Use Of System Dynamics Research Articles

The use of system dynamics as a tool for intermediate level technology evaluation: three case studies

Abstract This set of three case studies suggest that traditional approaches to technological evaluation are static and either high level and simplistic, or low level and complex. Further, that they tend to evaluate technology in terms of itself, rather than the domain it is intended to support. A holistic and dynamic method, based upon system dynamics simulation modelling, is described for the early evaluation of technology at an intermediate and balanced level. The method is demonstrated by applying it to the evaluation of management information systems (MIS) in the defence industry and new drugs in the pharmaceuticals industry. The approach involves the creation of dynamic simulation models of the anticipated domain of application of the technology and their use as a test bed to evaluate the systemic impact of the technology over time. Very importantly, the method allows the contribution of each aspect of the technology to be assessed and facilitates investigation of alternative structural and operating changes to the domain itself, to make best use of the technology.

Adding value to performance measurement by using system dynamics and multicriteria analysis

The design, implementation and use of adequate performance measurement and management frameworks can play an important role if organisations are to succeed in an increasingly complex, interdependent and changing world. Yet, despite widespread recognition of the importance of performance assessment, there are some issues that require further study if measurement systems are to be effective in the process of management through monitoring and decision making. This article proposes and seeks to illustrate that the use of system dynamics and multicriteria decision analysis, as part of a broader framework for performance measurement, can address some of the issues identified. The use of these approaches, independently and in an integrated manner, provides a means of exploring the dynamic complexity of organisations, making explicit trade‐offs between performance measures, and assessing the impacts of initiatives to improve performance, thereby enhancing understanding and ultimately contributing to the improvement of organisational performance.

Combining system dynamics and conjoint analysis for strategic decision making with an automotive high‐tech SME

AbstractAn erratum has been published for this article in System Dynamics Review 18:4 2002, p. 533.This article describes the use of system dynamics in combination with conjoint analysis to assist a high‐tech SME explore robust strategic policies in a context where customer preferences were critical to strategic decision making. Conjoint analysis served an important role in eliciting customers' underlying choice preferences and had a significant impact on the structure and parameterization of the final simulation model. The combination of methods was quite powerful in this case, and the authors feel it could be successfully applied to a broad class of problems where behavioral policies of decision makers include tradeoffs among multiple attributes. Methods developed to address the multi‐attribute choice problem (e.g., conjoint analysis) add needed precision to model formulation and validation. The alternative is to employ formulations that are not empirically derived or grounded in the extensive choice theory literature, and it is suggested that this alternative is not viable when model behavior is sensitive to choice preferences. Copyright © 2002 John Wiley & Sons, Ltd.

Group model building effectiveness: a review of assessment studies

AbstractOver the last decades system dynamicists have experimented with approaches to achieve more involvement of their clients in the model building process. As a result the number of reports in the literature on the use of system dynamics as an organizational intervention tool has increased dramatically. From the literature we have identified 107 cases that provide details on the modeling process and the assessment of results. The cases show a wide variety in the way the interventions are reported and assessed. From a research point of view this is clearly an undesirable state of affairs. This article reports on a meta analysis of findings of these studies and tries to provide an overview of outcome studies on system dynamics interventions. It attempts to draw some preliminary conclusions on the effectiveness of system dynamics modeling interventions, to clarify differences in definitions of outcomes, and to provide guidelines for more standardized assessments and reports. Rather than remaining in the stage of single case descriptions, the latter will enable the accumulation of research results in the future, a prerequisite for institutional learning within the system dynamics community. Copyright © 2002 John Wiley & Sons, Ltd.

Strategic management of complex projects: a case study using system dynamics

AbstractSystem dynamics models have been used extensively over the last 20 years on complex development projects and have proven their value in contributing to significantly improved project performance. System dynamics models facilitate the strategic management of projects, including planning the project (setting the initial schedule and budget, the organization structure, process model, etc.), determining measurement and reward systems, evaluating risks, and learning from past projects. The use of system dynamics for strategic project management is illustrated with a case study of the Peace Shield Air Defense System. On this project, the model was used to support the project bid, to identify and manage risks, and to assess the benefit of several process and organization changes which were implemented on the project. Upon completion, the project results were systematically compared to an earlier project to assess the management lessons—what worked and what did not, and what was the benefit. These lessons were systematized in a management learning system. Copyright © 2001 John Wiley & Sons, Ltd.

Models and simulations for learning in complex domains: using causal loop diagrams for assessment and evaluation

The aim of this paper is to describe issues related to interactivity and access to underlying models and representations in learning environments for complex domains. There is some evidence to suggest that system dynamics can be effectively used to promote understanding in complex domains [e.g. Davidsen, P. I. (1994a). Implementing elements of system dynamics approach to organisational learning. Proceedings of ESS'94, SCS. Ghent, Belgium; Davidsen, P. I. (1994b). The systems dynamics approach to computer-based management learning environments: implications and their implementations in Powersim. In J. D. W. Morecroft, & J. D. Sterman (Eds.), Modeling for learning organizations, (pp. 301–316). Portland: Productivity Press; Davidsen, P. I. (1996). Educational features of the system dynamics approach to modelling and simulation. Journal of Structured Learning, 12(4), 269–290; Sterman, J. D. (1988). People express management flight simulator. Cambridge, MA: Sloan School of Management; Sterman, J. D. (1994). Learning in and about complex systems. System Dynamics Review 10(2/3), 291–300.]. However, there is insufficient evidence to establish whether or not this is in fact the case. Moreover, there has been little effort to address strategic design issues pertaining to the effective use of system dynamics in promoting learning in and about complex systems. This paper is an attempt to review the relevant conceptual issues in promoting learner engagement with appropriate and relevant representations for complex domains. A specific approach will be presented and defended, an elaboration example will be discussed, and early evaluation results will be reported. Finally, a method for evaluating these environments and assessing individual progress will be defended.

Simulation of Road Crashes by Use of Systems Dynamics

The framework of a systems dynamics model (SDM) is presented for simulating road crashes. For the purpose of illustration, the model is applied to two-vehicle rear-end crashes where both vehicles are assumed to be traveling in the same lane. The crash situation results from the introduction of some obstruction along the pathway, which causes drivers to adjust their speeds and separation distances. SDM extends the features of classical car-following theory in combination with crash avoidance models. Preliminary results are discussed. The SDM provides a number of useful insights into the complex process that gives rise to rear-end crashes for an assumed transportation scenario. These insights can serve to guide the development of effective safety countermeasures for reducing rear-end crashes. The potential relevance of the model for other crash situations is also discussed.

Safety regulation changes during projects: the use of system dynamics to quantify the effects of change

Uncontrolled change can have an important effect on large design and development projects. Such effects are systemic and so are difficult to quantify. One particular source of change that can have a major effect is changes to safety regulations. The risk of such change needs to be recognised and quantified. This paper highlights this risk by describing two transport manufacturing projects that were evaluated post mortem as part of claims procedures. The types of effects caused are described, as are the issues involved in their quantification. Traditional tools were inadequate to quantify these effects. The use of System Dynamics is described to demonstrate the project dynamics, to model the inter-relationships between factors and to quantify their combined effect. This technique can be used for many areas of project modelling.

Energy modelling platforms for policy and strategy support

The energy field has been dominated by ‘hard’ modelling approaches advocated by researchers from engineering and economics disciplines. The recent trend towards a more liberalised environment moves away from central planning to market-based resource allocation, leading to the creation and use of strategic tools, with much ‘softer’ specifications, in the ‘systems-thinking’ tradition. This paper presents the use of system dynamics in a generalised way, to provide a platform for integrated energy analysis. Issues of modularity and policy evolution are important in the design of the modelling platform to facilitate its use, and reuse. Hence the concept of a platform, rather than a model, has to be implemented in a coherent way if it is to provide sustained value for ongoing support to both government policy and corporate strategy.

Reflections for the future of system dynamics

The foundations of and recent trends in system dynamics are reviewed. The increase in qualitative only modelling has potential dangers and there is a need for better guidelines. New software tools provide increased power and flexibility for quantitative modelling, enabling the ‘flight simulator’ concept to be applied to a wide range of business environments but more research on interface design is required. Research into the connection between model structure and behaviour, and also the role of optimisation is being undertaken. The growth in the use of system dynamics, including by consulting firms, is fuelling a need for better education and training, which is being met by an expanding number of university programmes. (In the USA the concepts are being successfully introduced into some primary and secondary schools). The next challenge is to extend the application of system dynamics from the (mainly) business area so as to tackle the ‘big’ national and global problems.

Management of inventory using control theory

This paper describes the systems approach to the management of inventory. It puts into context the use of System Dynamics (SD) and other Cybernetic models and outlines their advantages and disadvantages. The main objective of a systems examination is to understand how the organisation of a business affects its performance. Principally the SD method is concerned with causal relationships. Cybernetic models are used to find an analytic expression to describe the whole process, concentrating on the input and outputs to the system. Results of simple inventory management are shown to be examples of proportional control in conventional theory. Better control algorithms, such as proportional, derivative and integral (PID), are used to indicate a more sophisticated form of inventory control that can easily reduce stock levels by 80% and hence reduce cost. This has special significance for JIT and MRP methods.

Dynamic modeling of present and future service demand

The emphasis on "forecasting" demand for future services hides the fact that demand is not a predetermined element but something that is strongly influenced by societal and economic trends and the actions of market players. Any forecast makes implicit assumptions about the future. In a rapidly changing market, businesses need to supplement traditional forecasting models with dynamic models that explicitly include factors influencing changes in demand and enable managers to explore the impact on demand of different business options. This paper describes the use of systems dynamics modeling to provide insight into the factors influencing service growth.

Towards evaluation of systems-thinking interventions: a case study

The use of system dynamics and systems thinking in organizations is increasing dramatically. However, little is known about the efficacy of these interventions in enhancing organizational effectiveness or productivity. With few exceptions, the relationship between the use of systems thinking and organizational performance remains the province of anecdote rather than rigorous follow-up research. Evaluation helps identify the tools and techniques that can be used successfully, the situations in which they work, and their limitations. This article reports a follow-up evaluation of a well known systems thinking intervention designed to improve quality and performance in the claims adjusting unit of a U.S. insurance firm. Through a questionnaire, interviews, and extensive review of company records, it has been established that the intervention succeeded in changing the mental models and behavior of key managers. New policies consistent with model recommendations were implemented. Evidence of performance improvement is mixed, however. A number of confounding variables limit the possibility of assessing the business impact of the intervention. These limitations could have been lessened if the original intervention had been designed with rigorous evaluation as a goal. © 1997 John Wiley & Sons, Ltd.

The Effects of Design Changes and Delays on Project Costs

This paper describes a study of a large design and manufacture engineering project, undertaken as part of a Delay and Disruption litigation. Design changes and delays in design approval would have caused delay to the project; in order to fulfil a tight time-constraint, management had to increase parallel development in the network logic, reducing delay but setting up feedback loops that markedly increased total project spend. Cognitive mapping was used to elicit the relationships, which suggested the use of System Dynamics to quantify the effects. Results are described that show the effect of levels of design changes and approval delays, and their compounding effect. The wider implications on modelling projects are also discussed.

Introducing system dynamics in schools: The Nordic experience

AbstractThis article describes two pilot studies of introducing system dynamics into schools in the Nordic countries. The first study describes the use of system dynamics in a high school economics class. One group of students was taught by the standard economics teaching approach; the other group, by a system dynamics approach. The second study tested the ability of 15‐ and 17‐year‐old students to understand the dynamics of social and ecological systems. The results of these pilot studies suggest that incorporating system dynamics into teaching leads to a better understanding of complex dynamic problems. A list of recommendations for designing educational systems using system dynamics was compiled.

System dynamics—background, methodology, and applications. Part 1: Background and methodology

System dynamics is a methodology for modelling and redesign manufacturing, business, and similar systems which are part man, part machine. It has been around for over 30 years. Some management consultants make extensive use of system dynamics, whilst others do not. Why is this so, and is it primarily an educational problem? In this two-part article we describe the methodology, trace its history, and show how it fits into a problem-solving spectrum in between, but overlapping with, system theory and system thinking.In Part 1 we show how both servotheory and cybernetics have influenced system dynamics and examine the linguistic, investigative and numerical information souces which can be used for model building. Central to this exercise is the use of input-output analyses which are the system dynamics equivalent of writing down balance equations for hardware systems. We also comment on the important role of system dynamics ‘user friendly’ software in business games, and the relevance of the method as perceived by a very experienced management consultant.In Part 2 we consider what can be done to better exploit system dynamics in the area of improving business competitiveness. The solution proposed here is to integrate the use of servotheory within the system dynamics framework. The illustrative example chosen requires the smoothing of material flow within a supply chain via the effective use of all available marketplace information in contrast to acting only on distorted orders passed on by the adjacent echelon. It is concluded that the ideal background for a successful system dynamicist is good experience in both control and industrial engineering.

System dynamics—background, methodology, and applications. Part 2: Applications

System dynamics is a methodology for modelling and redesign of manufacturing, business, and similar systems which are part man, part machine. It has been around for over 30 years. Some management consultants make extensive use of system dynamics, whilst others do not. Why is this so, and is it primarily an educational problem? In this two-part article we describe the methodology, trace its history, and show how it fits into a problem-solving spectrum in between, but overlapping with, system theory and system thinking. In Part 1 (October 1993 CCEJ) we showed how both servotheory and cybernetics have influenced system dynamics and examine the linguistic, investigative and numerical information souces which can be used for model building. Central to this exercise was the use of input-output analyses which are the system dynamics equivalent of writing down balance equations for hardware systems. We also commented on the important role of system dynamics ‘user friendly’ software in business games, and the relevance of the method as perceived by a very experienced management consultant. In Part 2 we consider what can be done to better exploit system dynamics in the area of improving business competitiveness. The solution proposed here is to integrate the use of servotheory within the system dynamics framework. The illustrative example chosen requires the smoothing of material flow within a supply chain via the effective use of all available marketplace information in contrast to acting only on distorted orders passed on by the adjacent echelon. It is concluded that the ideal background for a successful system dynamicist is good experience in both control and industrial engineering.

The use of system dynamics in manufacturing systems engineering

This paper considers the characteristic dynamic behaviour associated with basic manufacturing system designs. In studying such systems the focus will be on three fundamental flows: orders; materials; and information. Of specific interest is the influence of these flows on scheduling decision rules based on stock levels and/or product order rates, as well as how information is passed through the system. Thus it is the optimum combination of feedforward and/or feedback flow paths in a manufacturing-system design which is being sought. This paper will propose a 'middle ground' between two categories of technique used when considering dynamic behaviour - i e, building models using continuous computer simulation packages and alternatively using models capable of mathematical solution. It is proposed that mathematical models, of limited complexity, can provide the necessary insight to guide the design and appraisal of live system models built with a continuous computer package. The paper concludes by developing the idea that a generic application in the study of scheduling strategies for live manufacturing systems.

System dynamics: A methodology for testing dynamic behavioral hypotheses

The use of system dynamics as a methodology for modeling and testing dynamic behavioural hypotheses in organizational behavioural studies is presented. The system dynamics equivalent of March and Simons' (1958) motivation model is constructed to study its behavioural consequences; it provides an analysis of both the steady-state behaviour and the transient behaviour of the March-Simon motivation model. The methodology yields the dynamic consequences of hypotheses concerning relationships among the variables in the model. Furthermore, it does not necessarily require extensive empirical data for model construction. Rather, it may pinpoint the critical nature of certain variables prior to conducting the actual research. The dynamic behaviour obtained from this approach is identical to the analytical solution of the system of differential equations given in March and Simon's mathematical model. Three distinctive patterns of system behaviour emerge from the numerous experiments conducted with the model. Experimental results leading to these patterns and additional results concerning the time reach equilibrium and levels for the satisfaction variable are discussed.

Managing international mining — a case study in the application of system dynamics to complex, multiple ownership systems

The paper describes the use of System Dynamics in the understanding and analysis of large, complex and multiple ownership systems. The setting chosen is that of an international minerals industry, characterised by the interactions between individual, autonomous groups of systems actors, involved in the functions of production, fabrication and consumption; each having their own objectives and related operating policies. A review is presented of some of the major problems associated with such industries. This is followed by a description of the model and the way it has been applied to examine various supply responses, in the light of changing consumption patterns. Demonstration results deal with model validation and with analysis of international buffer stocks and conflicting supply policies on the historic situation in the copper industry.