Business Dynamics: Systems Thinking and Modeling for a Complex World with CD-ROM
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Today’s leading authority on the subject of this text is the author, MIT Standish Professor of Management and Director of the System Dynamics Group, John D. Sterman. Sterman’s objective is to explain, in a true textbook format, what system dynamics is, and how it can be successfully applied to solve business and organizational problems. System dynamics is both a currently utilized approach to organizational problem solving at the professional level, and a field of study in business, engineering, and social and physical sciences.
system from its behavior alone. In practice the data are too scarce and the plausible alternative specifications are too numerous for statistical methods to discriminate among competing theories. The same data often support wildly divergent models equally well, and conclusions based on such models are not robust. As Learner (1983) put it in an article entitled “Let’s Take the ‘Con’ Out of Econometrics”: In order to draw inferences from data as described by econometric texts, it is necessary to
interactively with them. There is an on-site DCAA auditor who knows the model. She can ask us to run any set of assumptions, and we usually get the answer back in an hour (Goldbach, personal communication, 1999). The financial simulation has been very effective, but far more important, Goldbach says, are the lessons he learned about the challenges of managing complex systems: For the [shipbuilding] industry I thought I was a pretty sophisticated manager, but it changed my whole perspective. I
participate in modeling workshops or even to give them the model so they could work with it themselves. None had training in system dynamics or computer modeling. Line supervisors and maintenance mechanics are action oriented and have little patience for presentations with lots of charts and graphs. Ledet was familiar with the Beer Distribution Game, a role-playing management flight simulator of a manufacturing supply chain developed by the MIT System Dynamics Group as an introduction to systems
Orleans; and Griffith, J., D. Kuenzli, and P.Monus (1998) “Proactive Manufacturing: Accelerating Step Change Breakthroughs in Performance,” NPRA Maintenance Conference, MC-98-92. I7TMG News, 15 September 1998. Chapter 2 System Dynamics in Action 79 The success of the learning laboratory and maintenance game illustrates the real purpose of the modeling process. The model, game, and workshop don’t teach anyone how to maintain a pump better or how to do vibration monitoring. Du Pont, BP, and
fluctuations in the world economy known as “long waves” are self-perpetuating limit cycles (Sterman 1985; Forrester 1983). Sterman (1989a) reports an experiment in which people managed a simple economic model; the vast majority generated long waves much like the behavior of the model. Sterman (1989~)shows that many of the decision rules’characterizing the human subjects generate chaos and various forms of limit cycle. Chaotic Oscillations Chaos, like damped fluctuations and limit cycles, is a