Managerial Applications of System Dynamics

(Now available from Productivity Press, Cambridge, Mass.)

Useful as both a text and a working resource, this volume contains 36 chapters (and 4 appendixes) illustrating the application of system dynamics to overall strategic planning and managerial problem-solving in the corporate functional areas of manufacturing, marketing and distribution, research and development, and finance and control. In addition, a final section treats the systems analysis of societal problems that impinge on a manager's social responsibilities.

Many of the chapters provide full descriptions of the modeling processes and implemented results, and in nine cases the computer models are completely documented with listings of the model equations. This book is the first attempt to compile real managerial uses of the system dynamics approach, and the first volume since Forrester's Industrial Dynamics (MIT Press, 1961) to focus upon corporate system dynamics models. In draft form the book has been used as the basis for teaching system dynamics in the Sloan School's regular graduate programs and its middle-management executive development programs.

In his introductory chapter on the concepts, philosophy, and methodology of system dynamics, the editor clearly identifies the underlying

"The system dynamics philosophy rests on a belief that the behavior (or time history) of an organization is principally caused by the organization's structure. The structure includes not only the physical aspects of plant and production process but, more importantly, the policies and traditions, both tangible and intangible, that dominate decision-making in the organization. Such a structural framework contains sources of amplification, time lags, and information feedback similar to those found in complex engineering systems. Engineering and management systems containing these characteristics display complicated response patterns to relatively simple system or input changes.... The subtleties and complexities in the management area make these problems even more severe. Here the structural orientation of system dynamics provides a beginning for replacing confusion with order.

A second aspect of the system dynamics philosophy is the concept that organizations are viewed most effectively in terms of their common underlying flows instead of in terms of separate functions.... A meaningful system framework results from tracing cause-and-effect chains through the relevant flow paths."

The book is included in the MIT Press/Wright-Allen Series in System Dynamics, of which Jay W. Forrester is general editor. System dynamics as a methodology was largely devised by Forrester, Roberts, and other MIT faculty and staff. It employs computers to predict short- and long-term consequences of social, economic, and corporate policies, and has been used variously to chart the growth of new products in business, to study environmental change, and to examine the impact of public policies at scales ranging from the urban to the global. Professor Roberts' four prior books on system dynamics cover a similar range of theory and application of systems and computer modeling concepts.