System Dynamics – 1ZM65/1ZS24
Lecture 2
September 8, 2014
Dr.ir. Bob Walrave
Agenda
• Recap of Lecture 1
• Structure and behavior of dynamic systems (chapter 4)
• Causal loop diagramming (chapter 5)
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PAGE 1
Recap of Lecture 1
• Dilbert contemplating policy resistance. “The
behavior of a system arises from its structure!”
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Recap of this lecture (take-aways)
• System Dynamics is:
• About understanding why and how things usually work out
differently than you expected (policy resistance)
• About counterintuitive behavior of systems
• Looking at the world differently: Feedback view
• Seeing the bigger picture (bird’s-eye view)
• A methodology to analyze problems
• Learning System Dynamics requires a lot of practice!
• 5 ECTS = 140 hours
• 18 weeks until due date  7.8 hrs/wk
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Reference: Business Dynamics
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Recap of Lecture 1
• Characteristics of dynamic
complex systems:
• The modeling process:
your decisions
1. Problem Articulation
(Boundary Selection)
unintended
side effects
your goals
situation
goals of
others
5. Policy Formulation
& Evaluation
4. Testing
2. Dynamic
Hypothesis
3. Formulation
decisions
by others
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Example of Test Question (Lecture 1)
• This figure describes the
learning cycle. However, there
are many barriers to learning
that cause this cycle to fail.
• Which of the following
examples is NOT a way to
break this cycle? (which is
NOT a barrier to learning)
A) Time delay
B) Dynamic complexity
C) Misperception of feedback
D) Policy formulation
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Agenda
• Recap of Lecture 1
• Structure and behavior of dynamic systems
• Causal loop diagramming
Sterman, Chapter 4
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Interactions of Structure and Behavior
• The behavior of a system arises from its structure.
• Behavior = output of a simulation model
• Structure = input of a simulation model, consisting of
•
•
•
•
Feedback loops (causal loop diagram)
Stocks and flows
Time delays
Nonlinearities
structure of the
system
Simulation
Model
behavior of the
system
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Interactions of structure and behavior
• Structure
+
+
eggs
chicken
road
crossing s
-
+
• Behavior over time
chickens
time
chickens
chickens
+
=
time
???
time
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Fundamental modes of behavior of
dynamic systems
• Basis modes of dynamic
behavior
• Exponential growth
• Goal seeking
• Oscillation
• Other forms of behavior
• Equilibrium
• Random
• Chaos
• Interactions of basic modes
• S-shaped growth
• Growth & overshoot
• Overshoot & collapse
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Exponential growth
Besides growth, we can also have
exponential decline!
Behavior
Structure
money on
bank account
interest per year
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Goal-seeking
Behavior
actual number of
customers
desired number
of customers of
a product
Structure
This system is characterized by
exponential decay (i.e., a half-life).
attract more customers
by advertising in
supermarket
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Oscillation
desired
temperature in
the room is 20ºC
Behavior
Structure
actual temperature in
the room is 15 ºC
increase heater
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S-shaped growth
The interaction between positive and
negative loops is non-linear.
Behavior
actual number of
people in a bar
Structure
is there still room
in the bar?
people allowed
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in the PAGE
bar14
Growth & Overshoot
number of rabbits
in a meadow
Behavior
Structure
Food available
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Overshoot & Collapse
Model these fundamental modes of
behavior in VENSIM PLE
Behavior
actual number of
Structure
people infected
with a certain
type of flu
The more
infected people,
the less people
may be infected
in the future
number of people
that may be
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infected
Vensim illustration
• State of the system  Stock
• Net increase rate  Flow
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Systems archetypes
• Use these fundamental modes – by combining them
– when you are modeling!
• Besides these fundamental modes there are generic
templates that can be used to …
• Interpret a Causal Loop Diagram’s overall nature
• Refine a preliminary CLD
• See the leverage in the CLD’s structure
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Four well-known archetypes are:
1.
2.
3.
4.
Fixes that fail
Shifting the burden
Limits to growth
Tragedy of the commons
For more information on archetypes, see: Wolstenholme, E.F., 2003, Towards
the definition and use of a core set of archetypal structures in system dynamics,
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System Dynamics Review, 19(1): 7-26
“Fixes that fail”
Increase of
crime
+
Problem
symptom
Fix
Recruitment of
police to reduce
reported crime
-
+
delay
+
Unintended
Consequence
Shortage of prison cells,
leading to shortening
prison sentences
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“Shifting the burden”
Expediting
orders for
important
customers
Quick Fi x
+
Lead time is too
long in a
production plant
+
-
Si de Effect
Probl em
symptom
delay
+
Fundamental
Sol uti on
Lead time of all
other orders
becomes even
longer.
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“Limits to growth”
C onstraint
+
+
Effort
+
Li miting
Action
Perform ance
+
Increase of sales
effort leads to
increase of orders
-
Customers are
unsatisfied with
long delays, leading
to decrease of
future orders
Production capacity
cannot keep up with
increased demand,
leading to longer
production delays
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“Tragedy of the Commons”
+
A's Acti vity
N et gain for A
R esource li mit
+
+
+
+
Total Activity
delay
+
Gai n per
i ndividu al activi ty
+
+
B 's Acti vity
N et gain for B
+
Increase number
of visitors to a
national park,
which increases
profit, but also
increases the
damage to the
park (disturb
wildlife)
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Agenda
• Recap of Lecture 1
• Structure and behavior of dynamic systems
• Causal loop diagramming
Sterman, Chapter 5
5.1-5.4
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Causal Loop Diagrams (CLDs)
• Capture hypotheses about the causes of dynamics
• Elicit and capture mental models
• Communicate the important feedbacks that are
responsible for a problem
• See a CLD as a illustration of a story; a narrative that
explain how a certain problem came to be
• The loops within a CLD a characterized by ‘loop
dominance’, which facilitate your story
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Elements of a Causal Loop Diagram
• Basic elements:
• Variables
• Arrows (causal link)
• Link polarity (+ or -)
• Loop identifiers
• Additional elements:
• Loop Polarity:
− Balancing
− Reinforcing
• System Delays
actual work
pressure
+
coaching effort
by experienced
employees
+
delay
+
total number
of productive
employees
perceived work
pressure
-
+
delay
quality of work
hiring new
employees
-
delay
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Link polarity: definitions and examples
• Positive link:
The higher the actual work
pressure, the higher the
perceived work pressure will be,
after a certain (time) delay
or: lower actual work pressure
leads to lower perceived work
pressure
• Negative link:
The higher the perceived work
pressure, the lower the quality of
work (more errors are made)
or: lower perceived work
pressure leads to higher quality
of work
actual work
pressure
perceived work
pressure
+
-
perceived work
pressure
quality of work
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CLD Represent causation, not correlation
Figure 5-2, Sterman: Causal diagrams must include only (what you believe
to be) genuine causal relationships.
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Label link and loop polarities
?
Figure 5-3, Sterman
?
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“Challenge” p.143: assign polarity, add
loops
• Consider the attractiveness
of a product to customers
as it depends on various
attributes of the product.
• Assign link polarities.
Quality
+
Price
Product
Attractiveness
• What feedback loops might
be created as product
attractiveness changes the
demand for the firm’s
product?
Delivery
Delay
+
Functionality
+
+
Demand
Figure 5-4, Sterman: The attractiveness of a product as it
depends on various attributes.
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Challenge p.145: Identify and label the
polarity of links and loops
Attractiveness
of Market
+
Number of
Competitors
Profits
+
+
Price
-
-
Bank Cash
Reserves
+
Perceived
Solvency of
Bank
Net
Withdrawals
-
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Three ways to determine loop polarity
• The fast way: count
the number of
negative links
• A better way: trace
the effect of change
around a loop
• The formal way: do
the mathematics
Attractiveness
of Market
+
Number of
Competitors
Profits
+
+
Price
-
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Assign unambiguous polarities
Incorrect
Correct
? (+ or -)
Price
Revenue
+
?
Price
-
Revenue
+
Sales
Figure 5-7, Sterman: Causal links must have unambiguous polarity
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Name and number your loops
Figure 5-9, Sterman: Name and
number your loops to increase
diagram clarity and provide
labels.
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Indicate important delays in links
Price
Supply
Delay
+
Figure 5-10 Representing delays in causal diagrams
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Variable names should be nouns or noun
phrases
Incorrect
Correct
+
Costs Rise
Price Rises
+
Costs
Price
?
Figure 5-12: Sterman
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Variable names should have a clear sense
of direction
?
Figure 5-13, Sterman
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Choose variables whose normal sense of
direction is positive
Incorrect
Correct
-
+
Costs
Losses
Criticism
+
Unhappiness
Costs
Profit
Criticism
Happiness
Figure 5-14, Sterman
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Make intermediate links explicit
Figure 5-15, Sterman: Make intermediate links explicit to
clarify a causal relationship.
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Make goals of negative loops explicit
Figure 5-16, Sterman: Make the goals of negative loops
explicit.
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Distinguish between actual and perceived
conditions
Figure 5-17, Sterman
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Using Causal Diagrams to
Model an Issue
examples
Using Causal Diagrams to Model an
Issue
• The majority of our problems can be captured by a
combination of two loops: balancing & reinforcing
• The balancing loop describes what our goal is, what
we try to accomplish
• The reinforcing loop describes what our main
obstacle is or could be
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Structure & Behavior
actual weight (kg)
72
71
70
69
68
67
66
65
64
63
DOMINANT LOOP:
BALANCING
0
4
8
12
16
20
24
28
32
DOMINANT LOOP:
REINFORCING
36
40
44
48
52
week
- First the balancing loop is driving the behavior,
because the actual weight is always close to the
desired weight
- Around week 46 something happens, because the
actual weight is not going back to its desired value
- The reinforcing loop is now dominant
56
desired weight
actual weight
+
+
food intake
B
+
deviation
propensity to eat
-
+
propensity to snack
(between meals)
+
mood
R
-
PAGE
44
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need for comfort
food
What do the loops tell us?
Balancing loop:
• The loop is selfstabilizing
• The manager’s
primary role is to
monitor
• Act only when there
is an exception or
likelihood of one, i.e.,
gap between desired
& actual weight
Reinforcing loop:
•The loop is not selfstabilizing
•The manager’s
primary role is to act
•If the cycle is vicious,
find a way to break it
PAGE
45
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Guest Satisfaction Index in a hotel
• The GSI in the hotel is measured on a monthly basis
• When the GSI is above 8.2, the customers are happy,
as well as the hotel staff
• However, the GSI recently dropped below 8.2, and
now management is worried
• During a staff meeting, hotel management tells
everyone that customer focus should be increased
• It is expected that after a while customer happiness
returns and that the GSI will rise accordingly
PAGE
46
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Where to start?
• Start with a narrative, a story
• Underlying a specific problem
• What is the goal that you try to reach
• What happens when you deviate from the goal
PAGE
47
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Drawing the first loop
Identify the goal seeking behavior
in question
•Goal: desired GSI
Starting point: indication of
drift from goal
•GSI Shortfall
(desired – actual GSI)
focus on
customer
+
GSI shortfall
+
customer
happiness
B
+
GOAL:
desired GSI
actual
GSI
+
Decision: focus on customer
•Effects: customer happiness, GSI
Link variables & qualify links, insert delays
Determine type of loop – balancing or reinforcing
PAGE
48
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The problem is not as easy as it looks
• The increased focus on the customer leads
to extra work for most of the team
• After a while, the extra work starts to
exhaust the team
• As a result of this exhaustion, some team
members start making mistakes
• Although the customer is still happy with
the increased focus, the mistakes made by
the staff have a negative effect on the GSI
PAGE
49
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Drawing the second loop
focus on
customer
+
extra work
+
GSI shortfall
+
GOAL:
desired GSI
+
customer
happiness
B
actual
GSI
R
+
exhaustion
+
+
-
mistakes
Starting point: what could be another (side-) effect of increasing
the focus on customers
Other variables:
• More focus on customer can lead to extra work
• Doing more work can lead to exhaustion
• Exhaustion can lead to making mistakes, which reduces GSI
Link variables & qualify links, include delays
Determine type of loop – balancing or reinforcing
PAGE
50
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What can we learn from the loops?
+
focus on
customer
extra work
+
GSI shortfall
+
GOAL:
desired GSI
+
customer
happiness
B
actual
GSI
R
+
exhaustion
+
+
-
mistakes
• As long as GSI increases while the focus on customer
increases, the BALANCING loop is in charge
• Apparently the hotel staff can handle the extra work
• When GSI decreases while the focus increases, you are in
danger. The REINFORCING loop takes over
• Act now!
PAGE
51
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Using Causal Diagrams to Model an
Issue
• But CLDs can become far more complex!
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Causal loop diagramming
(NRC 28 April 2010)
PAGE
53
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Using Causal Diagrams to Model an
Issue
• Problem definition: managing workload
• Identifying key variables:
•
•
•
•
•
•
Assignment rate
Work completion rate
Assignment backlog
Grades/Performance
Workweek
Energy level
• Developing the reference mode (next slide)
• Developing the causal diagrams
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Reference mode
- example • When a person manages his
workload according to the
“grasshopper strategy”, work
will not be done until the
deadline is very near.
• As a consequence the
assignment backlog builds up
• And when the deadline is
near, working overtime (or
even at night) is no exception.
Figure 5-20, Sterman:
Reference mode for the
grasshopper strategy
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Develop causal diagrams – managing
workload
+
Assignment
Rate
Calendar
Time
+
-
Work
Completion +
Rate
+
-
Assignment
Backlog
-
B2
Time
Remaining
Due
Date
-
Corner
Cutting
+
Work
Pressure
-
Effort Devoted
to Assignments
Productivity
B1
Midnight
Oil
Figure 5-21: Sterman: Basic
control loops for the assignment
backlog
+
Workweek
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Adding the burnout-loop
+
Assignment
Rate
Calendar
Time
+
-
Work
Completion +
Rate
+
-
Assignment
Backlog
-
B2
Time
Remaining
Due
Date
-
Corner
Cutting
+
Work
Pressure
-
Effort Devoted
to Assignments
Productivity
+
B1
Midnight
Oil
R1
Burnout
Figure 5-22: Sterman:
The burnout loop
+
Workweek Delay
Energy
Level
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Adding the “too tired to think”-loop
+
Assignment
Rate
Calendar
Time
+
-
Work
Completion +
Rate
+
-
Assignment
Backlog
-
B2
Time
Remaining
Due
Date
-
Corner
Cutting
+
Work
Pressure
- Effort Devoted
to Assignments
B3
Grades
+
Productivity
+
R1
Burnout
B1
Midnight
Oil
Quality
Control
+
Figure 5-23: Sterman: The
“too tired to think” loop
R2
Quality of
Work
+
Too Tired
to Think
+
Delay
Workweek
Energy
Level
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Adding “my dog ate my homework”-loop
+
Assignment
Rate
Calendar
Time
+
Work
Completion +
Rate
+
-
Assignment
Backlog
-
B2
Time
Remaining
B4
Due
Date
-
-
Corner
Cutting
+
Work
Pressure
- Effort Devoted
to Assignments
-
My Dog Ate
My Homework
+
Requests for
Extensions +
B3
Grades
+
Productivity
+
R1
Burnout
Quality
Control
B1
Midnight
Oil
+
Figure 5-24: Sterman: My dog
ate my homework—Parkinson’s
Law
R2
Quality of
Work
+
Too Tired
to Think
+
Delay
Workweek
Energy
Level
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From practice: what is the best team size?
• Linear view of the world:
Small teams  low communication overhead  high
efficiency
But is this true?
• Lets examine the feedback view of the world
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From practice: what is the best team size?
communication
overhead
+
increase focus
-
knowledge sharing
+
-
+
fatigue
+
-
dependency on
tacit knowledge
overtime
priority
change
+
efficiency
+
need to increase
progress
+
team size
+
+
progress
So, what is better: a
large or a small team?
By the way: what is
wrong with this CLD?
+
+
vulnerability to
disturbances/deviations
delays
+
+
+
interruptions,
complications, etc.
Info/resources not
available
+
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The beer game
• https://www.youtube.com/watch?v=qxpgM8paegQ
• https://www.youtube.com/watch?v=Aqi5-KzQZWc
• Play the game here:
• (http://www.beergame.lim.ethz.ch)
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The beer game
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Example of test question (Lecture 2)
• In the Netherlands, in the spring, when the sun is shining for the first
time since months and the temperature is rising, many people want to
go out and enjoy the lovely weather, instead of staying at the office. As
a consequence, as soon as the temperature starts rising, many people
take a day off (or a short holiday). Below, a causal structure of this
phenomenon is given.
• What is the polarity of the links?
A) Link 1 is positive, Link 2 is negative
B) Link 1 is positive, Link 2 is positive
C) Link 1 is negative, Link 2 is negative
D) Link 1 is negative, Link 2 is positive
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Example of test question (Lecture 2)
• When people go on holiday,
their colleagues have to take over some
of their work.
So, the workload for these colleagues is
increasing. Most likely, these colleagues
have to work overtime to get all the work
done.
Working overtime has a positive effect,
because it increases productivity and
reduces the remaining workload.
But, it also has a negative effect,
because it reduces motivation.
The causal loops below describe this
behavior.
• What is the polarity of the loops?
A) Loop 1 is positive, Loop 2 is negative
B) Loop 1 is positive, Loop 2 is positive
C) Loop 1 is negative, Loop 2 is negative
D) Loop 1 is negative, Loop 2 is positive
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Questions?
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