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Forecasting and Management of Technology, Second Edition by Frederick A. Rossini, Scott W. Cunningham, Jerry Banks, Alan L. Porter, Alan Thomas Roper, Thomas W. Mason

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6.6 System Dynamics

System dynamics modeling is a method in which the world is viewed as a continuous, interconnected system of accumulations and associated fluxes. The accumulations are the stores of materials or information (pertaining to the materials) that make up the attributes of the system under study. These accumulations are termed stocks or level variables, while the fluxes are called lows or rate variables. In a business enterprise, for example, the inventory would be a level variable. The changes in the stock, perhaps through production or import on the one hand and sales on the other, are rate variables.

The evolution of such a system over time, that is, the system dynamics, occurs primarily by the interaction and feedback between the stocks and flows under the influence of implicit policies. These implicit policies are the usual ways that people seek to control and influence the behavior of the system. In this aspect, system dynamics differs significantly from other modeling approaches such as discrete event modeling or spreadsheet modeling. For a system dynamics study to be effective, it must include the interactions of people within the system (i.e., most actions determining the behavior of the system in the long term should be included) so that the full feedback structure of relevance is modeled. The only external factors, called exogenous variables, should be those over which people within the system have no control and that are not strongly influenced by interactions ...

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