This disc contains the simulation models developed in Business Dynamics and the software needed to run them. The models are provided in three different formats: ithink^®, Powersim^®, and Vensim^®. The disk includes complimentary versions of the ithink, Powersim and Vensim software. You can install any or all of these simulation packages on your computer at no charge.

All of the more than 60 models on this disc are presented in each of the three software formats. The models are as close to identical as the different interfaces of each program permit. Note, however, that the diagrams in the text were prepared using Vensim. The Vensim models therefore correspond exactly to the figures in the text; the ithink and Powersim diagrams differ slightly from those in the text.

Website

You should also check the Business Dynamics website where the models and simulation software are also available for download. Information on updates and new versions of the simulation software will be posted. The website will also post any corrections to the models or text, new models, links to other system dynamics resources, and other information to help you get the most from Business Dynamics. You may also be interested in other titles in the Irwin/McGraw-Hill production-operations management area.

Feedback

Send suggestions, notification of any problems or errors you discover, and any other comments you have to BusDyn@mit.edu.

Simulation Software

Vensim: The disc includes VensimPLE 3.0, by Ventana Systems. VensimPLE (the Personal Learning Edition) provides all the functionality you need to simulate and extend the models in the text, or to build your own models. You can build, modify, simulate and save the models you develop. There is no limit (other than the memory of your computer) on the size of the models you develop in VensimPLE. When you install the software you also receive an online user’s manual, online help files, and a folder of sample models.

You can obtain the latest release of VensimPLE and learn about the professional version of Vensim along with other Ventana systems products and services at http://www.vensim.com .

ithink: The disc includes ithink Run-time 5.1.1, by High Performance Systems. The run-time package is the full version of the professional ithink software. With the run-time package you may open, run and modify existing models, and build new models, but you may not save any changes you make. There is no limit (other than the memory of your computer) on the size of the models you may run with ithink Run-time.

You can order the full and student versions of ithink and learn about other High Performance Systems software and services at http://www.hps-inc.com .

Powersim: The disc includes Powersim 2.51 by Powersim AS. The version of Powersim provided on the disc is the full professional version of the product, limited for educational purposes to models of no more than 150 equations. You can build, modify, simulate and save the models you develop as long as they contain 150 or fewer equations (enough to work with all the models accompanying the book). When you install Powersim you also receive an online tutorial, help files, and a folder of sample models.

You can learn about the unlimited version of Powersim along with other Powersim products and services at http://www.powersim.com .

Installation for PC users

ithink

Open the ithink folder. Double click or run the file it51r_32.exe, then follow the instructions.

Powersim

Open the Powersim folder, then the Powersim Install folder. Double click or run the file Setup.exe, then follow the instructions.

Vensim

Open the Vensim folder. Double click or run the file venple32.exe, then follow the instructions.

Installation for Macintosh Users:

The disk also includes the Macintosh versions of ithink and Vensim, and Mac-ready versions of the models for both ithink and Vensim. Powersim does not support the Mac.

To install the ithink software, open the folders “ithink for Mac” and then “ithink Run-Time Mac” then double click “ithink ® Run-time Installer” and follow the instructions.

To install the VensimPLE software, open the folders “Vensim for Mac” and “VensimPLE Install Mac” then double click “Vensim PLE PPC Installer” and follow the instructions.

Guide to the Models

The models are organized into folders corresponding to the chapters in which they are described. Vensim models are in the format <Model Name.mdl>. ithink models are in the format <Model_Name.itm>. Powersim model names are limited to eight characters and have the format <Mdl_Name.sim>. The list below describes the models by chapter. The list provides the model name for Vensim and ithink, with the abbreviated name for the Powersim version in parentheses, followed by a short description of each model and the section of the text where it is presented.

Chapter 4

Pop and Carrying Capacity (PopCCap)

A simple model of a population growing in an environment with a given carrying capacity. The carrying capacity can be constant or consumed by the population; nonrenewable or renewable. With different parameters, the model can generate the most important modes of behavior observed in dynamic systems and discussed in chapter 4, including exponential growth, exponential decay, S-shaped growth, S-shaped growth with overshoot and oscillation, and overshoot and collapse.

Chapter 8

First Order Neg FB (FONeg)

The first-order linear negative feedback system, illustrating exponential decay. See section 8.3.

First Order Neg with Goal (FONegGl)

The first-order linear negative feedback system with an explicit goal, illustrating exponential approach to a goal. See section 8.3

First Order Pos FB (FOPos)

The first-order linear positive feedback system, illustrating exponential growth. See section 8.2

Linear Population (LinPop)

First-order population growth model with linear birth and death rates. See section 8.4.

Nonlinear Population (NonlnPop)

First-Order population growth model with constant carrying capacity, illustrating S-shaped growth. See section 8.5.

Chapter 9

Bass Model (Bass)

The Bass innovation diffusion model (innovation diffusion as driven by advertising and word of mouth feedbacks). See section 9.3.3.

Bass Repeat Purch Flow (BassRPur)

The Bass diffusion model expanded to include repeat purchases of the product by adopters. See section 9.3.6; figure 9-22.

Bass with Discards (BassDisc)

The Bass diffusion model expanded to include product discards and replacement purchases. See section 9.3.6; figure 9-20.

Logistic Model (Logistic)

The logistic growth model of population growth or innovation diffusion. See section 9.1.1.

Richards Model (Richards)

The Richards population growth model. See section 9.1.3.

SI Innovation Model (SI_Innov)

The SI epidemic model applied to innovation diffusion. See section 9.3.

SI Model (SI)

The SI (Susceptible-Infectious) model of infectious disease. See section 9.2.1.

SIR Model Threshold (SIRThres)

The SIR epidemic model configured to illustrate the concept of the tipping point. See section 9.2.5.

SIR Model (SIR)

The SIR (Susceptible-Infectious-Removed) model of infectious disease. See section 9.2.2.

Chapter 10

Nonlinear Polya Process (NonPolya)

The Polya urn model with a nonlinear function for the probability of selecting the color of the next stone to be added. The model illustrates path dependence. See section 10.2.1.

Network Effect (Netw_Eff)

A model of two firms competing for market share in the presence of network externalities, illustrating path dependence. The attractiveness of each firm’s product to customers depends on the size of the installed base (the network of users). See section 10.8.

Polya Process (Polya)

The classic Polya urn model in which the probability of adding a stone of a given color to a bag of stones equals the proportion of stones of that color already in the bag. Illustrates path dependence. See section 10.2.

Chapter 11

Adaptive Exp Random Walk (AdtExpRW)

Adaptive expectations (first-order exponential smoothing) driven by a random walk. See section 11.3.1.

Adaptive Expectations (AdaptExp)

Adaptive expectations (first-order exponential smoothing) driven by a stationary random input. See section 11.3.1.

Nonlinear Smoothing (NonlSmth)

First-order exponential smoothing with a nonlinear time constant, allowing a different response time for increases and decreases. See section 11.4.1.

Chapter 12

Capital Labor Coflow (CapLabCF)

Simple model of a capital stock with a coflow to track the embedded labor requirements of each unit of capital. See section 12.2.

Capital Vintaging Coflow (CapVinCF)

Model of the capital stock for a firm, industry, or economy, disaggregated into an aging chain with different capital vintages, and including a coflow to track the factor input requirements embedded in each unit of capital. See section 12.2.2.

Faculty Aging Chain (FacAging)

Illustrates the dynamics of aging chains with the example of a university, tracking the hiring, promotion, and termination of faculty from assistant to associate to full professor. See section 12.1.6.

Hiring Chain 1 (Hiring1)

Simple model of a firm’s hiring and training process distinguishing between new, inexperienced employees and experienced employees; shows how experience and productivity vary with attrition rates, learning times, and growth. See section 12.1.7.

Labor Learning Curve (LabLearn)

Models a labor force and their on-the-job learning from experience. Illustrates coflows with nonconserved flows. See section 12.2.1.

Chapter 13

Floating Goals (FltGoals)

Models a negative feedback system in which the goal of the system is variable and adjusts to the past performance of the system itself. Illustrates floating, or eroding, goals. See section 13.2.10.

Hillclimb (HillClmb)

A structure used to model local search by hill-climbing. The state of the system adjusts to a desired state which in turn is based on the current state modified by various pressures that indicate the gradient (the direction leading, at least locally, to higher performance). Useful in a wide range of models of local optimization, search, and learning. See section 13.2.12.

Price Discovery (PriceDis)

Applies the hill-climbing structure to model the process of price discovery in a market where the market makers do not know the demand and supply curves of market participants. Provides a basic model of disequilibrium price adjustment. See section 13.2.12.

Chapter 15

Market Growth 1 (MktGrow1)

The version of Forrester’s Market Growth model developed in chapter 15 (a model of a high-tech growth firm).

Chapter 16

TREND (TREND)

The TREND function developed in chapter 16. Models the formation of growth expectations from the past history of an input time series.

Chapter 17

Stock Mgt1 (StkMgt1)

The stock management structure for controlling a stock in the presence of losses or usage and an acquisition delay for new units. In this variant, the desired supply line is based on the desired acquisition rate. See section 17.3.

Stock Mgt2 (StkMgt2)

Stock Mgt 1st Order (StkMgtFO)

The stock management structure for the first-order case in which there is no supply line of unfilled orders. See section 17.2.1.

Chapter 18

Multiplier Simul Eqns (MultSimE)

Simple macroeconomic model based on the Keynesian consumption multiplier. Illustrates simultaneous initial value equations. See the Challenge on Simultaneous Initial Conditions in section 18.1.5.

W2Stage w DD FB (W2Stage)

Expands the Widgets model with material inventories and order backlogs to represent two partners in a supply chain, one representing an OEM and one representing the supplier to the OEM. The delivery delay for the supplier is potentially variable, and the OEM responds by varying the desired supply line of materials on order. See section 18.2.

Widgets w Mat Inv (WdgtMat)

Expands the Widgets model with order backlogs to include a stock of raw materials. See section 18.1.9.

Widgets w Backlog (WdgtBklg)

Expands the Widgets model to include a backlog of unfilled orders. See section 18.1.7.

Widgets (Widgets)

A model of a manufacturing firm representing the supply line of production. Represents finished goods and work in process inventories, and the decision rules used to manage them in the face of unpredictable orders. See section 18.1.

Chapter 19

Labor w Layoffs (LaborwLO)

Applies the stock management structure to the labor supply chain for a firm, representing vacancies, vacancy creation and vacancy fulfillment along with the labor force, hiring, quits and layoffs. See section 19.1.

Widgets w Labor & OT (WdgtwLOT)

Adds overtime/undertime to the Widgets model with labor. See section 19.2.4.

Widgets w Labor (WdgtwLab)

Integrates the Widgets model developed in Chapter 18 with the labor supply chain model Labor w Layoffs. See section 19.2.

Chapter 20

Commodity1 (Commodty)

The commodity industry model developed in chapter 20.

Price Sector (Price)

The price setting subsystem for the commodity model. Represents how market makers set prices through consideration of the demand/supply balance and expectations about the underlying value (expected equilibrium price) of the commodity. See section 20.2.6.

Chapter 21

Inv-WF Noise Switch (InvWF_NS)

The inventory-workforce model developed in Chapter 19 (Widgets with Labor) augmented to include random variations in productivity. The random shocks in productivity can be switched between two different sequences drawn from the same distribution to illustrate the difficulty of predicting the exact future values of a stochastic dynamic system even when it is perfectly specified. See section 21.4.7.

Summary Statistics (Sum_Stat)

A module that computes summary statistics characterizing the historical fit of a model to data. Computes mean absolute percent error, (root) mean square error, R², the Theil inequality statistics, and others. See section 21.4.7.

Appendix A

Population Model (Populatn)

A simple linear population model used to illustrate techniques for numerical integration such as the Euler and Runge-Kutta methods.

Appendix B

Inv-WF with Noise (Inf-WF-N)

Pink Noise Normal (PinkNorm)

Structure to generate pink noise (first-order autocorrelated noise) from a normally distributed white noise input.

Pink Noise (PinkNois)

Structure to generate pink noise (first-order autocorrelated noise) from a uniformly distributed white noise input. The pink noise output is asymptotically normal.

System Dynamics Resources

Portals to System Dynamics Resources:

Many useful system dynamics resources are available on the web. Several of these contain many links to a wide range of resources. Rather than duplicate their excellent work I recommend that you visit them for information and links:

The System Dynamics Mega-Link List developed and maintained by Günther Ossimitz at the University of Klagenfurt includes hundreds of useful links to system dynamics and systems thinking resources. It is well-organized, comprehensive, and updated regularly. The site is presented in both English and German. A wonderful starting point.

Tom Fiddaman’s System Dynamics and Simulation list includes an excellent set of system dynamics resources and links. His site also includes a model library with many interesting models available for download.

Useful System Dynamics Resources

The System Dynamics Society is the professional association of system dynamics academics, practitioners and educators. The site contains information on society conferences, chapters, publications, member services and other activities. The society distributes a searchable bibliography of system dynamics publications.

The MIT System Dynamics Group site includes working papers and publications for download. Includes home pages of Jay Forrester, John Sterman, Nelson Repenning, Jim Hines, and other members of the MIT system dynamics group.

The Creative Learning Exchange is a clearinghouse for information on the use of system dynamics and learner-directed learning in the K-12 grades.

The system dynamics email discussion group, hosted and moderated by Bob Eberlein of Ventana Systems, provides a forum for folks to talk about current issues and share ideas. Includes a searchable archive.

Pegasus Communications publishes The Systems Thinker, hosts conference, and publishes books, tapes, and other resources for managers and others interested in systems thinking, system dynamics, and organizational learning. Pegasus now publishes many of the classic system dynamics books

The Society for Organizational Learning site includes information on research, programs, publications, and other activities of SoL.

High Performance Systems makes the ithink simulation software.

Powersim, SA makes Powersim software

Ventana Systems makes Vensim and VensimPLE software.

Acknowledgments

Thanks are due to each of the three software vendors, High Performance Systems, Powersim, and Ventana Systems, for their willingness to provide their simulation software at no charge to purchasers of Business Dynamics.

The models were originally created in Vensim. Special thanks to Bob Eberlein and James Meluish for outstanding support and responsiveness during this project.

Special thanks as well to the hard-working people at High Performance Systems and Powersim who translated the original Vensim models into ithink and Powersim. The Team at HPS included Mike Bolger, Phil Odence, and Steve Peterson. The Powersim team included Mike Bean, Ricardo Galan, Humera Khan, and Imrana Umar. They all did a great job.