Vensim software work required for 3 students 3 copies
Lisa09
EBUS504_week9.pdf
Dr. XINJIE XING
EBUS-504
Operations Modelling and Simulation
Introduction to System Dynamics
University of Liverpool
Management School,
UK
Learning outcomes
• Understand and realise what a system is.
• Visualise the System Dynamic perspective for
any process.
• Apply causal loops diagram to represent the
System Dynamic approach.
• Use the tool VENSIM to model and simulate
manufacturing and supply chain processes.
Recommended reading material
• Chapter 4 of Kramer, N.J.T.A. and de Smit,J., “Systems thinking”, Martinus
Nijhoff Social Science Division, 1977, ISBN 90 207 0587 3, The Netherlands.
• Campuzano, F. and Mula, J. (2011). Supply Chain Simulation. A System
Dynamics Approach for Improving Performance. Springer, 1st Edition. ISBN
978-0-85729-718-1
• Ford, A. (2009). Modeling the environment , 2nd Edition.
• Hernández, J.E., Zarate, P., Dargam, F., Delibašić, B., Liu, S. and Ribeiro, R.
(2012). Decision Support Systems – Collaborative Models and Approaches in
Real Environments. Lecture Notes in Business Information Processing,
Springer, Volume 121. DOI: 10.1007/978-3-642-32191-7
• Towill, D.R., “System dynamics, background, methodology and applications”,
IEE Computing and Control Engineering Journal, October 1993, pp201-208 and
pp261-268.
What a System is?
• A system can be broadly defined as an integrated set of
elements that accomplish a defined objective.
• People from different engineering disciplines have
different perspectives of what a "system" is.
For example:
• Software engineers often refer to an integrated set of computer programs as a
"system."
• Electrical engineers might refer to complex integrated circuits or an integrated
set of electrical units as a "system."
• As can be seen, "system" depends on one’s perspective, and the “integrated
set of elements that accomplish a defined objective” is an appropriate
definition.
System perspective - relationships Aggregated
view
System perspective - relationships Containing
system Intra
connection
System of
interest
Sub-system
System perspective - relationships Containing
system
System A System B
System C System D
System E
E = f ( A , B , C , D )
Generally math operators
such as: +, -, /, x
Behaviours
Behaviours
Behaviours Behaviours
Behaviours
Dynamic approach of systems
• Changing over time
• Tightly coupled
• Governed by feedback
• Nonlinear: changing dominant structure
• Adaptive
• Counterintuitive
• Characterised by tradeoffs
• History-dependent
• Policy resistant
System are complex, and they can help us to understand, explain,
anticipate, and make decisions considering an inexact
Representation of the reality.
System Dynamics
System Dynamics
We can make adjustments to the structure which are
consistent with the behaviour we would like to produce.
Behaviour
System Structure
Events
System Dynamics
• Can be seen as the application of control systems
principles to problems associated with;
• Manufacturing management
• Supply Chain
• Logistics
• Forecasting
• Organisations
• Socioeconomics
• Human behaviours
http://www.control-systems-principles.co.uk/
Additional information about control systems
System dynamics for traffic management
System dynamics for population planning
Relationship between states is paramount in system dynamics
System Dynamics – Electric Power Industry
Andrew Forda, System Dynamics and the Electric Power Industry, System Dynamics Review Vol. 13, No. 1, (Spring 1997):
57–85
System Dynamics – Inventory Management
Listl A. Notzon I. 2000 An operational application of system dynamics in the automotive industry: inventory
management at BMW Proceedings of the 18th International Conference of the Systems Dynamic Society Bergen 129 138
System Dynamics – Market model
Weil H. 2007. Application of system dynamics to corporate strategy: the evolution of issues and frameworks. In 50th
Anniversary System Dynamics Conference, Boston, MA.
System Dynamics – Healthcare systems
David Lane, Camilla Monefeldt and Jonathan Rosenhead. Emergency - but no Accident
- a system dynamics study of an accident and emergency department. Operational research society.
System Dynamics – Causal Loop diagrams
▪ Represent the feedback structure of systems
▪ Capture
o The hypotheses about the causes of dynamics
o The important feedbacks
System Dynamics – Causal Loop diagrams
• Bank Balance VS Earned
interest ▪ Bank Balance → Earned interest
▪ Earned interest → Bank Balance
• Study effort VS
Grade ▪ Study effort → Grade
▪ Grade → Study effort
Bank Balance Earned interest Study effort Grade
Some relationships examples
Causal Loop diagrams – Polarity I
• The polarity information is used to address the positive ‘+’ or
negative ‘–’ relationship between variables. This can provide a
preliminary view and understanding about how the system will
behave.
• Positive relationship/feedback loop: Is represented by the symbol
‘+’ and means that increments in the first variable will generate
increments in the second variable, whether decrements in the first will
generate decrements in the second.
• Negative relationship/feedback loop: Is represented by the symbol
‘–’ and means that increments in the first variable will generate
decrements in the second variable, whether decrements in the first will
generate increments in the second.
Signing Arcs
+
+
+
-
Bank Balance Earned interest Study effort Grade
....FOR INSTANCE ....
Causal Loop diagrams – Polarity II
• Positive feedback loops
• Are represented by the symbol which is located in the centre of the loop.
• This type of loop tends to generate the well-known “snowball”. effect in where variable values continues to increase or decrease.
• Generate behaviors of growth, amplify, deviation, and reinforce.
• Negative feedback loops
• Are represented by the symbol which is located in the centre of the loop.
• Tend to produce “stable”, “balance”, “equilibrium” and “goal- seeking” behavior over time
+
-
Bank Balance → Earned interest, Earned interest → Bank Balance
The better my Bank Balance is
The more Interest I earn
The more Interest I earn
The better my Bank Balance is
Causal Loop diagrams - Positive Feedback Loop
+
+ Bank Balance Earned interest+
The more Interest I earn
The better my Bank Balance is
The more grade I get
The more grade I get
The more study effort I made
The more I sleep The less tired I am
-
Causal Loop diagrams - Negative Feedback Loop
Study effort Grade
+
-
Study effort → Grade, Grade→ Study effort
The less study effort I made
The less grade I get
The less grade I get The more study effort I made
Causal Loop diagrams - Loop Dominance
• There are systems which have more than one
feedback loop within them.
• A particular loop in a system of more than one loop
is most responsible for the overall behavior of that
system.
• The dominating loop might shift over time.
• When a feedback loop is within another, one loop
must dominate.
• Stable conditions will exist when negative loops
dominate positive loops.
Causal Loop diagrams - Nested Feedback Loop
Tim Haslett, Charles Osborne, (2000) "Local rules: their application in a system", International Journal of Operations & Production
Management, Vol. 20 Iss: 9, pp.1078 - 1092
Use of managers
local rates
Delay for
other parts
Speed of return
to stock out bins
Stock outs
Usage rates
Part in bins Posting of kanbans
Manufacturing of parts
Queue length
Delays
+ -
-
-
+
+
+ +
+
+
+ +
-
-
- -+
• Items that affect other items in the system but are
not themselves affected by anything in the system.
• Arrows are drawn from these items but there are no
arrows drawn to these items.
Causal Loop diagrams – exogenous items
-Study effort Grade
+
-
Tougher
environmental
conditions
-
• Items that affect other items in the system but are
not themselves affected by anything in the system.
• Arrows are drawn from these items but there are no
arrows drawn to these items.
Causal Loop diagrams – 2nd example exogenous
+Births Population
+
+
Birth rate
+
Systems often respond sluggishly
Causal Loop diagrams - delays
-Birth School
attendance
+
- Foreign
students
+
Delay
Delay
Birth rate
+
Causal loop diagram – Industry example
• A formal modelling approach based on systems thinking
• It is used for complex problems where system variables change over time
• It specifically applies to problems where feedback plays a significant role
• Example: Sales staff motivation scheme in a niche market
o Sales staff get paid more for more sales
o Staff are motivated to sell more if they are paid more
o The market has a limited capacity for the product
Motivation Sales
Income
Productivity
increases
increases
increases increases
SALES
STAFF
Available
Sales
Decreases
After a delay
decreases
Market
size
constraint decreases
MARKET
Cumulative
sales
time
Causal loop diagram - In general
Variable A Variable B
( + )
Variable A Variable B
( - )
Positive Link:
An increase in A will result in an Increase in B
Negative Link:
An increase in A will result in an decrease in B
Positive Link with time delay:
An increase in A will result in an Increase in B
after a time delay (dt)Variable A Variable B
( + ) | |
Variable A Variable B
( - ) | |
Negative Link with a time delay:
An increase in A will result in an decrease in B
after a time delay (dt)
delay
delay
Causal loop diagram - In general
Variable A
Variable B
Variable C
Variable E
Variable D
( - )
( + )
( + )
( + )
( - )
Positive Loop
(even number of –ve links) Negative Loop
(odd number of –ve links)
Variable A
Variable B
Variable C
Variable E
Variable D
( - )
( + )
( + )
( - )
( - )
( - )( + )
Basic Behaviour Patterns
time
S-Shape
time time
time
Exponential Goal seeking
Oscillating
Quiz 1
POPULATION BEHAVIOUR
From one study about the population behaviour in one particular area, it has
been found that a relationship between births and deaths exist in order to realise
the current population. The study stands for the fact that birds add to the size of
the population, in where a larger population will tend to have more births in the
future. On the other hand, deaths will reduce the number of population, then a
larger population will tend to have greater number of deaths. In both cases, the
rates of birth and death are an exogenous variable.
• Identify the main elements that define this model and their relationships.
• Build up the causal loop diagram.
• Identify the positive and negative feedback loops linked to this study.
Source: Ford, A. (2009). Modeling the environment , 2nd Edition.
Quiz 2
AUTOMOTIVE MARKET
In this example, the automotive market is defined in a way that the car
production builds the inventory of cars at the dealer. For this, it has been found
that a higher inventory leads to a lower market price, and lower market prices
cause less car production in the future. In terms of the economics of the
environment, if the price of cars were to increase, the retail sale of cars would
tend to fall and, retail sales drain the inventory of cars held in stock at the
dealership. This means that a decline in the inventory will cause the dealers to
raise their prices in the future.
• Identify the main elements that define this model and their relationships.
• Build up the causal loop diagram.
• Identify the positive and negative feedback loops linked to this study.
Source: Ford, A. (2009). Modeling the environment , 2nd Edition.
Quiz 3 POKET MONEY
This quiz is about to model the process when a child receive pocket money from
its parents. On one hand, the more money the parents earn the more money they
are likely to give to their child. On the other hand, the behaviour of the child can
be defined by two feedback loops. The first is oriented to describe the highly
probable fact that spending of the child increases with the available amount of
pocket money, and spending decreases this amount. The other feedback loop
describes the observation that the aunt hands over money to the child whenever it
comes to visit. Nevertheless, the child does not like its aunt too much, so with
increasing budget it is less inclined to see her.
• Identify the main elements that define this model and their relationships.
• Build up the causal loop diagram.
• Identify the positive and negative feedback loops linked to this study.
Source: Binder, T., Vox, A., Belyazid, S., Haraldsson, H. and Svensson, M. (2004)
Developing system dynamics models from causal loop diagrams, presented at the 22nd International
Conference of the System Dynamics. Society, Oxford, UK.
Dr. XINJIE XING
EBUS-504
Operations Modelling and Simulation
Introduction to System Dynamics
University of Liverpool
Management School,
UK
