Dennis T. Beng Hui, De La Salle University-Manila

Common Modes of Dynamic Behavior

Business Dynamics by John Sterman

Dennis T. Beng Hui, De La Salle University-Manila

Exponential GrowthThe larger the quantity, the larger the net increase. Exponential growth has the remarkable property of a constant DOUBLING TIME.Examples: population, money in a bank.

Dennis T. Beng Hui, De La Salle University-Manila

Exponential Growth

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Dennis T. Beng Hui, De La Salle University-Manila

Goal Seeking

The rate at which the system approaches its goal diminishes as the discrepancy falls. We do not observe a constant rate of approach that suddenly stops just as the goal is reach

Dennis T. Beng Hui, De La Salle University-Manila

Goal Seeking

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Goal

Dennis T. Beng Hui, De La Salle University-Manila

OscillationIt is third fundamental mode of behavior in system dynamics. The state of the system is compared to its goal, and corrective actions are taken to eliminate discrepancies. The state of the system constantly overshoots its goal or equilibrium state, reverses, then undershoots and then so on. The overshooting arises from the presence of significant time delays.

Dennis T. Beng Hui, De La Salle University-Manila

Oscillation

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Dennis T. Beng Hui, De La Salle University-Manila

Interactions of the Common Modes of Dynamic Behavior

Dennis T. Beng Hui, De La Salle University-Manila

S-Shaped Growth

Growth is observed to grow exponentially, the gradually declines. Eventually, one or more constraints halt the growth process.

Dennis T. Beng Hui, De La Salle University-Manila

S-Shaped Growth

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Limiting Constraint

Dennis T. Beng Hui, De La Salle University-Manila

S-Shaped Growth with Overshoot

Often, systems with s-shaped growth contain significant time delays. These time delays lead to the possibility of the system to overshoot and oscillate around the limiting constraint.

Dennis T. Beng Hui, De La Salle University-Manila

S-Shaped Growth with Overshoot

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Limiting Constraint

Dennis T. Beng Hui, De La Salle University-Manila

Overshoot and Collapse

Consumption or erosion of the limiting constraint happens such that the system does not reach equilibrium and the system collapses.

Dennis T. Beng Hui, De La Salle University-Manila

Overshoot and Collapse

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Limiting Constraint

Dennis T. Beng Hui, De La Salle University-Manila

Other Modes of behaviorStatis or equilibrium – change is too slow relative to your time horizon for it to be meaningful. .Randomness – this is a measure of ignorance. When we say random variations, we mean that we don’t actually know the reasons for these variations.Chaos – chaotic systems fluctuate irregularly, never exactly repeating, even though its motion is completely deterministic. This irregularity arises endogenously and is not created by random shocks.