System Dynamics Simulation Model for Decision Making in Retailer Selection

Abstract

Simulation models are becoming increasingly popular in the analysis of important policy issues including global warming, population dynamics, energy systems, and urban planning. The usefulness of these models is predicated on their ability to link observable patterns of behaviour of a system to micro-level structures. This paper argues that structural validity of a simulation model -right behaviour for the right reasons- is a stringent measure to build confidence in a simulation model regardless of how well the model passes behaviour validity tests. That leads to an outline of formal structural validity procedures available but less explored in system dynamics modelling ‘repertoire’. An illustration of a set of six tests for structural validity of both system dynamics and agent-based simulation models follows. Finally, some conclusions on the increased appeal for simulation models for policy analysis and design are presented. Key words: System Dynamics, Simulation, Retailer selection