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System Dynamic Modelling

In: Business and Management

Submitted By AD89
Words 2058
Pages 9
1. Abstract
System Dynamic Modelling is an approach to frame and solve complex problems. It is widely used for policy design and analysis. System dynamics analysis is a part of Systems Theory which is used to study the dynamic behaviour of complex systems. The theory is based on acknowledgement of the fact that the inter-relations between the various components of a model, time delays between processes are as important to analyse the behaviour of a model as is the analysis of individual components. SD models solve the problem of simultaneity (mutual causation) by updating all variables in small time increments with positive and negative feedbacks and time delays structuring the interactions and control.
In this paper, we have discussed the basic methodology of the technique, and the modelling process. Then, we have discussed the applications of SDM ranging from conventional ones like project management and science and engineering to exploring the concepts of SDM in Brand management and public health issues. 2. Historical background
This technique of solving problems was developed in 1950s by Prof Jay Forrester of Massachusetts Institute of Technology, during his involvement with General Electric. He developed his insights about the foundations of engineering which helped him in the creation of system dynamics. He studied the problem of instability in GE employment. In this he did hand simulations (or calculations) of the stock-flow-feedback structure of the GE plants, which included the existing corporate decision-making structure for hiring and layoffs. Forrester was able to show how the instability in GE employment was due to the internal structure of the firm and not to an external force such as the business cycle. These hand simulations were the beginning of the field of system dynamics.
During 1960s, the problem solving evolved from hand simulations…...

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