System Dynamics

Learning expectations
DESIGN SYSTEMS
 System Dynamics
• Investigation of
information-feedback
characteristics of systems
• Study of action-reactions
of system components
over time
• Modeling of feedback
structure arising from
these interactions
 History of SD

• System Dynamics was originally developed in the 1950's

and 1960's at MIT by Jay Forrester
• Applied his background in computer sciences and
engineering to the development of computer modeling
and analysis of social systems.
• The SD methodology was based on ideas of feedback,
such as encountered in electrical and mechanical control
systems.
• SD was developed to evaluate how alternative policies
affect growth, stability, fluctuation, and changing
behavior in corporations, cities, and countries.
• http://www.sis.pitt.edu/~mbsclass/hall_of_fame/forres.htm
 System Dynamics basic principle
• Graphical plot  equation
– Revise the equation  revise the plot
• Equation formulation  variables
– Control the variables  control the equation

If you know the variables and their relationships (equation)

then you can control the system behavior and the problem

 Corollary: you can never solve the problem is you do not

know the significant variables and the equation. All is trial
and error.
Urban Dynamics
Fluctuations in commodity prices
System Dynamics: Basic principles

Events
Behavior

Structure
Are events problems?
 Why do events occur?
Randomness Assignable cause
• No reason for its • Static or dynamic cause
occurrence • Static are dependent on
• By chance fixed causes
• No time to investigate • Dynamic causes lead to
its cause recurring events
• Do not care to find out • Recurring events persist
its cause over time
Dynamics of Risk
 Key: change
• Change is Dynamism.
• Change can be seen visually thru pictures. But
these are snapshots and in between
developments are not shown.
• Change can be clearly seen in graphs. Its
evolution and gradual change is seen.
World Dynamics
 ESTRADA
1998-2001
AQUINO
1986 - 1992
MARCOS
1965 - 1986

RAMOS
1992 -98
ARROYO
1001 - 2010
 System Dynamicist’s tasks
• Find causes and feedback
loops
• Focus on endogenous
variables not exogenous
• Avoid strong random
exogenous effects
• Identify decisions
• Identify mental models
and biases
 System Dynamics
Philosophy and Approach Tools and
concepts techniques
Dynamism Problem solving
Causality Models Diagrams
Feedback Simulation Vensim
Endogenous Experimentation Stella
Mental models Policy design Group modeling
Simulation and experimentation
 System Dynamics
is a
Problem solving
solve
approach
understand
 What is an SD problem?
• A persistent undesirable behavior
• The behavior is indicated by a graph
• It is clear that randomness or external events
govern the behavior
• The consequences are undesirable
 Assignment for June 30
• Read Chapter 2: Business Dynamics by
Sterman
• Short quiz on Wednesday about Chapter 2