structure which lead to high competitiveness, from the positive analysis of Japanese World Class Manufacturing complains. The "linkage" structure throughout the firm from the strategic or innovative communication phase to the operational communication phase has appeared. We inquire into the determinants of the structure. The process of forming the structure is proposed hypothetically based in the analysis. We also provide the implications for modeling the structure by the system simulation like System Dynamics, the problems to be challenged and potential managerial meanings we could obtain as the result of it.


Models Crossing the Boundaries of Tools

Magne Myrtveit

Abstract: As the filed of system dynamics matures, and the number of available tools increases, the problems related to incompatible model formats consume increasingly large portions of researchers’, educators’, and model users’ time. Manifestations of these problems are many: Researchers may be unable to communicate models because they are using different tool (or different versions of the same tool). Educators face problems distributing models because schools use different tools. Authors have problems including a model disk with their books, as readers use different tools. Similar problems have been experienced with other tools, like word processors and drawing programs. The kind of solutions that are used for transferring documents between word processors can be applied also to system dynamics models. One solution would be to implement a series of model conversion filters in each SD tool. (This corresponds to the way MS-Word may load and store files in WordStar, Word Perfect, Works, and Write format). Another solution would be to define a common standard file format for interchanging models. (This corresponds to formats like plain text and Rich Text Format for documents, and BMP, EPS, GIF, PCX, TIFF, and WMF for graphics.) The latter approach has several advantages. 1) Each software tool need only support one foreign file format, in addition to its native file format. 2) The software tools need no knowledge of each native file formats. The benefits of developing a model interchange file format are many; 1) Models may be stored in a common format (e.g., in libraries). 2) Models may be transferred in a common format (e-mail, diskettes included in text books, etc.). 3) Co-development of models. 4) Easier use of several tools by the same user.


On The Modeling of Sea Power: An Extension of the Polis Model in a Competitive Scenario

M. Piattelli

R.G. Coyle

Abstract: This paper deals with an extension of the "Polis" model that focuses on the subject of Sea Power. The presentation follows two complementary lines: the simulation of the naval conflict arising from Greek colonization westward during the last millennium BC; the discussion of this model within the general approach to Sea Power adopted by the leading authors in the field, Mahan and Kennedy. The conclusions concern the actual limits of the Polis in modeling Sea Power and further steps in its development. Finally, the main difficulties involved in issues of this kind are briefly discussed.


A System Dynamics Approach to Sustainable Cities

Michael J. Radzicki

W. Scott Trees

Abstract: The idea of sustainable cities has become central to the concept of sustainable economic development. This paper demonstrates that system dynamics modeling can be effectively used to study the forces preventing the sustainable development of cities. The problems being experienced by cities located in both the less industrialized and industrialized nations are examined, and a slate of current policy prescriptions is described. Simulation runs from a system dynamics model created to examine some of the barriers to the sustainable development of cities are presented and their implications for public policy are discussed.


Chaos from Generic Structures: A Cautionary Tale

George P. Richardson

Abstract: An elegantly simple and understandable model composed of generic structures is shown to move from damped oscillations to repeated period doubling, leading eventually to chaos. The third order structure contains a balancing loop with a delay and integral control that attenuates as the accumulated pressure gets relatively large. The model and its behavior are so classic and it so quickly converges on its attractor that it may well serve as an ideal structure with which to introduce complex nonlinear behavior and deterministic chaos. Unfortunately, the model contains a subtle error, which, when corrected, destroys in model's ability to exhibit complex behavior. Reflection on these results suggests a number of cautions about modeling practice.


Problems for the Future of System Dynamics

George P. Richardson

Abstract: The field of system dynamics first envisioned by Forrester in 1956 is approaching its fortieth anniversary. It has experienced two significant revolutions: changes in practice wrought by the development of iconographic software and the shift from modeling to improve a process to modeling for the purpose of improving people's mental models (Forrester 1992). Its third revolution---expanding the pool of practicing modelers far beyond the nucleus who have received university training  ---has been underway since STELLA hit the schools in the late 1980s. A fourth revolution – moving to the forefront qualitative modeling based on word-and-arrow archetypes---began quietly in the mid 1980s (e.g., Wolstenholme and Ciyle 1983) and exploded on the scene with the publication of The Fifth Discipline (Senge 1990). These resent and ongoing revolutions carry promise and potential pitfalls for the field.



The Organization of Learning in System Dynamics Practice

Khalid Saeed

Abstract: This paper carefully examines the classical system dynamics practice in the context of human learning process and attempts to explicitly state an implementation procedure that should enhance the use of modeling as a thinking companion at a wide scale. A generic model of learning is used to delineate the principles of conduct of system dynamics modeling. Further, the various activities called for are grouped into a set for four core competencies which are based on four key human abilities. The organizing principles which must be superimposed on the learning abilities to deliver the core competencies are also discussed. A clear statement of the principles of the learning process in system dynamic practice should transform system dynamic modeling from an art learnt mostly through apprenticeship of experts to craft acquired through written word.


Unanticipated Side Effects of Successful Quality Programs: Exploring a Paradox of Organizational Improvement

John Sterman

Nelson Repenning

Fred Kofman

Abstract: Resent evidence suggests the connection between quality improvement and financial results may be weak. Consider the case of Analog Devices, Inc., a leading manufacturer of integrated circuits. Analog's TQM program was a dramatic success. Yield doubled, cycle time was cut in half, and product defects fell by a factor of ten. However, financial performance worsened. To explore the apparent paradox we develop a detailed simulation model of Analog, including operations, financial and cost accounting, product development, human resources, the competitive environment, and the financial markets. We used econometric estimation, interviews, observation, and archival data to specify and estimate the model. We find that improvement programs like TQM can present firms with a tradeoff between short and long run effects. In the long run TQM can increase productivity, raise quality, and lower costs. In the short run, these improvements can interact with prevailing accounting systems and organizational routines to create excess capacity, financial stress, and pressures for layoffs that undercut commitment to continuous improvement. We explore policies to promote sustained improvements in financial as well as nonfinancial measures of performance.


Understanding the Dynamics of Technology Switching in Seeking to Maintain International Competitiveness

Graham W. Winch

Abstract: When firms face the possibility of making fundamental change, as opposed to incremental improvements, to maintain their competitiveness, their senior teams face particularly uncertain times. This paper focuses on a system dynamics model that captures that situation of an industry experiencing the switching of its production plans to a new process technology. The model enables the complexity of this situation to be represented, and facilitates a clearer understanding of the expected industry dynamics. The results show that an individual firm facing the up-grade decision must consider the impacts of the change across a number of dimensions, and demonstrates that the point in time along the industry's endemic capacity-building / price cycle may have an important impact on the economics of the decision. The paper is also able to draw some comparisons between this and the other approaches to modelling technology change decision-some comparisons between this and other approaches to modelling technology change decision-making.


Systems Thinking, System Dynamics

Eric F. Wolstenholme

Abstract: This paper attempts to build a coherent picture of the way in which various system problem solving methodologies relate to one another. The work builds on the discussion and views expressed at the 1994 System Dynamics Conference that held at Stirling and expressed in the special edition of the System Dynamics Review entitled "System Thinkers, System Thinking". The underlying premises, assumptions and terminology of a number of such approaches are reviewed, contrasted and summarized. It is argued that, in philosophical and academic terms, System Thinking should be considered as a total framework which subsumes all system approaches to understanding human activity. Further, that there exists a range of System Thinking methodologies which can defined and contrasted by positioning them dependent on the degree of vagueness (to be relevant) and their degree of rigour (to be meaningful). It also suggested that their base position may shift dependent on their area of application. It is hoped that this paper or a derivative of it might be used as a reference by practitioners to explain to end-point users if system methods how their own approached fits into a wider and integrated framework.


Strategic Evalution of Flexible Assembly Systems-Combining Hard and Soft Decision Criteria

Erich Zahn

Jurgen Greschner

Abstract: The evaluation of investments in flexible assembly system lacks of an appropriate methodology. First a brief review of decision making process regarding complex investments is given. Such decisions have to be made in the tension of hard and soft decision criteria which often produce a dilemma for the decision maker: Considering only short-term effects in terms of hard criteria will usually kill investments proposals. In contrast managers feel the need for the investment but have difficulties to justify their intuitive insights. As a possible solution a System Dynamics based approach is proposed to bridge the gap between rational and intuitive judgment. The approach combines qualitative and quantitative criteria by using a computer-aided step-by-step modelling concept.





Volume II: Parallel Programs


Quantifying the Soft Issues: A Case Study in the Banking Industry

Henk Akkermans

Abstract: Quantification of causal models that contain many so-called “soft” variables is often problematic because so few “hard” data are available to calibrate the model. This paper describes a case study in which different techniques were used to qualify a causal model that contained a number of such soft variables, such as “level of expected customer irritation”, or “effort required to reach branch office”. The case study itself concerned the development of a decision-support system to assess branch office viability of a medium-sized bank. The specifics techniques used for quantification are viability for a medium-sized bank. The specific techniques used for quantification are part of the standard “tool set” of the Participative Modelling (PBM) Method, the synergistic blend of system dynamics and group knowledge elicitation techniques developed by the author in a series of six case studies, of which was the fifth.


An Urban Growth Modeling Based On Urban Attraction

Toshiaki Aoki

Hajime Inamura

Abstract: There are two main current of urban growth modeling. One is a traditional synthetic growth model using System Dynamics(SD). The other is a regional science model which can determine the location of industry and residence based on micro economics. Although this study basically uses the framework of SD, the principles of micro economics and an aggregated behavior model are introduced in some part in order to make the urban growth models more reliable. The model has four traditional sectors, such as industry sector, population sector, land sector and worker sector. In addition to them, there is a crucial addition of the migration sector which predicts the migration intended for Sendai, Tokyo and other part of Tohoku. Migration based on urban attraction is determined using real data based on an individual utility concept and a multiple regression analysis. The model is applied to Sendai Metropolitan Area for coming 100 years.


Electricity Conservation in Domestic Sector of Pakistan: A System Dynamics Approach

Javaid Aslam

Khalid Saeed

Abstract: This paper describes the dynamics of supply and demand, price and pilferage, and resources and need of electricity conservation in the Domestic Sector of Pakistan. The dynamic hypothesis of the model is described. Then explanation of system behaviour, through model simulation, is given. The system dynamics treatment of the feedback loops is contrasted with the treatment found in most electric utilities of the world in general and of Pakistan in particular. The flexibility of the technique was extensively utilized in policy analysis and 22 policies were studied, out of which 11 are discussed in this paper. It also shows that electricity conservation is a very complex socio-economic environment, a more complex issue than conservation itself, rather moral than economic, and is not very much in the control of utilities alone. The study provided many insight, e.g. pricing policies are not the cause if the problem, increase in income level may not alleviate pilferage of electricity, conservation may be possible with pilferage control and certain incentives, and resource allocation needs social attention.


Dynamic Model of Purchasing Quality

Anil K. Bajpai

Phillip C.T. Wiley

Abstract: The importance of quality costs and benefits is sometimes not fully recognized by industrial managers, Quality costs money. Industrial managers recognize this and tend to be afraid of spending on quality. But, quality also earns money. Industrial managers may need to be convinced of this fact. Unfortunately, existing publications on the subject do not encourage investment for higher quality. Most of the models about quality improvement costs and even about the cost of achieving the desired level of quality fail to incorporate the benefits of improved quality. This paper describes a model of purchase quality costs and benefits. The purchase quality costs elements are drawn from various standard sources such as the British Standards and American Society of Quality Control (ASQC) publications on purchase quality. The benefits from investing for purchase quality are taken from recently published case studies and reports as well as from our own experiences. The elements of quality related activities of a purchase department are -review of purchase order, capability survey of suppliers and purchase planning. The contribution of each element, starting from estimation of loses due to inadequate purchase quality through to prevention of poor quality are isolated and linked dynamically so that costs and benefits are demonstrated through time. The purchase quality costs and benefits model is developed using the system dynamics modelling approach, and simulated using a computer software package, 'Professional DYNAMO Plus'. The simulated results demonstrate the extent to which prevention investment in purchasing is justified by future earning. It is felt that the model can be a significant addition to course material for training programmes of purchase managers. It allows the user to explore the consequence of different levels, type and timing of investment on profit performance and the delays before profits are increased. It is hoped that the model will serve as useful tool for decision-makers, encouraging them to invest in improvement-related activities.


IGRASP-A System Dynamics Software Package With Automatic Code Generation Facility

Souvik Banerjee

Mohit Junja

Pratap K. J. Mohapatra

Abstract: In this paper, we describe the feature of IGRASP (Interactive Graphic Simulation Package), a software package developed by the authors, which helps in developing and simulation system dynamic model and which has the facility of automatically developing codes for system dynamic models from their flow diagrams. The package integrates the following four modules :(1) The graphic user-interface module, (2) The automatic code generation module, (3) The simulation module, and (4) The output module. The key to the automatic code generation lies in the dimensional matching of the variable for which the code is generated and the set of variables and parameters which influenced it.


An Educational Dynamic Model for Net Working Capital Management in a Trading Wholesale Firm

Carmine Bianchi

Abstract: The purpose of this paper is to sketch a dynamic model which may be useful to improve net working capital (NWC) management. This subject is commonly studied through the use of accounting models, which are mainly based on General Ledger data.


Dynamic Modeling for "Products Portfolio" Management and New Products Launching

Carmine Bianchi

Habib Sedehi

Abstract: The paper aims to sketch a dynamic model in order to support decisions for the allocation of financial (i.e. cash flow provided by current sales) and human resources to Marketing and R&D policies, in order to better manage "product portfolio" and new products launching in an industrial firm. The working hypothesis from which the paper stems is to consider that the strategic control for launching new products and monitoring the path of the old ones along their life-cycles is not only possible through the use of accounting models, but also through dynamic models. Both kind of models indeed can be useful in "product portfolio" management; however, each of them may better satisfy different purposes. More particularly, accounting models (i.e.: those which are mainly based on General Ledger data) may better support some cognitive purpose regarding the management of each product separately without taking in "account" the interrelation influence between new and old products. On the other hand, the use of dynamic model, which is mainly based on non-accounting data, may particularly enable to: improve management learning of the system (as a whole) to be handled; implement a strategic control sub-system of resource allocation to product, drawing more on mental models, personal, personal experience and intuition of the entrepreneur and of management than on accounting data; improve an inter-functional and inter-divisional approach and so a better understanding of trade-off among financial, marketing, production, R&D subsystems and though decisions on "product portfolio" management; point out the different levers on which management may act and evaluate the different effects they may produce in the short and in the long term, so to assess the several possible consequences of managerial decision on the product life-cycle; better evaluate the medium/long term effects of product discretionary costs (Advertising, R&D, Education, etc.) on product cash flows. This may lead to a more integrated monitoring and understanding of the paths that different products may run along their cycle. The above said working hypothesis will empirically be tested in a medium-sized wine producer firm.


The Momentum Of Success: The Role of Construction in the Thailand Economic Boom

Kathleen Brooke

Abstract: Construction freezes the ratio of industrial to housing area (Forrester, 1969), becoming visible, measurable, evidence of structural change. The Momentum of Success documents economic activities of the construction sector during the Thailand economic boom. An important research protocol was the gathering of both qualitative data, with interview of 75 leaders of industry and government concerning decision-making factors experienced during the boom. The database was analyzed by three system dynamicists as well as by the disciplines of psychology, construction economics, and statistics. The results reveal three patterns of strategic action, with suggested future competencies for business and government in regions undergoing rapid development.


Towards Evaluation of Systems Thinking Interventions: A Case Study

Steven Cavaleri

John Sterman

Abstract: Recent innovations in systems thinking have fueled growing interest among managers in the practical application of the tool (Senge 1990, Morecroft and Sterman 1994, Senge et al. 1994). A number of technologies and protocols are more useful for developing systems thinking capability in organizations and individuals, such as management flight simulators, experiential exercises, and casual loop diagramming. Although various intervention techniques that fall under the rubric ' systems thinking' have become quite popular, little is known about their effectiveness in enhancing organizational effectiveness or productivity. In general, the relationship between the use of systems thinking and organizational performance remains the province of anecdote rather than developed if we are to build a strong foundation for the effective use and refinement of the tools of system dynamics and system thinking. In this paper we evaluate a well-known and often-cited systems thinking intervention in an organization. The evaluation suggests the intervention did have positive effects on the organization, but because the original intervention was not designed with evaluation in mind, the study also illustrates many of the difficulties encountered in conducting such evaluations.


Strategic Modeling for Competitive Advantage

R.Y. Cavana

R.D. Hughes

Abstract: This paper provides an interim report of the work of the authors in developing a framework for analysing strategic and policy decisions within organizations. To explore frameworks a system dynamics model is developed which draws upon Michael Porter's approach to assessing industry profitability, Alfred Rappaport's method for measuring value creation and Oliver Williamson's approach for aligning management structures with the nature of the service being provided that promote economic efficiency. The framework is empirically tested based on the development of a dynamic simulation model of subsidiary of a large private sector company in New Zealand. A number of scenarios are provided illustrating the use of the model.


A System Thinking Approach to Select Avenue of Science & Technology Development

Jin Chen

Xu Qingrui

Shao Shaomin

Abstract: It is a very important issue for China's sustainable development of economy and society aided by Science & Technology (S&T) Development. The Avenue of Science & Technology Development (ASTD) occupies a special place in the development process of Science and Technology. In Western views, innovation goes through from basic research, technological development to the commercialization. But for most developing countries, as we understood, innovation often started from the process of technology acquisition and innovation occurs when the indigenous technological innovation capability is good. So the S&T development of China may take avenue as NICs did, and improving indigenous technological innovation capabilities is extremely important, but China's strong S&T potentiality should not be ignored, there do exists a special strategy of S&T development for China. Concerning the vague understand on the choice of avenue of science and technology development in China as well as the avenue of science and technology development did not match with national situation of China, this paper provides a system thinking tool, a system dynamics model, to analyze the choice of avenue of science and technology development in coming 50 years in China.



A Conversion Table of DYNAMO into STELLA II

Thomas D. Clark

Hironori Kurono

Abstract: Although there have been many System Dynamics models written in DYNAMO, which are the common property in the society now, there are many obstacles recognized in studying these models using STELLA.  This paper shows a conversion table of the basic DYNAMO rules into STELLA II in order to overcome these obstacles.  First, we refer to the recent graduate increase of the papers System Dynamics Review, etc. which used STELLA I or STELLA II, and then we expect STELLA II for windows will be used more for model building in the future.  Second, we refer to the general features of five differences between DYNAMO and STELLA II in terms of terminology, an equation, a time script, a time related character, and the relationship of Level and Rate (or stock and Flow), and then we refer to one similarity in terms of value chain.  Third we show a comparison table of DYNAMO functions with STELLA II functions according to the categories of Delay and Smooth Functions, Logical Functions, Table Functions, and then we show a conversion table of DYNAMO functions into STELLA II functions using simple examples respectively.  In addition, we show the applications of Sub-Model and Space Compression Object (SCO) of STELLA II functions, which are the new methods available in Stella II (Mac v3.0.4, 1993).  In conclusion, we successfully convert the model of Saturday Evening Post written in DYNAMO (Hall 1973) into a model in STELLA II according to these our findings in order to estimate them.



System Dynamics Modeling of an Activated Sludge Plant

Bhakta Das

Manas Bandyopadhyay

Pratap K. J. Mohapatra

Abstract: This paper systematically presents, with the help of flow diagrams, the development of a system dynamics model for an activated sludge plant which is used to treat the waste water biologically under aerobic conditions.  Three different physical flows  (hydraulic flow, biomass flow and flow of substrate) are considered in the model.  The model is simulated with the help of IGRASP.  The transient and steady-state behaviour of the growth of biomass, sludge production and the treatment efficiency, and their sensitivity to variations of physical (both environmental and physical) parameters are studied in detail.  Strategies for recirculation of activated biomass in the treatment plant are evaluated. At the end, the paper indicates the merit of system dynamics modeling as a tool for conceptualizing relationships, integrating knowledge about separate parts and evaluating control strategies in environmental systems.


From Control to Chaos: A System Dynamics model of Interpersonal Communication

Julia Di Stefano

Abstract: The current interest in learning organizations makes clear the need for more open, more collaborative communication practices in the workplace. "To compete in today's fast moving business environment," says one corporate communication expert, "organization must create a culture of shared understanding" (Locke, 1992,245).  However, a major obstacle to facilitating open communication and the generation of new ideas required in learning organizations is the inadequacy of traditional communication models.  These models tend to use information for control in organizations; to see information as signals or bits separate from meaning; to see the brain as analogous to a computer; and to seek accurate transmission and replication of messages rather than creation of new information. The purpose of this paper is to show that the confluence model of negotiating differences in interpretation is better suited to understanding interpersonal communication than the traditional cybernetic and information theory models based on Wiener and Shannon and Weaver.  Furthermore, it argues that information for control is an outdated model that binds us to old scripts, to replicating traditional patterns rather than creating new ones.


Simulation of Systems Archetypes

Anne M. Dowling

Roderick H. MacDonald

George P. Richardson

Abstract: In recent years an important component of the research agenda in the field of system dynamics has focused on the definition and use of archetypal structures.  Although the primary objective of such research is to develop an intrinsic set of system structures that can be used to categorize insights in dynamic systems, the ultimate goal is to provide an effective mechanism by which information can be transferred from a system dynamics model to a client in an easy to comprehend manner.  To date, a number of archetypal structures have been presented by Richmond, Senge, and Wolstenholme. This paper discusses two systems archetypes proposed by Senge: "shifting the burden" and "fixes that fail." By developing sets of precise code and simulating the models, the authors document the written descriptions of these two archetypal structures and explore the extent to which the structures behave as expected. The authors demonstrate that the development of formal models for systems archetypes is not an easy task.


Information Age Accounting: Catalyst and Enable of the Self-Organizing Enterprise

Morton Egol

Abstract: A paradox of the Information Age is that while the sheer quantity of data and information has grown exponentially, the quality of understanding is typically declining. New technologies are driving accelerating change and complexity, leading to greatly increased uncertainty and heightened business risk. There is widespread recognition that the old "command and control" decision making model, which relied on the insights of the "brains at the top" of the organization, is inadequate to cope with today's challenges. Yet nothing has emerged to take its place. Management has responded to change by reengineering core processes and decentralization through "empowerment" of employees and cross- functional teams; but such efforts, while a step in the right direction, have generally not been successful. Instead of increasing the organization's capacity for creative and timely response to radical change in the marketplace, the changes frequently have amounted to mere downsizing- leaving the organization and its employees more anxious and fearful of change than before.


Sustainable Civilization: Cohesion, Capacity and External Contacts

Tom Forest

Abstract: Human civilizations cover the Earth. In the last several thousand years, many civilizations have been created. Several still exist. Over the next few hundred years, they will change. The most likely scenarios are: 1) All current civilizations come to a quick end in conflict with each other. After several hundred years, new civilizations arise. Many have values and policies strongly contrasting with those of today's civilizations. 2) A new civilization is formed from a combination of today's, which then collapses in civil disorder. After a few hundred years, new civilizations arise, many with values and policies strongly contrasting with those of the world's current civilizations. 3) Today's existing civilizations coexist peacefully until they, in turn then together, dissolve in civil unrest. After a few hundred years, new civilization arise, many with values and policies strongly contrasting with those of the world's current civilizations. 4) Today's existing civilizations change their values, over a course of a few decades, to embrace values of sufficiency and sustainability. They coexist peacefully until, in a few hundred years, they coalesce into a new civilization. This paper describes a model to stimulate the characteristic behavior modes of one civilization's extent and intensity, and how it relates to a second civilization. These modes include externally generated pressure collapse; internal loss of cohesion and resource shortage collapse modes; and a mode of sustainable civilization.


Assessing System Dynamics Curricula: Past, Present and Future

Susan L. Ganter

James K. Doyle

Micheal J. Radzicki

Abstract: Many claims have been made for the efficacy of the growing number of curricula utilizing system dynamics. However, although there is educational research that will likely support these claims, systematic efforts to document them thus far have been inadequate or non-existent. This paper will review and critique one such effort to assess the effectiveness of system dynamics in the classroom. The compelling need for improved SD assessment procedures, as well as recommendations for the future projects in SD assessment, will then be discussed.


Economic Lift-Off, Boom and Bust: A System Dynamics View of the Bangkok, Thailand Economy 1980-1992

Peter J. Genta

Donald A. Seville

Abstract: The World Bank has recently published a 390 page study, "The East Asian Miracle" to try to shed some light on the role of government intervention in the development of East Asian economies. Could we better understand this phenomenon participate in an extensive study into the factors behind the Bangkok, Thailand real estate economy, we developed a casual loop diagram to help explain the factors responsible for the boom and eventual slow down. This process revealed some of the leverage points a similar process of understanding, the lessons learned should be applicable to other developing nations.


Bipartisan Process Improvement in Polymer Coating: Combining System Dynamics with Statistical Process Control (SPC)

Nicolas C. Georgantzas

James S. Fraser

Elvan Tugsuz

Abstract: A firm's end-product waste problem motivated us to investigate the structure underlying a polymer coating process (PCP) by combining system dynamics simulation modeling with statistical process control (SPC). Our bipartisan approach proved to be rather powerful: not only it provides insight about the negative feedback-loop structure between temperature distribution and polymer thickness but also allows assessing the potential affects of leverage points on the stability of the polymer manufacturing process directly from the process capability and control charts. The new knowledge gained yields a dramatic improvement in the firm's end-product quality and productivity. Worth nothing is our transforming of the heat control equations--which correspond to the gelling operations of polymer foam and be solved using standard Runge-Kutta methods. Consequently, our essay illustrates how to effectively handle parabolic partial differential equations using conventional system dynamics simulation software.


Allocation Dynamics of Resources Imperiled: AACSB, Students and Professors

Nicolas C. Georgantzas

Sharon P. Smith

James S. Fraser

Abstract: To comply with accreditation standards of the American Association of Collegiate Schools of Business (AACSB), B-schools in the United States have to maintain a low student to faculty ratio. AACSB standards also affect the process of reviewing full-time faculty (FTF) members for promotion and tenure (P&T), so that the P&T review process safeguards the continued development of educational and intellectual activities in US B-schools. AACSB requires the FTF of its members to enhance the reputation of their B-schools through research and publications. This essay extends the work of Georgantzas, Hamilton, & Drobnis (1994) on the implementation of AACSB standards through feedback-loop planning, showing how a system dynamics simulation model complete with computed scenarios has been helping a small but prestigious B-school assess its future in term of student to faculty ratios.


Can Consummate Concentric, Conglomerate, Constrained And Contractual Creatures Create Value? An Intricate Shakespearean Impromptu on Romancing the Deal

Nicolas C. Georgantzas

Andreas Schulte

Abstract: This abstract extends the merger and acquisition (M&A) model of Georgantzas, Schmid, & Walton (1994), showing the dynamic evolution of markets into hierarchies or other transactional exchange governance (TEG) forms resulting from the creation of a climate of trust and its effect on the internalization cost of control. The extended M&A model offsets the shortcomings of transaction cost economics (TCE) and points to the potentially rich contribution of system dynamics to exploring governance structures beyond the ideal-type forms of markets and hierarchies that dominate the TCE literature.


An Integrated Social Fabric Matrix /System Dynamics Approach to Policy Analysis

Roderic Gill

Abstract: All socioeconomic systems are characterised by a complexity of interacting influence patterns that would usually incorporate institutional, environmental, technological, and behavioural relationships. The challenge for management is to develop a sufficiently detailed understanding of these influences in order to develop effective opportunities and mechanism for control. This challenge is heightened by the tradition of 'partial' or non-holistic thinking that continues as the conventional wisdom in the management field. Though the imperative for holistic thinking is intuitively supported by most mangers, the difficulties associated with implementing these ideas into management practice may be perceived as being 'too hard' or 'open ended' for practical application. System dynamics modelling is an appropriate process for developing an holistic understanding of any socio economic system. A realistic model can be applied to the development of management strategies and decision support. To a novice modeller, however, model construction can be intimidating process lacking in the kind of systematic procedural support seemingly offered by the more conventional, non-holistic management school. To a large degree, the integration of the qualitative social fabric matrix with quantitative system dynamics presents a more system modelling process for practical application. The proposed amalgamation also yields some added conceptual insights into the nature of management processes and prospects for control.


Planning Sustainable Agro-Ecosystems: A System Dynamics Approach

Roderic Gill

Abstract: The assessment of and planning for agricultural system sustainability is a difficult task not adequately handled by conventional methods of farm management analysis. Sustainability is appropriately considered as multi-dimensioned phenomenon incorporating ecological, economic and sociological aspects. An holistic perspective is necessary to consider these dimensions. The inherent complexity of real world agricultural system implies an inductive, rather than deductive analytical approach. As an inductive modelling procedure, system dynamics is able to represent the underlying feedback processes that define those ecological economic processes relevant to an understanding of sustainability. Through such an understanding, the analyst is able to facilitate change towards the ultimate goal of holistic system sustainability. A case study model is developed to indicate the relevant modelling procedure and outline some guidelines for interpretation.


The Dynamics of Research and Development in the Pharmaceutical Industry--Productivity of Traditional versus New Research Technologies

Martin U. Grobman

Abstract: The process of research and development (R&D) in the pharmaceutical industry has become increasingly unproductive during the last few decades. One reason, among others, for this development is the diminishing level of performance reached by research technologies. In the following study the term 'performance' is limited to an output measurement which is reflected by the number of new drugs launched into the market by which therapeutic improvements can be realized. The purpose of this study is to analyze the decreasing performance of traditional technologies in order to partly explain the reduction in R&D productivity. Subsequently, the potential impact of new technologies upon research performance will be simulated by using System Dynamics. Broad-scale random screening is the main technological process traditionally used to discover chemical substances for new drugs. This study reveals the random screening can be adequately modelled by the statistical formula Poisson function. The function is used to calculate the probability of discovering new drugs. Empirical data from the German pharmaceutical industry from the 1950s onwards were out into the formula. The results show that the probability of discovering new drugs has decreased strongly by using  random screening. Furthermore, the risk involved in research with random screening can be measured by Poisson distribution functions. In can be seen that risk has risen significantly since the 1950s. The Poisson formula also provides a formal framework for forecasting the impact of new technologies on the rate of drug recovery. The high potential performance of new biotechnologies, especially genetic engineering, could increase research success rates significantly. A System Dynamics model has been constructed in a prototype version to generate scenarios for future output rates. The high uncertainly in predicting research successes can be estimated by a best, a worst and an intermediate forecast based upon varying assumptions. The software application Vensim has been used for modelling and simulating. The model is partly based on hypothetical data and is, therefore, a first step towards forecasting the impact of genetic engineering on research performance in the pharmaceutical industry.


System Dynamics Simulation Software--Dynamox

Jiuqiang  Han

Guoji Sun

Abstract: The purpose of this paper is to present the characteristic, functions and program structure of system dynamics simulation - DYNAMOX that can be used on XENIX operation system. This software is mainly composed of six parts. (1) dispatch management module, (2) parameter modify module, (3) model compiler module, (4) model run module, (5) database access module, (6) model library access module. In order to illustrate out software, we give a simple example about the organism relationship model between deers, beasts and grass in Kaibab plateau.


Programs To Support the Development of System Dynamics-Based Curricula

John F. Heinbokel

P. Jeffery Potash

Martin Engelken

Robert Green

Abstract: Over the past several years, faculty at Trinity College have engaged in a number of project to develop their modelling skills, to incorporate modelling into established courses, to use modelling as foundation for new interdisciplinary courses, to develop modelling skills in our students, and to reach out to pre-college educators to support their development in similar directions. Our more successful experiments share at least one common element: They begin with a conceptually simple theme, and then systematically and progressively build complexity, realism, and connections to more diverse fields, around the central theme. Such structure allows the development of entire course on foundation of system dynamic modelling, rather than episodic modeling exercises common in many other educational settings. An additional benefit is that several of our experiments have begun to provide unexpectedly reinforcing support for other experiments. In this contribution we briefly describe these recent experiments which, together, can provide significant support to pre-college educators and educational systems seeking to enhance the system dynamic components of the curricula. Our efforts to provide initial modeling training for teachers rested upon a graded sequence of modeling exercises progressively developing more complex, realistic models of human population growth, then connecting the population dynamics to the other topics of interest to the teachers. Recognizing this strategy as an effective one for building modeling skills, we have used it as conceptual  foundation for an interactive computer-based tutorial for the building of STELLA II models. This Tutorial can support independent learning of this language, serve as a self-paced adjunct to more traditional modeling instruction, or provide a means to convey basic skills and concepts to students using models within a particular course. Following these successes, we developed in 1993 an interdisciplinary (primary biology, history, and economic) college course (Plagues and People) in which a simple model disease transmission served as the core model with which to develop diverse scenarios addressing historical, social, and economical factors of disease in setting ranging from ancient Greece to the modern case of AIDS. A more recent course was based on initially simple models of human population growth and explored how human population dynamics have influenced migration and settlement patterns, was and conquest, resource exploitation, disease, and development pf social and economic systems.


A Mathematical Definition System of System Dynamics

Jia Ren'an

Abstract: This essay provides a mathematical definition of the causal diagram and the flow diagram. It also elaborates the idea that the level-rates system is the key to solving the problem in System Dynamics. The essay will make a combination to the knowledge of model conceptualization and formulation and improve modeling practice.


System Dynamics Model for A Mixed Strategy Game Between Police and Driver

Dong-Hwan Kim

Doa Kim

Abstract: Game theorists have recommended lots of reasonable strategies for resolving domestic and international policy problems. In general, they use a concept of equilibrium strategy for analyzing dynamic consequences of available policy options in game situations. One of the most famous policy recommendations suggested by game theorists is that of George Tsebelis (1989). He contends that an increase in penalty against law-violation is not a viable policy tool for decreasing the violation tendencies of drivers. That is because the interactions between police and drivers can be best represented as a mixed strategy game in which each player choose their alternative actions with a probability. In a mixed strategy game between police and driver, the probability of driver's law-violation cannot be decreased by increasing penalty against law-violation. Tsebelis's suggestion seems to be contradictory to common sense. For most policy makers, an increase in penalty is conceived as one of the most effective tools for policy implementation. In Korea, the increase in penalty have vastly reduced the number of drunken drivers. In many countries, the penalty management is a major policy implementation tool for inducing compliance from the people. Our SD model for a mixed strategy game shows that it takes a very long time for an gametheoretic equilibrium to appear. Therefore, game players cannot and should not depend on the equilibrium state for choosing their actions. Furthermore, our mixed game model shows that an increase in penalty can induce a compliance from the people. Our model shows a behaviors which are contradictory to the game theoretic solution, but consistent to the real world behaviors. We have proposed that these gaps between SD model and a game theory come from the ambiguous conception of equilibrium state and the lack of dynamic and transient behavior analysis in the game theory.


A New Approach for Finding Dominant Feedback Loops: Loop By Loop Simulation for Tracking Feedback Loop Gains

Dong-Hwan Kim

Abstract: Traditionally, feedback loops have been analyzed in two ways. First, as in causal loop analysis, the positive or negative relationships between variables are summed up to judge the polarity of feedback loops. This approach can be said as a qualitative method. Second approach for analyzing feedback loops are analytic methods mainly developed for dealing with linear models. For the problems of understanding the behavior of feedback loops, the qualitative methods and analytic approaches give little help to modellers. In this paper, third approach for understanding the behavior of feedback loops are suggested. That is a loop by loop simulation method for tracing the feedback loop gains. First parts of this paper explain the concept of feedback loop gain and the loop simulation method. Second parts of this paper experiment the loop simulation method with two S.D. models; the commodity cycle model which shows equilibrium forces and the two shower model which shows fluctuating system behaviors without external shocks. Last parts of this paper discuss about the dangers of understanding S.D. model with qualitative analysis of causal loops and raise a question on the way of interpreting cyclic or chaotic behavior as shifts in dominant feedback loops.



Transport Forecasting Based on Artificial Life Concept

Kishi Mitsuo

Hosoda Ryusuke

Yamada Tomoki

Funahashi Hiroki

Abstract: A system dynamics model based on Artificial Life (AL) concept is proposed for transport forecasting. The proposed model focuses on the economic behaviour which emerges out of the interactions among individual local objects, i.e. economic units. That model is merely a large aggregation of simple programs which specify how that local object react in the environment. Application examples are provided to illustrate the applicability of the proposed model.


System Dynamics Model of the Tokyo System

Takahiro Kojima

Yutaka Takahashi

Kinya Machida

Teiichi Igarashi

Abstract: Tokyo and the surrounding region support a huge population. The resulting large number of people who commute to the city centre has necessitated the ongoing construction and maintenance of a vast railway network. Currently transportation form terminal stations to the city centre is provided mainly by Japan Railways' Ymanote Line, the TRTA and the Tokyo Public Subway. Thirteen lines, including those in only partial operation, comprise the subway system in the downtown area. The TRTA forms the heart of the system with nine lines, while the Tokyo Public Subway is relatively small in scale, with only four lines. The current research project provides the TRTA material for use in developing future management directions by data provided by the TRTA. This paper covers the first phase of this research.


Diary of an Oil Market Model: How an Interactive System Dynamics Modeling Process Was Used with Shell Managers t o Resolve Conflict and Generate Insight

David Lane

Abstract: Managers involved in the refining and trading of oil had conflicting views on the relationship between output and cash generation in their market. A day by day account is given of a project in which the market was modelled. The models ostensibly represented the view of the Refining Strategy staff but consultation which other individuals allowed the views of the local Trading department to be represented too. The tools of system dynamics were used to articulate assumptions and to support a 'dialogue' in which disagreements regarding macro-behaviour were transformed into debates over specifics relationships. The repeated re-crafting of a STELLA model led to alterations in the interaction. In consequence, the participants aligned behind a single view of the market's behaviour, as well as admitting to increased respect for the expertise of the other group.



Building Cognitive Feedback into a Microworld Learning Environment: Results from a Pilot Experiment

Paul A. Langley

Abstract: This experimental study examines how performance and learning in a system dynamics microworld environment may be improved through the provision of online cognitive feedback. Subjects are postgraduate management students at the University of Westminster, London. They participate in the experiment over a two week period, as part of graded assignment. Subjects have to complete a set of six tasks in an Oil Producers microworld, playing the Independents Producers, with a clearly defined performance objective to maximise cumulative net income over a 25 year period. The experimental design includes three different cognitive feedback treatment groups, in addition to a control group which receives no cognitive feedback at all. All groups receive outcome feedback. Treatment groups only have access to the cognitive feedback during the first three trails out of six. Mean subject performance is significantly greater for the treatment groups during the first three trials, but declines to a level comparable with the control group by trial six. Sustainable mean performance improvements are not achieved, but productivity (performance/time taken) does improve significantly by the end of experiment.


System Dynamics and The Internet

Nan Lux

Eric Choi

Abstract: As the 21st century approaches, the Internet will be an important resource for system dynamists. This paper will describe the new computer server where a suite of Internet tools are used and maintained at MIT by the System Dynamics in Education Project under the supervision of Professor Jay Forrester. These tools will be available to anyone with an interest in system thinking and system dynamics. This introduction to the field of electronic networking will mention the various methods of connecting to the Internet and touch upon some of the most popular uses of the Internet. We will expand this discussion into how the Internet can be used for the rapid exchange of information. One of the most intriguing capabilities of the server will be the sharing of computer models. These computer simulations can be downloaded, evaluated, modified, and sent back or on to other people. The use of technology will facilitate discussion, debate, and the exchange of ideas. The MIT system dynamics server can be reached through the World Wide Web, FTP, Gopher, and e-mail. Specific detail will be given about how to access the server, and how to use each of its components. Since technology is changing rapidly, future plans for the expansion of the server will be discussed as well. A summary of what papers, models, announcements, and resources are presently available on this system dynamics server will be present. In addition, we will discuss other system dynamics resources available on the Internet, such as servers maintained by the System Dynamics Society and other institutions around the world. The technology transfer that the Internet allows can benefit all those who are interested in the field of system dynamics including model building and sharing of experiences. The Internet is an efficient, often inexpensive means of communication, which can important for the growth of system dynamics in the future.


Understanding the Dynamics Created by Management Decisions- A Vensim-based Simulation Approach for Management Education

Frank H. Maier

Abstract: Industrial companies can be characterized as complex and dynamic systems that are only parts of more complex systems. Therefore the purpose of education of business administration student can only be to teach the principles of different functional areas. Management education also has to enhance the understanding of how the different organizational parts of a company interact, how the dynamic consequences of decisions are and how decisions in one functional areas of a company influences other parts. Here the traditional way of teaching in management education fails. Tools are needed that allow (1) to teach the structural fundamentals of companies and (2) to part of the education of students in business administration at the Industrieseminar of the Mannheim Univeristy. The paper discusses a comprehensive model of a company and its interactions to the suppliers, the markets, the competitors and its use in management education. This management simulator is partly based on the model developed and published by Lyneis. Some of the sectors of the original Lyneis model were improved and completed by others that map market dynamics, research and development, and a more detailed representation of competitive structures. Opposed to the Lyneis model which was developed in DYNAMO the management simulator is implemented in VENSIM. Students use this model in the advanced courses of System Dynamics. They analyze the structure of the model, the feedback relations and the management policies that are mapped. They are also forced to seek for better policies in the different functional areas and can test the dynamics created by their new policies. On that basis the understanding of the interactions of the functional parts of a company and the dynamics consequences of decision can be improved.


Innovation Diffusion Models for Decision Support in Strategic Management

Frank H. Maier

Abstract: The diffusion of innovations over time is a highly dynamic problem that is influenced by various factors like price, advertising, product quality, competition and among other the time of market entry. The traditional models of innovation diffusion--like the Bass model and the further development on that basis--ignore those factors and the complexity and dynamics underlying the process of diffusion. Usually these models consider only one influencing, but exogenous element, e.g., price of advertising, and seek for strategies to optimize the cumulated profits. Their aim is normative decision supports in the field, but they model, which do not appropriately represent the structural fundamentals of the problems because the methodologies the models are based on are inadequate to build complex and interdependent models. The use of the system dynamic methodology allows the development of more complex models to investigate and analyze the process of innovation diffusion. These models can enhance the insight and the problem structure and increase understanding of the complexity, the dynamics and the impact of the influencing factors. The paper discusses in a systematic view different model types. In the beginning the coarse structure of a model that generates the process of innovation diffusion in monopolistic markets is shown and discussed in detail. It is also described how management policies and the structures of corporate models can be integrated to the model. Further developments of this core model then describe different ways of mapping competition among existing and potential competitors in innovation diffusion models. These models then allow -among other- the analysis of market entry timing, pricing or advertising, and research and development strategies.


Missing Links in Quality Initiatives in Australian Manufacturing Industry-A System Dynamics Analysis

Purnendu Mandal

Abstract: This paper emphasises on the question of how quality management initiatives influences business performance with particular emphasis to Australian manufacturing industries. The paper describes the finding of a pilot survey on quality conducted among manufacturing companies in the Geelong region of the Victoria state. The results of the survey have helped in understanding the transient nature of the quality management process. It transpires from the study that the industry managers have limited perception of the quality process. They fail to realise some of the important feedback loops of the quality management system. The paper attempts to identify the missing links and develop a comprehensive (and a more representative) causal model of quality management process.


Maintenance Models and System Dynamics

Adolfo Marquez

Rafael Usano

Antonio Herguedas

Abstract: This paper presents a complete study of quantitative models to optimize maintenance decisions in a company. The corrective, preventive maintenance with and without previous test are modeled and implemented for several cases. This is a new contribution within the field of maintenance, introducing the possibilities associated to the utilization of these models as a support for the maintenance planning decision making process.


A Model for Learning about the Agricultural Business System

Rosa Melero

Jose A.D. Machuca

Abstract: The aim of our paper is to present a simulation model for training which enables the behaviour of the agricultural business system to be studied in the light if different scenarios and policies. We will show the potential applications of the model developed.


Use of System Dynamics Diagrammatic Tools as Representation Schemes for Linear Programming Models

Pratap K.L. Mohapatra

Abstract: The paper suggests that the diagrammatic tools available in the system dynamics methodology are very useful to build external representation schemes for linear programming models. The paper further suggests that these tools can be used for problem conceptualization and model building. An example is cited to demonstrate the power of the system dynamics diagrammatic tools to conceptualize the problem, fix the model boundary, and define the decision variables and the constraints.


Development and Maintenance Dynamics of a Software Business Firm

Pratap K.L. Mohapatra

Abstract: This paper demonstrates, in a system dynamics framework, the effects maintenance activities have on development of new software. Buoyant demand, rising backlog of work, increased delivery delay, pressure to increase programming productivity, and consequent rise in the number of defects in the software result in a fall of quality image of the company in the eye of its customers. Falling delivery delay and quality images can reverse the trend of orders. Added to this problem is the fact that the software industry today is experiencing large employee turnover. Hiring new programmers affect both productivity and quality of products. The simulation results display cyclic fluctuation of business over a 12-year period. The policy tests indicate that the policy of hiring experienced staff and of being able to retain them for a considerable length of time gives the best system behavior compared to the other policies.


Confusion in the Polarity of Major Loops

Mohammad T. Mojtahedzadeh

George P. Richardson

Abstract: There is an a priori in the system dynamics paradigm which implies that the behavior of a system is tightly related to its structure. A structure specifies the relationship between the elements of the system in term of stocks and flows and feedback loops. The attempt is to explain the behavior of a system based upon the accumulation in a system and its positive and negative feedback loops. This note introduces the concept of implicit loops or pathways, as components of a major loop, to explain how changes in the behavior of a variable of the system occur over time. The note demonstrates that they presence of a negative loop (explicit or implicit) around a positive loop (explicit or implicit) is necessary in order for a system to oscillate. In particular, in explains how a pure positive major loop can oscillate.


Human Service Systems: A Theoretical Perspective

Tom Morgan

Bill Ammentorp

Abstract: In virtually every industrialized nation, the human services constitute the largest economic sector. Exploding costs of these services have driven many national budgets to unimaginable deficits. At the same time, there is an ever-increasing demand for health, education, corrections and other social services. Despite the proportions of this industry, there is little or no theoretical foundation for design and management of service delivery systems. Nor is there a sound conceptual basis on which public policy can be raised. This paper grows out of the increasing similarity among human services in the industrialized countries. All such services are driven by population growth and the dynamics of problem "incidence" and "prevalence". They are designed to deal with particular "case mixes" of clients through "arrays of service". The terms in quotations in the previous sentences provide examples of the language the authors use to formulate a general theoretical model of human service systems. The model design is implemented in ITHINK and is identified to human services systems in the United States. Model behavior is analyzed to illustrate general principles of delivery system design policy objectives interact over time. In this way, the model points to important insights which policy markers and human service administrators might consider in their search for solutions to social problems. Although the model in this paper is based on the peculiarities of human services in the United States, the authors make a case for wider applicability. Using health care and education examples from other countries the authors show how major propositions in the general theory are viable in widely differing context. The result is a powerful schema which can guide research, policy making and human service administration.


Understanding Strategy of a Manufacturing Based Learning Organization in Transition in the Twenty-First Century

Hamza Musaphir

Ostap Hawaleshka

Abstract: Manufacturing strategy offers a means for integrating operations management decisions and linking them with the firm's business strategy to attain a competitive position. The goal of this paper is to develop a model using System Thinking which can be utilized to better understand what constitutes manufacturing strategy, and why certain decision choices better mesh and lead to a superior competitive position. The model focuses on understanding linkages among operation management decisions which will include the decision areas of process, materials management, quality, workforce management, and maintenance.


Feeding Your Models with Real Business Data

Magne Myrtveit

Abstract: In making models of real world problems or real world processes, the need for transfer of data between model and external files, applications or other devices becomes important. This paper illustrates the use of automatic data transfer in model construction and in process control. In a typical model construction and verification process, real date plays an important role. Once a model is made of the target system, real data is fed into the model, and the model output is compared to the output of the real system. The result of the comparison is used as a basis for refining model structure, model parameters, or both. The Dynamic Data Exchange (DDE) object and the Archive object of POWERSIM may be used in a model to import and export data during simulation. This greatly reduces the amount of work involved in checking model against reality. DDE can also be used to set up a data analysis, for example, by launching a spreadsheet or a statistical program. In combination with the multiple runs feature of POWERSIM, a series of model structures and model parameters can be tested with real data without manual intervention. In a research project aiming at developing a model of the biological process of fish growing in a fish farm, the above tools have allowed for extensive use of data from fish farms in the process of model construction and verification. The basic feedback loop of a process control system, involves measurements (import of data), comparison between measured values and desired values, followed by a controlling action (output of data) aiming at closing the gap between actual and desired process state. The data transfer protocols of POWERSIM make it possible to implement process control systems as POWERSIM models, and linking the models to the physical process. A range of input/output devices for the Windows operating systems supports DDE or Net-DDE, and may therefore be used directly together with POWERSIM.


Civil Engineering Design Management Using a Dynamic Model

Stephen Ogunlana

Jason Lim

Khalid Saeed

Abstract: In an attempt to understand the current practices and problems in design projects, a system dynamics model was developed for the management of detailed design process in a civil engineering project. The model took an integrative approach, consisting of four interrelated subsystems: human resources, design production, controlling and planning. Two sets of data were used to initialise and test the model. Some policies and scenarios were then explored to gain insight into the model's behavior and to seek alternatives for better management. The experiments showed the following policy hierarchy: A) In terms of meeting scheduled times, the effectiveness of policies is in order:(1) progress control, (2) manpower allocation, (3) estimation of workload, and (4) realisation of underestimated work. B) In terms of man-days expended or cost reduction, the effectiveness of policies is the order: (1) manpower allocation, progress control, (3) estimation of workload, and (4) realisation of underestimated work. As such, good estimation of workload is essential but not sufficient to bring the project to finish on schedule. Good project control and early perception of real progress are needed to ensure adequate resource allocation and on-time completion.


A Dynamic Comparison of Organizational Design Alternatives

Toshizumni Ohta

Antonio A. Montes

Tadashi Yamamoto

Abstract: The purpose of this paper is to explain, in terms of a simple model, the structure of formal organization, and to show how external events can affect their performance. The conceptual viewpoint used to describe the coordination occurring within organizations, is that decision-making theories of organization design, namely, that organizations are information processing systems with problem solving units connected by a communication network. We begin by modeling a basis coordination structure (functional hierarchy), as set of actors (processors and managers) who are connected together by communication lines. Then, queuing models are employed to analyze the execution of tasks by processors and the processing of result by managers. A production function is defined, which considers the average delay for both processors and managers. Then we introduce the concept of environmental uncertainty. We explain how it relates to structures, and how it can affect the organization's productivity. In order to cope with this uncertainty, we have considered four alternative organizing strategies (Galbraith 1977): (1) creation of slack resources, (2) creation of self-contained tasks, (3) investment in formation systems, and (4) creation of lateral relation. Each of these strategies is applied to the initial coordination structure, and for each we define a production cost equation. In addition to production costs, we also analyze coordination and vulnerability costs. Then, based on these cots we make a comparison of the four strategies, pointing out the trade-offs between them. In conclusion, since we consider management delay time in our model, we are able to explain in more detail the trade-offs between the alternatives strategies.


Policy Design and the Problem of Fraud "Some Preliminary Ideas from Considering Fraud as a System Issue"

Terence Palfrey

Abstract: This paper seeks to develop an evaluative framework for further consideration of policy design for government and business concerning the problem of serious economic fraud. Considering a resent UK pensions industry scandal and proposals for reform as an example, it is argued that fraud effects the integrity of financial markets and economic well being of society. It draws out of Traditional System Dynamics, Senge's Systems Thinking and Soft System Methodology an approach that link real world problem and systemic thinking in order to produce realistic policy initiative. The paper sets systemic thinking towards just outcomes in the context of legal, economic and political constraints, the eventual aim being to develop acceptable fraud prevention and detection policies at national and business levels. This work is at a preliminary stage and is attempting to take account of both logic based and wider socio legal analysis.


A General Model to Support Transport Planning

M. Piatteli

Marta Cuneo

Nicola Bianchi

Nicola Triggiani

Abstract: This paper examines a transportation model which is to be used as a support in planning and whose main requirement is general applicability in terms of both geographical area and user levels. The model treats the transport network as a system of finite elements characterized by a transit delay. These elements are nodes, legs or links, and carries. The model consists of a series of cores, each of which applies to a different commodity. Integration in the network takes place on the legs at carrier level. The elements of each core characterized by both operational and economic performance. The dynamics run on two times scales: day-to-day and year-to -year. The model is implemented by discrete-event, object-oriented languages and provides a scenario for decision-making problems, which are typically approached using System Dynamics methods.


Senior Management Standards, Management Development and Systems Thinking

Chris Pierce

Abstract: This paper summarises the research work associated with the development and trialing of the standards of competence, personal competence, and knowledge and understanding for senior management published by Management Charter Initiative in the UK in March 1995. The structure of the standards is described and system thinking archetypes are developed to examine the application of standards for conformance and development purpose.


The Global Electronic Community: Modeling the Sociology of Self-Organization

Joan Roca

Bill Ammentorp

Tom Morgan

Abstract: The revolution in telecommunications of the past decade had brought about fundamental changes in the patterns of professional communication. Internet and other electronic networks make it possible for geographically-dispersed individuals to engage in meaningful dialog concerning common problems. These exchanges result in a Global Electronic Community which unique in human experience. This is a community that is truly self-organizing in that it can take on new forms momentarily. Consequently, it is a dynamic community with continually-changing membership and structure; a society populated with both human and electronic agents. It is, as a result, more complex in the roles its members can assume. The sociology of this community is both novel and open to inquiry in depth-in ways never before imagined by students of human society. This paper explores the sociology of the Internet as self-organization system. The Internet is represented as a “electronic landscape” where users and their agents seek collection of relevant information. The “landscape” is defined by the accessibility, connectedness and relevance of data files. As users navigate across this “landscape”, they add both connectedness and relevance. This creates collections of useful information and welds users into Electronic Communities held together by shared models and paradigms. The authors present a System Dynamics model of the prototypic Global Electronic Communitiy. Using the data drawn from Internet file servers, the authors identify the model and show how its structure and behavior conform to the principles of self-organization. Simulation results are used to outline the sociology of such Communities and the implication for professional contributions to sustainable development.


A Model of Capital Accumulation, Technological Progress and Long Waves

Alexander Ryzhenkov

Abstract: In line with a previous research (Ryzhenhov 1993), a Goodwin-like model of fluctuating growth is represented by a three-dimensional competitive-co-operative system of non-linear ordinary differential equations. In particular, a labour income share enhances a rate of growth of a capital-output ratio. This ratio, in its turn, adversely affects the rate of growth of employment ratio. Under an appropriate constellation of coefficients and control parameters, this model is capable of generating long waves modelled by converging fluctuations in the vicinity of the dynamic equilibrium (steady-state growth path) or by closed orbits in the phase space. The analytical and experimental results seem to provide a new base for the conclusion that no intrinsic (exogenous) clustering of innovations is necessary to produce long period fluctuations of economic activity as the flow of invention and innovation is contingent upon the rate of capital accumulation. It is shown that the model is consistent with the Kaldor prominent stylised facts and the Valtukh information value hypothesis.


Growth of Construction Activity in Thailand: Views of the System from Three Vantage Points

Khalid Saeed

Abstract: This paper views three feedback maps of the construction activity in Thailand, development by three experienced modelers as three views of the same problem seen from three vantage points that consider different time frames. The three maps possibly appeared since reference mode for the modeling problem was not explicitly stated, while a wide spectrum of historical data was provided to the modelers. System Dynamics attempts to model processes rather than systems and as such a clear statement of the problem is necessary before a model with a unique structure that corresponds to the stated problem can be formulated.


System Dynamics in Engineering Education

Martin Simon

Abstract: System dynamic can play an important role in the education of engineers. On the one hand, students in engineering profit from system dynamics. On the other hand, the system dynamics methodology can be enhanced if we take advantage of the training in physics and mathematics received by the students. It is found that new forms of teaching physics (system physics) support system thinking in a unique way. Advanced courses in engineering disciplines can then build upon modeling and simulation taught early on the curriculum.


Modeling Product Life Cycles from Customer Organization

Sonia Skelton

Thomas Lynch

Craig F. Donaldson

M.H. Lyons

Abstract: Increasing competition in markets, rapid advances in technology and changing organisational styles have contributed to a reduction in product life times and development cycles. The telecommunications industry is becoming very complex with a vast array of products and services, many of which are at least partially substitutable for one another. It is becoming increasingly important to have tools which help companies manage their service portfolio. This paper presents an investigation into product life cycles from perspective of customer choice. A simulation model, based on a system dynamics approach, was developed and the impact on market growth of various influences analysed. Results suggest the model may be used to investigate product life cycles and to evaluate and compare commercial strategies. This modelling activity provides a valuable insight into the potential predictability of product life cycles, the amount a telecommunications service provider may influence a product life cycle and the applicability of system dynamical analyses to an organisation’s commercial strategy


Order and Disorder in Creative Organizations

P. Stoyanova

A.O. Moscardini

M. Elliott

R. Woodward

Abstract: This paper addressed the survival of an organization in the fight for competitive advantage. A simple model of a non-standard successful organization has been build using System Dynamics which requires definitions of terms such as Quality, Momentum and Inertia. The non-linear nature of this model gives rise to complex behavior which is explored and analysed. It is concluded that for a company to survive in an ever changing environment it is crucial that it the changes as early as possible and responds to them adequately.


Limits to Urban Growth and Urbanization- A case study of Bangkok Problem

Orasa Suksawang

Hari Srinivas

Abstract: This paper suggests integrated teaching approaches of System Dynamics methods for socioeconomic analysis, and Geographic Information System for spatial analysis, in examining, evaluating and planning the limits to urban growth and urbanization of city in the course of Urban Planning by taking Bangkok city as a case study. The course if offered for graduate students in the field of Social Sciences at Kasetsart University. Urban Dynamic Model applied in the study includes interactions of population, capital investment of housing, industry and transportation; economic development in terms of gross provincial product and loan interest rates, and land subsystems. The model aims to illustrate problems of shortage and ineffectiveness of City Planning Act which could not control disorderly urbanization and the over supplies of capital investment of housing and industry. Historical patterns of spatial settlements interacting with changes of a socioeconomic behaviour were illustrated. The policy revising the City Planning Act to limit clearly floor area ratio for building construction within the city in relation to land use categories - commercial areas, residential areas, industrial areas - generates the desired urban growth and urbanization.


Determination Methods of Rate Variable Using Fuzzy Theories

Eiichiro Takahagi

Abstract: In the real world, most rate variables are determined by human decision makings. However, in the system dynamics (SD) simulation method, a rate variable is often assigned to difference (or a ratio of the difference) between a level variable and its normal level. Practically, most decision makers have some (fuzzy) rules and apply them depending on its situation. If an intermediate situation among the rules occurs, they interpolate the rules. In this paper, to simulate such human decision makings, we study to apply the fuzzy reasoning to determination method rate variables. We discuss the design of fuzzy reasoning for SD in section 3. We show an application of this method using DYNAMO in section 4.


Developing Countries Dilemma: Labor Intensive Technology or Capital Intensive Technology?

Muhammad Tasrif

Abstract: It is an accepted view that technological progress is an extremely important - perhaps the most important- determinant in the growth in output per man. In the discussions of the role of technological change in the economy, one of some important questions naturally arise is how does technological change affect different factors. Traditionally, some technological changes are thought of as "labor intensive", and some as "capital intensive". Whether the technological change is capital intensive or labor intensive, the most important question for developing countries is how the technological change can be expected to improve their national productivity considerably and continuously. Their economies generally depend on foreign exchange earnings from loan and exports, and from now on, they are facing some constraints in the international market.


A Dynamic Model of Labor Market

M.D. Torres

R. Lechon

Abstract: We present a system dynamic model about labor market. The model is based on four equations mainly: demand and supply for labor, and evolution of prices and wages. To find the supply labor we consider characteristics of the labor market in Spain. The simulation of the model allows us to determine the evolution of variables as demand employment, male and female supply labor, wages, prices, inflation and unemployment rate.


Advanced Manufacturing System Dynamics: the Lean Production Approach

Rafael Usano

Adolfo Marquez

Jose Torres

Abstract: The goal of this paper is to present some of the latest advances in manufacturing techniques. With that purpose, different production process patterns are modelled. The models are tested to carry out the experiments and further appropriate analysis for several manufacturing techniques. The techniques under study are known as “CONWIP”, an acronym for Constant Work In Process and the very well known “JIT”, Just In Time. The analysis is focused to obtain a deeper understanding of the Lean Production.


Computer Aided Organizational Design

Masaharu Ushijima

Koichi Hori

Setsuo Ohsuga

Abstract: This paper discusses about computer aided organization design by reinforcement learning. In the past days, organizational design is done by the experience and some intuition of corporate planning departments staff or other similar functional department staff. This means there is no expert of specialist for organization design in the corporation. We propose "Computer Aided Organizational design", here. This organization design system is build on the basis of the Enterprise Model and Corporate Information Structure Model. Organization design is implementing through computer simulation that is done by using actual markets data. This system uses banking business as an example. After implementing dealing for 1 month, the system start to make several monthly financial reports, that is, B/S, Income statement, and Risk Analysis. Organization will be redesigned its initial structure by performance which is indicated in above mentioned reports of each functional team and player's dealing. According to this designing process, organization (= corporation) gain robust structure, in another word, organization adapts environment change through this process.


Object based dynamic modeling

Lars Vavik

Magne Myrtveit

Abstract: This paper reports on collaborative action research partnerships with corporations to develop new tools to accelerate learning, and test these tools in real organization. In the collaborative program "From System Thinking to Praxis" several corporations are facing the challenge of building a virtual model to mirror the companies' business strategies. These models have to meet a level of functionality which allow managers to compare the output of the model with real data from organization. On the other hand, the models have to be flexible enough to give managers a laboratory for business process redesign. The focus in this paper is on the laboratory as an exploratory learning environment. The work is based both on modelling as a way of learning, and learning from running simulations (management flight simulators). The challenge is to build a bridge between the functionality and the transparency of the model. A combination of the flexibility of the modeling toolkit and the constraints of a simulation applications is needed. The computer based learning environment presented here is based on a state of the art toolkit for constructing system dynamic models (graphical flow diagram, arrays, OLE links, DDE date transfers). To meet the new requirement, major extensions were made to the toolkit in order to allow for concrete object in addition to the general and abstract objects of accumulator-flow diagrams. The resulting system opens up for modeling in terms of objects within the problem area (for example banks, markets, capital, transportation), and at the same time gives the possibility to use the basic blocks (accumulators and flows). A management flight simulator based on high level objects renders the possibilities to change the model structures, not only parameters. The value of a modeling process based on object based dynamic modeling is measured as the probability that a manager will grasp the result from a single analysis and act on it. With the object based dynamic modeling approach we challenge past conclusions that there is a tradeoff between model complexity and the value to the user- a compromise between functionality and transparency.


Organizational Flexibility and Learning Organization - Organization of CIMS Enterprise

Qifan Wang

Xianyong Wang

Abstract: By studying the essence and characteristic of CIMS enterprise, the paper discussed organizational flexibility, which corresponds engineering flexibility. Then the structural characteristic of flexible organization is inquired. On the basis of the discussion, the importance of learning organization (LO) is highlighted. The paper points out that organization of CIMS enterprises should be learning organization with high flexibility.


Modeling for Study of the Prospect if a Metropolis

Qifan Wang

Jianzhong Yang

Abstract: The study of a metropolis becomes more difficult today since, with the development of the world, a metropolis performs more functions than just as an economic center. It is hardly possible to study the long-term behavior mode of the metropolis by using a single approach. Therefore, the model here uses not only qualitative analysis, but also statistics, econometrics, input/output theory and other quantitative methods, incorporated and integrated in a system dynamics (SD) model. The model can be used to study the limits to the economic growth, the interacts among the different sectors in a complex system, and so on. The modeling framework is very helpful to model the socio-economic-ecological complex system.


Coordinated Development of Infrastructure in a Regional Economy

Qifan Wang

Bo Xu

Guoping Yang

Jianzhong Yang

Abstract: 1994 was an infrastructure year name by the World Bank which suggested that all member countries do their best in the investment of their infrastructure. The paper studied the roll of coordinated development of infrastructure in regional economy of a typical area such as Yangtze River Basin of China. The paper studied the following issues: (1) principle of rational layout regional industries, rational allocation of natural resources and coordinated development of infrastructure; (2) analysis of the status and problems of infrastructure in the region; (3) modelling and policy testing for analyzing the coordinated development of infrastructure; (4) the impact of coordinated development of infrastructure on regional economy. Based on theories of system dynamics (SD), urban dynamic, input-output and economics, we created a series of model simulating and policy testing, we put forward some suggestion in coordinated development of infrastructure to the regional economy and especially to Yangtze River Basin.


Decision Analysis Using Dynamic Simulation

Eric F. Wolstenholme

Abstract: This paper describes work to contrast the use of decision analysis and system dynamics simulation in the field of pharmacoeconomics. The importance of economic outcomes to supports the clinical evaluation of pharmaceutical drugs is growing in importance as public health service resources are constrained and clinical trial data support by decision analysis has become the established mode of evaluation. This paper describes research carried out with a major drug company to investigate alternative pharmacoeconomics drug evaluation procedures, in particular the use of dynamic simulation methods. An evaluation methodology based on these principles is presented here and applied to a disease management case study to contrast the analysis with decision analysis. The conclusion of the work to date is that decision analysis can be considered a special case of dynamic simulation and that the latter technique using 'ithink' has a large potential for providing transparent, economic analysis of the potential benefits of new drugs at the research and development stage.


A System Dynamics Approach to Regional Impact of the Construction of a  Submerged Floating Tunnel

Etsuo Yamamura

Seiichi Kagaya

Abstract: This study aims to examine the regional impacts of the construction of a long submerged floating tunnel across the bay. This study has been motivated by the apparent scant data and research works on the likely regional consequences of such a large-scale project (Alex 1989; Thirumurthy 1987). The main concern is with the department of techniques to predict likely regional impacts. The main premise is that the construction of submerged floating tunnel across the bay will result in changes may initially affect the immediate surroundings of the project site but eventually they are likely to have widespread effect. Ideally, these changes may be advantageous to some organism but disadvantages to others. From this view-point, we purpose an System Dynamic Model for the regional impacts. The actual simulation is examined using the example of the Volcanic Bay of Hokkaido in northern Japan.


The Use of Metaphor within a Soft System Intervention, A Fairy Story as an 'Alternative Rich Picture'

Jane A.O. Young

Abstract: This paper presents the case study of a management information system which is seen in some parts of the organisation it serves, as problematic. This was the typical trigger for a soft systems approach intervention. The research for the case study provided an important methodological insight, which is equally relevant to other systems thinking; the perceived need to find a novel communication method to overcome management resistance. A major cause of conflict, had been the attempted use f data flow diagrams as a communications device with senior management. The blow to managerial pride this techno-speak presentation has caused, left deep and enduring scars which might best be thought of as negative appreciative settings (after Vickers). Such is the antipathy that in some minds, the system had almost become the 'scapegoat' for any problems in this part of the organisation. Yet there was a very clear organisational need for the system to be used satisfactorily. During the intervention a rich picture, in the style of a data flow diagram, was constructed once more as a communications devices, for use with technical specialists. This had limited success, even to those familiar with complex diagramming techniques, unfamiliar symbols and conventions were seen as problematic. This can be equally true where influence diagrams and ‘ithink’ type diagrams are to be used. This reinforced the view that often the real value of rich pictures lies in the process of their production, rather than the end product. Yet the question of how to communicate and share perceptions with both sides still remained. Ideas from Morgan’s ‘Indigenization’ led to perceptions of the situation resembling a mythical kingdom and the idea of a fairy story as an alternative rich picture, or a ‘management toy’ (after De Geus), perhaps from this, a novel means of communication is possible. The story does not have an ending – happy or otherwise, that will be added by the participants in the experiment. If it causes some learning in those involved in the situation, it will have been a success. Children use fairy stories to learn about the world – why should managers not use them to help make the transition into successful systems thinking about the world?


Soft Landing into the 21st Century - Cultural Gap or Cultural Trap

Jane A.O. Young

Abstract: The so-called ‘culture gap’, between information systems professionals and organisational management, is often cited as, either a reason for system failure, or the cause of lack of perceived success. This paper presents the view that organizations get the systems they deserve, since information professionals in an organisation are no more able to buck the prevailing organisation ‘culture’, than any other professional. This leads to the thinking that is not so much a ‘culture gap’ as ‘culture trap’, suggesting that top management need to be considering the organisational culture which impact upon change, if success with organizational information systems is to be improved. This matter has been become one of considerable concern as organizations seek to reengineer their business processes, using the power of information systems. The case study which prompted the thinking is presented. The associated research was undertaken using action research with a soft systems approach, which itself prompted some useful learning. A method of extending the use of rich pictures as a means of developing influence diagrams is suggested. The aim being a ‘rich’ but ‘soft’ qualitative SD model.


Designing the Learning Environment of Learning Laboratory: Cognitive Strategy, Learning and Transfer

Showing H. Young

Sy-Feng Wang

Abstract: The problems of video game syndrome has been an obstacle to prove the value of Management Flight Simulators. This paper proposed a theoretical perspective of cognitive strategy to explain this phenomenon: that is, due to the reasons of (1) rational allocation of limited cognitive resources, (2) passive generation alternative methods when failed, (3) faulty mental model to represent the dynamic complexity, the cognitive strategies used by subjects, e.g., feedback control, feedforward control and memory control, are different from the cognitive strategy of mental model simulation expected by researchers. Task salience and transfer-oriented task setting were manipulated to facilitate learning with provoking the appropriate cognitive strategy. The effects of these two learning aids are tested by one laboratory experiment, and tested by multiple index with multiple measurement methods. Experimental results support the proposed theoretical perspective. The mental model simulation strategy seems not the natural cognitive strategy used by subjects. The learning aids had significant positive effects on inducing the cognitive strategy of mental model simulation,  on the learning of cognitive skill of systems thinking, on the improvement of task's performance, and on the transfer performance in two transfer tasks.


A Study of Business Competition from a System Dynamics Perspective

Showing H. Young

Chia Chen

Abstract: Literature on competitiveness is numerous. In the field of business administration, strategic management and marketing management focus on how to compete in the markets. This paper begins with a review on the development of key concepts in strategic management.  Next, an interpretation from the view of systems thinking on the concept of the experience curve and resource-based view of the company will be provided and made into casual-loops diagrams. Then, with system dynamics simulation methods, there will be quantified studies on the pattern of behavior occur in those casual-loops structures. Finally, based upon these findings and observations, suggestions for strategy will be discussed.


A System Dynamic approach to the Hospital Nurse Turnover Problem in Taiwan

Showing H. Young

Lih-Lian Hwang

Abstract: The average nurse turnover rate in Taiwan's hospitals was 31.56% in 1988. High turnover rate has a detrimental effect on costs, staff morale, and patient care. Nursing staff turnover is a critical personnel problem for nursing administrators and top hospital management. In order to understand the underlying dynamic structure which causes such a high turnover rate of hospital nurses in Taiwan, we developed a system dynamics model. The results of computer simulation showed that the key solution to the hospital nurse turnover is not a quick-fix, but rather a long- term committed and supportive hospital administration to make improving in the nursing working conditions.


Problems of Population Control in China

Jia-di Yu

Xiu-jin Feng

Abstract: Population is an element in the social system. There are a number of elements in the social system which will influence the population growth rate. On the other hand, population growth will, in turn, exert influence on other social elements. We can, therefore, apply the system dynamics (SD) model to dealing with the problems of population control. The paper, based on the investigations carried out in Anhui Province of China, conducts a study of the policies concerning population control in China by use of the system dynamics model.


A System Dynamics Approach to Analyze the Effect of High Set Up Time of Machines on Marketing Growth: The Case of Packages LTD. Pakistan

Ijaz Yusuf

Khalid Saeed

Abstract: This study aims at exploring the polices for the order arrival rate from decision making bodies in order to smooth down the activities of production by lowering the set up time of machines. The impact of scheduling techniques is examined and production and market operations are observed carefully in order to solve the problem of reduced proportion of machine running time. Everything seems to be okey but the proportion of machine running time has the declining trend. Especially, the production and market operations are considered with the positive and negative feedback loops that influence the proportion of machine running time. Ultimately, the decision is made to solve the problem by the construction of formal System Dynamics Model to analyze the interaction of different components of the company. The model provides a detailed, integrated framework among separate facets of the issue addressed representing the past behavior of the production sector. Experimentation with the model attempts to identify the appropriate policies concerning proportion of machine running time.


The CC-STADUS Project: Developing and Nurturing a Cadre of Pre-College Teachers Using System Dynamics/Computer Modeling in the Classroom

Ronald J. Zaraza

Abstract: The CC- STADUS project has trained more than eighty pre- college science, mathematics and social science teachers in the basics of computer modeling and system dynamics. In the process of teaching these teachers to build single content area and cross- curricular models, the project has experience some major successes and a variety of problems. More than twenty- five major cross- curricular models and many more single discipline models have been developed by the participants, working both individually and in teams. The training which was provided has evolved continuously in response to feedback from the teachers and formal evaluation. Most major difficulties were eliminated in the second year, allowing consideration of other less obvious problems. The third and final year of the program includes substantial revisions in the focus of the initial training, topics presented by guest speakers, the formation of modeling teams, and the amount of time dedicated to construction of cross- curricular models. Similar changes have been planned for the assessment and support of participants in the year following the training. Consideration of the successes and problems encountered by the CC-STADUS staff can provide valuable insights to those attempting training of pre-college teachers in modeling or system dynamics. A variety of key factors have been identified that can enhance the effectiveness of the training and the subsequent support provided during the academic year.


A New Discourse on Technology Transfer

Decong Zeng

Changrong Zhong

Abstract: In the contemporary era, the subjects of technology transfer (e.g. a nation or an enterprise) exist as a non- linear open system of disequilibrium. However, while we step into the 21st century, the environment in which the said system operated will take place great changes. There are some new features emerged from technology transfer and it will encounter with a range of new problems. The traditional theories guiding technology transfer will have met lots of challenges. This paper brings forward a new theory that is adaptable to need of the new century. In this paper, we view the opportunity as its core.