Showing papers in "System Dynamics Review in 1998"

Mental models concepts for system dynamics research

Abstract: Although “mental models” are of central importance to system dynamics research and practice, the field has yet to develop an unambiguous and agreed upon definition of them. To begin to address this problem, existing definitions and descriptions of mental models in system dynamics and several literatures related to cognitive science were reviewed and compared. Available definitions were found to be overly brief, general, and vague, and different authors were found to markedly disagree on the basic characteristics of mental models. Based on this review, we concluded that in order to reduce the amount of confusion in the literature, the mental models concept should be “unbundled” and the term “mental models” should be used more narrowly. To initiate a dialogue through which the system dynamics community might achieve a shared understanding of mental models, we propose a new definition of “mental models of dynamic systems” accompanied by an extended annotation that explains the definitional choices made and suggests terms for other cognitive structures left undefined by narrowing the mental model concept. Suggestions for future research that could improve the field's ability to further define mental models are discussed. © 1998 John Wiley & Sons, Ltd.

Dynamic modeling of product development processes

Abstract: Successful development projects are critical to success in many industries. To improve project performance managers must understand the dynamic concurrence relationships that constrain the sequencing of tasks as well as the effects of and interactions with resources (such as labor), project scope and targets (such as delivery dates). This article describes a multiple-phase project model which explicitly models process, resources, scope, and targets. The model explicitly portrays iteration, four distinct development activities and available work constraints to describe development processes. The model is calibrated to a semiconductor chip development project. Impacts of the dynamics of development process structures on research and practice are discussed. © 1998 John Wiley & Sons, Ltd.

Expert knowledge elicitation to improve formal and mental models

Abstract: Knowledge intensive processes are often driven and constrained by the mental models of experts acting as direct participants or managers. Descriptions of these relationships are not generally available from traditional data sources but are stored in the mental models of experts. Often the knowledge is not explicit but tacit, so it is diAcult to describe, examine, and use. Consequently, improvement of complex processes is plagued by false starts, failures, institutional and interpersonal conflict, and policy resistance. Modelers face diAculties in eliciting and representing the knowledge of experts so that useful models can be developed. We describe and illustrate an elicitation method that uses formal modeling and three description format transformations to help experts explicate their tacit knowledge. We use the method to elicit detailed process knowledge describing the development of a new semiconductor chip. The method improved model accuracy and credibility and provided tools for development team mental model improvement. * c 1998 John Wiley & Sons, Ltd. Syst. Dyn. Rev. 14, 309‐340, (1998) Many public and private sector systems increasingly depend on knowledge intensive processes managed and operated by interdisciplinary teams. These systems are diAcult to manage. Often formal models such as system dynamics models are used to help managers understand the sources of diAculties and design more eAective policies. Typically, the expert knowledge of the people who actually operate the system is required to structure and parameterize a useful model. To develop a useful model that is also credible in the eyes of the managers, however, modelers must elicit from these experts information about system structure and governing policies, and then use this information to develop the model. While many methods to elicit information from experts have been developed, most assist in the early phases of modeling: problem articulation, boundary selection, identification of variables, and qualitative causal mapping. These methods are often used in conceptual modeling, that is, in modeling eAorts that stop short of the development of a formal model that can be used to test hypotheses and proposed policies. The literature is comparatively silent, however, regarding methods to elicit the information required to estimate the parameters, initial conditions, and behavior relationships that must be specified precisely in formal modeling.

New product diffusion models in innovation management—a system dynamics perspective

Abstract: The diffusion of innovations over time is a highly dynamic and complex problem. It is influenced by various factors like price, advertising, and product capabilities. Traditional models of innovation diffusion ignore the complexity underlying the process of diffusion. Their aim is normative decision support, but these models do not appropriately represent the structural fundamentals of the problem. The use of the system dynamics methodology allows the development of more complex models to investigate the process of innovation diffusion. These models can enhance insight in the problem structure and increase understanding of the complexity and the dynamics caused by the influencing elements. This article shows how the traditional innovation models can be extended to incorporate competition and to map the process of substitution among successive product generations. Several model simulations show the potential of using system dynamics as the modeling methodology in the field of new product diffusion models. © 1998 John Wiley & Sons, Ltd.

The practice of system dynamics: milestones, lessons and ideas from 30 years experience

Abstract: The paper was written to respond to the honour of the conferment of the first Lifetime Achievement Award of the System Dynamics Society. A brief review of some of the author's early experiences suggests that it is valuable to have done other things as well as system dynamics. An approach to system dynamics modelling based on influence diagrams is described, leading to the concept of the cone of diagrams. That is illustrated by two views of a mining company. The use of performance indices to measure policy outcomes is illustrated for the mining company, showing how competing actors can both achieve their objectives. Further influence diagrams are developed for defence problems, the millennium ‘time bomb’ in a utility company and for the catastrophe of Angola. In each case, the diagram produces policy insights without the necessity of simulation. There is a discussion of the possible limits to quantification in system dynamics. The role of optimisation in system dynamics is examined and illustrated by two cases. The links between system dynamics and other methodologies for the study of the future are considered and exemplified. Finally, the author offers some thoughts on the future of system dynamics. © 1998 John Wiley & Sons, Ltd.

System dynamics and university management

Abstract: Contemporary management of the national university system in Australia is characterized by the pursuit of government goals through the linking of funding to expressed priorities. Competitive elements of policies at the national level have been translated by individual institutions into management strategies that promote competition between internal units such as faculties and schools. This is in addition to the competition that has been encouraged between the universities themselves in areas such as student enrolment and research productivity. Within these organizational contexts a variety of system archetypes can be identified "plying their trade". Efforts to contain debt by staff attrition, competition between institutions for students, setting of goals for enrolment levels, and distribution of scarce resources on the basis or research activity provide contexts for the manifestation of delayed feedback loops, escalation, sliding goals and 'tragedy' scenarios. Following illustration by means of example, some experiences of attempting to introduce system dynamic concepts into decision making discussions are shared.

Threats to sustainability: simulating conflict within and between nations

Abstract: Violent conflict is increasingly viewed as a factor related to sustainable development. This article argues, based on the well-established theory of lateral pressure originally proposed by Choucri and North in 1975, that the relationship arises because the same factors that affect sustainable development also influence conflict, namely population, technology, resources, military force, and trade and bargaining, while conflict, in turn, affects these variables. The theory is tested with a system dynamics model that includes international as well as domestic violent conflict, calibrated to seven countries in southern Africa and six OECD countries. The results show a number of situations in which conflict is perpetuated in a cycle that is difficult to break.

Public finance, oil revenue expenditure and economic performance: a comparative study of four countries

Abstract: The literature of resource-based development has widely discussed the impacts of oil revenues on the economic structure of oil-exporting countries. However, in addition to economic structure, oil revenues have a substantial impact on the growth and sustainability of the public sector in oil-exporting countries, which has not been discussed. This paper develops a system dynamics model to analyze the dynamics of government financial structure and public services in the course of development based on oil revenues. In oil-exporting countries, governments use their oil revenues to finance development projects and pay for a major part of operating and maintenance cost of public services. Development budget accumulates new capacity for public services and infrastructure. As public services capacity increases so does the required recurrent budget to pay for the operating and maintenance cost. The governments would need more oil revenues to sustain the growth of public sector and to pay for the growing recurrent budget. However, oil revenues cannot grow for ever. Limitation from market demand or oil reserves would restrict continuous growth of oil revenues. Oil revenues stop growing and eventually will fall. Decline of oil revenues would create a financial crisis for the public sector of oil-exporting countries. The development budget will fall below depreciation and public-sector capacity will drop. The paper also considers investment in public enterprises as another use of oil revenues. Since these enterprises do not usually produce a return, such investment will not impact the collapse of the public sector. The paper concludes with some policy recommendations for increasing the chance of sustainability of the public sector in oil-exporting countries. © 1998 John Wiley & Sons, Ltd.

Strategic evaluation of flexible assembly systems on the basis of hard and soft decision criteria

Abstract: Justifying investments in Advanced Manufacturing Technology has proved to be a rather complex issue for production management. Although they are aware of the strategic character of this technology, practitioners often seem to neglect that aspect in their decision process because of inappropriate management support methods. On the one hand, conventional approaches to justification of investment focus exclusively on hard decision criteria such as costs or paybacks. On the other hand, qualitative methods, such as scoring models, emphasize soft investment variables while lacking precise quantification of hard investment factors. Some methodical progress has been made by merging these traditional approaches into multi-perspective or multi-layer frameworks in order to strengthen the strategic dimension of investment decision processes. Against this background an integrated, system dynamics approach to evaluating complex investments in Flexible Manufacturing Systems has been developed and is presented in this article. Finally, the findings are illustrated by an investment case study. © 1998 John Wiley & Sons, Ltd.

End-use or extraction efficiency in natural resource utilization: Which is better?

Abstract: The role of technology innovations in making the wealth of non-renewable resources available to the modern economy is indisputable. Yet, there have been very few studies that compare the effects of different types of technology improvements on natural resource use. This article undertakes the comparison of the relative merits of end-use efficiency and extraction efficiency. The model used includes the dynamics of non-renewable resource use, decreasing ease of access, research and efficiency technologies. The simulation results show that, all else being equal, investments in end-use efficiency research lead to higher levels of service gained from resource use than investments in extraction efficiency alone. A combination of technologies, skewed towards end-use efficiency is superior to either by itself.

Sustainable trade relations in a global economy

Abstract: This paper illustrates, how experimentation with a system dynamics model may be used to determine the terms of trade for meeting long term contentions for sustaining global economic relations and environment. It has two parts, a review of empirical evidence that describes the trends in the volume and the nature of international trade over the past decade, and an exploratory analysis of their implications for the emergent contentions for global development and environment. The first part draws on secondary data and literature. The second part attempts to reinterpret in the global context an existing model I developed originally to understand valuation and income distribution processes in a dualist economic system within a developing country. The exploratory nature of the second part should be accented since the model it draws on was developed for a different purpose and the analysis of this paper only addresses its relevance to the global context without modifying any component of the model structure, hence it has some limitations. The original model focused, however, on the determinants of value accrued to the parties contributing to the production process, which is relevant both to income distribution within a country and the transfer of value and environmental costs through trade between countries. The experimental process adopted in the paper is seen to be of value for designing global agreements committing concerned parties to complex roles.

Effectiveness of infrastructure service delivery through earmarking: the case of highway construction in China

Abstract: Cost overruns in Chinese highway construction projects arise both from poor construction quality and delays in completion. As a result of the lack of an effective control mechanism linking project initiation with funding availability, new projects are initiated without sufficient budget to support completion as planned. Project managers are forced by the budget constraints either to sacrifice construction quality or to slow down the pace of construction. This paper develops a system dynamics model to understand the cost overrun problem in Chinese highway construction projects. Three policy options, (1) introduction of feasibility studies, (2) loan financing of the cash-strapped projects, and (3) the raising of user charges, are evaluated using this model. The introduction of feasibility studies has the potential to be an effective policy, yet it is impossible to implement because of organizational constraints. Loan financing leads to dependence on loans rather than sustaining service delivery. The raising of user charges is found to be the most effective policy, although it is politically not very attractive. © 1998 John Wiley & Sons, Ltd.

Accurate estimation of performance measures for system dynamics models

Abstract: Traditional system dynamics models are subject to error in the estimation of performance measures because of the method of calculation over discrete time intervals. It is shown that such errors may be significantly reduced by dividing the computation between two runs with different solution intervals and applying Richardson's extrapolation method. Examples are given for a variety of different published models and performance measures. © 1998 John Wiley & Sons, Ltd.