La Sapienza - Università di Roma

System Dynamics (Forrester, 1961); (Sterman, 2000) is a computer-based modeling method that makes use of formal models in order to understand the elements of complex systems over time. The main goal of System Dynamics is to understand how a system’s behavior emerges and uses this understanding to gain insights on how policy changes in that system might alter its behavior (Santos, Belton, & Howick, 2002). Its main elements are feedback loops and delays that give rise to dynamic complexity, inherent in socio-economic systems and processes, through quantitative simulations (Sterman, 2000).

System Dynamics are constructed for further understanding of a complex system, but they are often misunderstood for predictive models. However, the purpose of the method (and its main strength) is that it can capture underlying connections among system elements that cannot be easily perceived, it can identify and represent delays that affect the effectiveness of a policy and finally, it can remove the personal ideology and bias from the actual computations (Sterman, 2000).

To quantify the system, Stocks and Flows are used and the subsequent model is simulated with the use of computer software. A general representation of stocks and flows is illustrated in the figure:

The structure above corresponds to the differential equation:

Bibliography

Forrester, J. (1961). Industrial Dynamics. Cambridge: MIT Press.

Santos, S., Belton, V., & Howick, S. (2002). Adding value to performance measurement by using system dynamics and multicriteria analysis. International Journal of Operations & Production Management, 22(11) pp. 1246-1272.

Sterman, J. (2000). Business dynamics:systems thinking and modeling for a complex world (vol.19). Boston: Irwin/McGraw Hill.