Business Dynamics: Systems Thinking and Modeling for a Complex World with CD-ROM / Edition 1

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The leading authority on system dynamics explains this approach to organizational problem solving, emphasizing simulation models to understand issues such as fluctuating sales, market growth and stagnation, the reliability

of forecasts and the rationality of business decision-making. The CD includes modeling software from Vensim, ithink, and PowerSim.

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Product Details

  • ISBN-13: 9780072389159
  • Publisher: McGraw-Hill Higher Education
  • Publication date: 2/28/2000
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 982
  • Sales rank: 679,640
  • Product dimensions: 8.20 (w) x 10.30 (h) x 1.60 (d)

Meet the Author

John Sterman (Lexington, MA) teaches at the Sloan School of Management and direct MIT's System Dynamics Group.

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Table of Contents

Preface vii
Part I Perspective and Process 1
1 Learning in and about Complex Systems 3
1.1 Introduction 3
1.2 Learning Is a Feedback Process 14
1.3 Barriers to Learning 19
1.4 Requirements for Successful Learning in Complex Systems 33
1.5 Summary 39
2 System Dynamics in Action 41
2.1 Applications of System Dynamics 41
2.2 Automobile Leasing Strategy: Gone Today, Here Tomorrow 42
2.3 On Time and Under Budget: The Dynamics of Project Management 55
2.4 Playing the Maintenance Game 66
2.5 Summary: Principles for Successful Use of System Dynamics 79
3 The Modeling Process 83
3.1 The Purpose of Modeling: Managers as Organization Designers 84
3.2 The Client and the Modeler 84
3.3 Steps of the Modeling Process 85
3.4 Modeling Is Iterative 87
3.5 Overview of the Modeling Process 89
3.6 Summary 104
4 Structure and Behavior of Dynamic Systems 107
4.1 Fundamental Modes of Dynamic Behavior 108
4.2 Interactions of the Fundamental Modes 118
4.3 Other Modes of Behavior 127
4.4 Summary 133
Part II Tools for Systems Thinking 135
5 Causal Loop Diagrams 137
5.1 Causal Diagram Notation 137
5.2 Guidelines for Causal Loop Diagrams 141
5.3 Process Point: Developing Causal Diagrams from Interview Data 157
5.4 Conceptualization Case Study: Managing Your Workload 159
5.5 Adam Smith's Invisible Hand and the Feedback Structure of Markets 169
5.6 Explaining Policy Resistance: Traffic Congestion 177
5.7 Summary 190
6 Stocks and Flows 191
6.1 Stocks, Flows, and Accumulation 191
6.2 Identifying Stocks and Flows 197
6.3 Mapping Stocks and Flows 210
6.4 Summary 229
7 Dynamics of Stocks and Flows 231
7.1 Relationship between Stocks and Flows 232
7.2 System Dynamics in Action: Global Warming 241
7.3 System Dynamics in Action: The War on Drugs 250
7.4 Summary 262
8 Closing the Loop: Dynamics of Simple Structures 263
8.1 First-Order Systems 263
8.2 Positive Feedback and Exponential Growth 264
8.3 Negative Feedback and Exponential Decay 274
8.4 Multiple-Loop Systems 282
8.5 Nonlinear First-Order Systems: S-Shaped Growth 285
8.6 Summary 290
Part III The Dynamics of Growth 293
9 S-Shaped Growth: Epidemics, Innovation Diffusion, and the Growth of New Products 295
9.1 Modeling S-Shaped Growth 296
9.2 Dynamics of Disease: Modeling Epidemics 300
9.3 Innovation Diffusion as Infection: Modeling New Ideas and New Products 323
9.4 Summary 346
10 Path Dependence and Positive Feedback 349
10.1 Path Dependence 349
10.2 A Simple Model of Path Dependence: The Polya Process 354
10.3 Path Dependence in the Economy: VHS versus Betamax 359
10.4 Positive Feedback: The Engine of Corporate Growth 364
10.5 Positive Feedback, Increasing Returns, and Economic Growth 385
10.6 Does the Economy Lock in to Inferior Technologies? 387
10.7 Limits to Lock In 389
10.8 Modeling Path Dependence and Standards Formation 391
10.9 Summary 406
Part IV Tools for Modeling Dynamic Systems 407
11 Delays 409
11.1 Delays: An Introduction 409
11.2 Material Delays: Structure and Behavior 412
11.3 Information Delays: Structure and Behavior 426
11.4 Response to Variable Delay Times 434
11.5 Estimating the Duration and Distribution of Delays 437
11.6 System Dynamics in Action: Forecasting Semiconductor Demand 449
11.7 Mathematics of Delays: Koyck Lags and Erlang Distributions 462
11.8 Summary 466
12 Coflows and Aging Chains 469
12.1 Aging Chains 470
12.2 Coflows: Modeling the Attributes of a Stock 497
12.3 Summary 511
13 Modeling Decision Making 513
13.1 Principles for Modeling Decision Making 513
13.2 Formulating Rate Equations 522
13.3 Common Pitfalls 545
13.4 Summary 549
14 Formulating Nonlinear Relationships 551
14.1 Table Functions 552
14.2 Case Study: Cutting Corners versus Overtime 563
14.3 Case Study: Estimating Nonlinear Functions with Qualitative and Numerical Data 569
14.4 Common Pitfalls 573
14.5 Eliciting Model Relationships Interactively 585
14.6 Summary 595
15 Modeling Human Behavior: Bounded Rationality or Rational Expectations? 597
15.1 Human Decision Making: Bounded Rationality or Rational Expectations? 598
15.2 Cognitive Limitations 599
15.3 Individual and Organizational Responses to Bounded Rationality 601
15.4 Intended Rationality 603
15.5 Case Study: Modeling High-Tech Growth Firms 605
15.6 Summary 629
16 Forecasts and Fudge Factors: Modeling Expectation Formation 631
16.1 Modeling Expectation Formation 631
16.2 Case Study: Energy Consumption 638
16.3 Case Study: Commodity Prices 643
16.4 Case Study: Inflation 645
16.5 Implications for Forecast Consumers 655
16.6 Initialization and Steady State Response of the TREND Function 658
16.7 Summary 660
Part V Instability and Oscillation 661
17 Supply Chains and the Origin of Oscillations 663
17.1 Supply Chains in Business and Beyond 664
17.2 The Stock Management Problem 666
17.3 The Stock Management Structure 675
17.4 The Origin of Oscillations 684
17.5 Summary 707
18 The Manufacturing Supply Chain 709
18.1 The Policy Structure of Inventory and Production 710
18.2 Interactions among Supply Chain Partners 729
18.3 System Dynamics in Action: Reengineering the Supply Chain in a High-Velocity Industry 743
18.4 Summary 755
19 The Labor Supply Chain and the Origin of Business Cycles 757
19.1 The Labor Supply Chain 758
19.2 Interactions of Labor and Inventory Management 764
19.3 Inventory--Workforce Interactions and the Business Cycle 782
19.4 Summary 788
20 The Invisible Hand Sometimes Shakes: Commodity Cycles 791
20.1 Commodity Cycles: From Aircraft to Zinc 792
20.2 A Generic Commodity Market Model 798
20.3 Application: Cycles in the Pulp and Paper Industry 824
20.4 Summary 841
Part VI Model Testing 843
21 Truth and Beauty: Validation and Model Testing 845
21.1 Validation and Verification Are Impossible 846
21.2 Questions Model Users Should Ask--But Usually Don't 851
21.3 Pragmatics and Politics of Model Use 851
21.4 Model Testing in Practice 858
21.5 Summary 890
Part VII Commencement 893
22 Challenges for the Future 895
22.1 Theory 895
22.2 Technology 896
22.3 Implementation 899
22.4 Education 900
22.5 Applications 901
Appendix A Numerical Integration 903
Appendix B Noise 913
References 925
Index 947
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Sort by: Showing all of 3 Customer Reviews
  • Anonymous

    Posted November 22, 2004

    Too too huge without, really without a need

    This book is unncessarly too too long. The author is very relaxed and just talking. After reading a 100-page chapter you discover that it could have been 50. And there is a persisting impression that the author wants guide readers directly to what he means. There are valuable materials and experiences in the book but the too much talking and confusing order is dramaticly prventing this book from being a classic.

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  • Anonymous

    Posted August 21, 2002

    Improvements Needed

    Chapter organization is poor. In an introductory class the student will not understand what is going on in the book until chapter 5 or 6. Vocabulary is difficult. One of the three programs (Vensim) allows you to save your work. Challange problems can be difficult unless students understand Vensim first.

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  • Anonymous

    Posted January 10, 2001

    For the self-taught 'System Dynamics' student

    This book is a product of Prof. Stremann's long teaching career. The style of the writing reflects this and as a result the book is an ideal one for a person trying to walk the first steps on the road to becoming a good System Dynamics student/professional. The book does a good job of explaining the difference between the 'Informational Delays' and 'Physical Delays' two key elements that often get confused and are difficult to understand to a beginner. The book does a good job of balancing the mathematical aspects of control theory and the qualitative explanations for the less mathematically inclined readers. The book comes with all the models in three software formats (ithink, vensim and powersim) on a CD. Overall a great book.

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