System Dynamics (eBook)

Martin Kunc is Associate Professor at the University of Warwick, UK. Before joining academia and teaching in top business schools in the UK and Latin America, Martin was a consultant in the areas of SD and strategic management. He has published over 60 articles, books, book chapters and conference papers.

Contents 6
List of Figures 9
List of Tables 16
Introduction 19
Introduction 19
The Case for the Soft Perspective in System Dynamics 22
The Case for the Hard Perspective in System Dynamics 23
A Historical Perspective of the System Dynamics Field in Terms of Hard and  Soft Contributions from the Publications in Journal of the Operational Research Society 25
The Book Content 27
Conclusion 32
Appendix 33
References 45
Part I: Applications of System Dynamics in Management 48
Resetting the Clock: A Feedback Approach to the Dynamics of Organisational Inertia, Survival and Change 49
Introduction 49
A Feedback View of Organisational Inertia and Change 52
Structural Inertia Theory 52
Resetting the Clock: A Feedback Model 55
From Feedback Loops to Dynamic Models 59
Methods 64
Simulating Organisational Theories 65
Results 67
Discussion and Conclusions 73
Appendix: Model Equations and Documentation 78
References 81
Management Attitudes, Learning and Scale in Successful Diversification: A Dynamic and Behavioural Resource System View 85
Introduction 85
Model of FocusCo, the Focuser 87
Model of DiversiCo, the Diversifier 89
A Closer Look at FocusCo 91
Resources, Investment and Depreciation in the Core Business 91
Return on the Core Business 92
A Closer Look at DiversiCo 93
The Trigger for Diversification 93
Management’s Perception of Non-core Performance 93
Investment Policy and Assets in the Non-core Business 95
Disruption from Diversification and Its Effects on Performance 96
Simulation Experiments on Diversification 98
Experiment 1: FocusCo Faces a Sharp Downturn in Tyre Demand 98
Experiment 2: DiversiCo Faces a Downturn in Tyre Industry Demand 100
Comparing Performance—DiversiCo vs FocusCo 102
Experiment 3: DiversiCo Faces a Downturn in Tyre Demand and Is Lured into ‘Excess’ Diversification by Over-optimism 106
Experiment 4: Non-core Growth and the Trade-Off Between Confidence and Learning 108
Conclusions 111
Appendix 1 113
Appendix 2 114
Appendix 3 115
Appendix 4 116
Appendix 5: Part 1 117
Appendix 5: Part 2 118
Appendix 6: Part 1 119
Appendix 6: Part 2 119
References 121
Relevance Assumed: A Case Study of Balanced Scorecard Development Using System Dynamics 123
Introduction 124
Current BSC Theory and Practice 125
System Dynamics as a Modelling Method for BSC Development 128
The Case Study 130
Qualitative Model Structure 134
Quantitative Model Structure 136
Flow of Cases 137
Flow of Employees 137
Model Analysis 138
Overall Performance: Gradual Progress, But First Worse-Before-Better 139
Existing Policies Insufficient for Swift Progress 139
Unclear Benefits from Proposed Policies 141
Unexpected Leverage from a Counter-Intuitive Policy 142
Discussion 143
Limitations: Modelling of ‘Mental Models’, Not of the ‘Real World’ 143
The Added Value of System Dynamics to BSC Development 144
Conclusion 145
References 146
Interpersonal Success Factors for  Strategy Implementation: A Case Study Using Group Model Building 149
Introduction 149
Strategy Development and Implementation 150
Implementation Success Factors 151
Communication Quality 152
Insight 152
Consensus 153
Commitment 153
Open Issues in Strategy Implementation 153
Group Model Building and Strategy 154
Case Study 155
Survey Questionnaire 158
Results 161
Survey Results from Likert Questions 161
Survey Results Comparing Group Model Building to a ‘Normal Meeting’ 162
Survey Results Relating to Different Workshop Elements 163
Relationship Between Demographic Data and Survey Results 163
Open Questions 164
Post-workshop Events 166
Discussion 166
Limitations of the Case Study 169
References 170
Part II: Methodological Developments 179
An Overview of Strategy and Tactics in System Dynamics Optimization 180
Introduction 180
The Nature of System Dynamics Optimization 181
Optimization to Fit Data 181
Policy Optimization to Improve System Performance 182
Optimization Techniques: Optimal Control 182
Optimization Techniques: Algorithmic Search 183
History of Pattern Search in System Dynamics 184
Tactics for Search-Based Optimization 186
Calibration Issues 191
Defining the Objective Function 191
Calibrating the Direct Search Approach 193
Optimization by Direct Search: Examples 194
Mathematical Curve Fitting 195
Comparison Between Direct Search and Optimal Control 197
Aggregate Production Planning 199
A Problem with Spatial and Dynamic Elements 201
Fitting an AIDS Model to Data 202
Conclusions 204
Appendix: Listing of DYSMOD Run for the Navigation Problem 205
References 208
Simulation by Repeated Optimisation 212
Introduction 212
The System Response and the Parameter Plane 214
Hill-Climbing Optimisation 216
Overcoming the Limitations of Heuristic Algorithms 217
The Performance of a Simple Model 218
Formulating an Objective Function 220
The Significance of the Objective Function 221
Optimisation Experiments 222
Simulation by Repeated Optimisation 225
Objective Functions for Constrained Optimisation 226
Constrained Optimisation—A Case Example 228
Constrained Optimisation and Marginal Investments 229
Concluding Remarks 231
References 232
Judgement and Supply Chain Dynamics 234
Introduction 234
Research Background 237
Judgemental Interventions in Supply Chain Management 237
Factors Influencing the Bullwhip Effect 239
System Dynamics Modelling of Supply Chains 242
Experimental Structure 245
Model Description 250
Performance Measurement 256
Analysis of Results 257
Conclusions and Extensions 264
Further Research 268
Appendix: Model Equations 269
References 273
Comparing Discrete-Event Simulation and System Dynamics: Users’ Perceptions 276
Introduction 276
Existing Work on the Comparison of DES and SD Model Use 277
Understanding 278
Complexity 278
Model Validity 279
Model Usefulness 279
Model Results 280
Summary of Previous Comparison Work 281
Methods and Research Design 281
The Case Study 283
The Simulation Models 285
The Subjects 292
The Sessions 293
The Questionnaire 293
Survey Results 294
Respondents Profiles 295
Comparing the Level of Understanding Using the DES and SD Model 297
Factors that Help in Model Understanding 299
Model Complexity 300
Model Validity 302
Model Usefulness 303
Model Results 305
Summary of Results 307
Discussion and Concluding Remarks 310
References 312
Part III: Applications of System Dynamics at Industry Level 315
Modelling the Sustainability of Mass Tourism in Island Tourist Economies 316
Introduction 316
Conventional Regression Tourism Demand Models 318
A Generic System Dynamics Model of an Island Tourist Destination 319
Preliminary Conceptualisation of the Model 319
Basic Structure of the Generic Tourism Model 321
Model Testing to Improve Users’ Confidence 323
Policy Analysis Based Futures for Mass Tourism 326
Changing Charter Flight Arrivals 327
A Tourist Tax? 329
Restricting the Construction of New Budget Hotels 331
Discussion 333
Conclusions 335
References 337
Modelling for Policy Assessment in the Natural Gas Industry 341
Introduction 341
Modelling the Natural Gas Industry 344
Dynamics of Discoveries 345
Costs and Technology 347
Transportation 349
Integration of Models and Policy Analysis 351
Model Validation 354
Policy Assessment 356
Gas Demand and Substitution of Gasoline in Transportation 356
Emissions Control 360
Effect of the Gas Transport Network on the Market 360
Conclusions 362
References 363
Understanding the Drivers of Broadband Adoption: The Case of Rural and Remote Scotland 366
Introduction 366
Broadband 367
Scotland 370
Broadband Availability 371
Broadband Adoption 373
New Product Diffusion 374
Broadband Literature and Interviews 375
Decision Criteria Function 377
Potential Adopters 380
Advertising 381
The Impact of Policies on the Causal Diagram 382
Simulation Model 385
Model Structure 385
Populating the Model with Data 388
System Dynamics Model Output 389
Policy Discussion 393
Conclusions and Future Research 394
References 396
Part IV: System Dynamics in Healthcare 400
System Dynamics Mapping of Acute Patient Flows 401
Introduction 401
Initiating the Project 402
Project Purpose and Scope 404
Designing an Approach: Practical Constraints and Methodological Issues 405
Preliminary Activities 407
Conceptual Framework for NHS Resources and Pathways 409
Running the Workshops 413
Post-workshop Activities 416
Project Outputs 419
Beyond the Project 422
References 423
Improving the Cost-Effectiveness of Chlamydia Screening with Targeted Screening Strategies 426
Introduction 426
Analysis of the Opportunistic Screening Data 429
Geomapping Analysis 437
Socio-economic Indicators and Prediction 442
Simulation Modelling of Infection Dynamics and Costs-Effectiveness 447
Conclusions and Policy Implications 451
References 453
Competitive Dynamics in Pharmaceutical Markets: A Case Study in the Chronic Cardiac Disease Market 455
Introduction 455
Reforming Healthcare Policies—An Evolutionary Process 456
Using System Dynamics Modelling in Health Care 457
Problem Articulation and Dynamic Hypothesis 458
Formulation and Testing 462
Policy Formulation and Evaluation 464
Facilitating the Development of Drug Regulation Through Modelling and Experimentation 470
Conclusions 473
References 475
Index 479