Feedback Loops

Positive feedback loops Reinforcing loop Vicious cycle or virtuous cycle Growth generating mechanisms

Negative feedback loops Goal seeking feedback or balancing loop Actions are directed toward an objective

or target

Causal Loop DiagramsA diagram that shows causal

links among actions, information, and consequences.

Sometimes referred to as the influence diagram or directed graph.

Conventions in a Causal Loop DiagramRefer to the variables in the loop as

quantities that could rise or fall.Use nouns or noun phrases, not verbs.Phrase the variables positively.Do not use the loops to mean “and

then..”Be clear when you say “a variable

increase..”Keep diagrams simple to start with.

Example of a Negative Feedback Loop:The Tired-Sleep Loop

Tired Sleep

+

-

Behavior of a Negative Feedback Loop

Tiredness Level

0

5

10

Time

Tir

edn

ess

Lev

el

Tiredness Level

Example of a Positive Feedback Loop:The Cry-Depressed Loop

Cry Depressed

+

+

Behavior of A Positive Feedback Loop

Depression Level

0

500

1000

Time

Dep

ress

ion

Depression Level

Partial Model of Urban Growth and Decline (Combined Loops)

Services and Goods Needed Population Congestion of People & Buildings

Favorable Location

Traffic Dynamics(More Complicated Loop)

New Highways Underconstruction

Need for New Highways

Number of New Highways

Attractiveness of Driving on Highways

Number of Traffic Jams

System Archetypes (Adapted from The 5th Discipline by P. Senge)

Limits to GrowthShifting the BurdenEroding GoalsEscalationSuccess to the Successful

Limits to Growth

Growing Action Condition Slowing Action

Limiting Condition

Characteristics of Limits to GrowthPattern of behavior

Accelerated growth followed by slowing down leading to no more growth or accelerating collapse

Management principle Don’t push on the reinforcing loop,

remove or weaken the limiting sourceExamples: growth of a city, learning

process, growth of a “young” company

Shifting the Burden

Symptomatic "Solution"

Problem Symptom

Fundamental Solution

Side Effect

DELAY

Characteristics of Shifting the BurdenPattern of behavior:

Reliance on symptomatic solutions that seems to produce immediate positive results, leading to the avoidance of the fundamental solution.

Management principle: Focus on fundamental solution, use

symptomatic solution to gain time, not to replace fundamental solution.

Examples:credit cards, alcohol/drugs addiction, overtime work, QA inspection

Eroding Goals

Goal Pressures to Adjust the Goal

Gap

ConditionActions to Improve the Condition

DELAY

Characteristics of Eroding GoalsPattern of Behavior:

Relaxing on our Targets, lowering of standards.Management Principle:

Hold the Vision.Examples:Lowering of Quality Standards

by cutting budgets, Lowering Government Targets to balance deficit, Allowing endangered species to die to push industrialization

Escalation

A's Results

Activity by A

Results of A relative to B

B's Results

Activity by B

Characteristics of EscalationPattern of Behavior:

Two systems collide each other, where the welfare of one is dependent on the relative advantage over the other.

Management Principle: Look for a Win-Win Situation or pursue peaceful

actions that would not threaten the other side.Examples:Arms Race, Marriage Problem,

Transport Fares, Mindanao Conflict

Success to the Successful

Success of A Resources to A

Allocation to A instead of B

Resources to BSuccess of B

Characteristics of Success to the SuccessfulPattern of behavior:

Two systems compete for a limited resource or support. The more successful system starves the other.

Management principle: Break or weaken the coupling between the two

system. Balance the achievements of both systems.

Examples:work and family life, A slow learner and a fast learner, 2 products with limited funds.

Balancing Process with Delay

Actual conditions

Corrective ActionDelay

Characteristics of Balancing Process with Delay

Pattern of behavior The system seems to be on track, but we

suddenly overshoot our mark.Management principle

Aggressiveness produces instability. Be patient or make the system more responsive.

Examples: shower with hot water, cycles in manufacturing, EDSA 2

Tragedy of the Commons

Individual Activity of A

Individual Activity of B

Total Activity Delay Gain per individual

Resource Limit

Net Gain for A

Net Gain for B

Characteristics of Tragedy of the Commons

Pattern of behavior A lot of available resources for everyone

before, but is becoming scarce now.Management principle

Educate everyone and create self-regulation among everyone.

Examples:Exhaustion of secretariat pool, Deteriorating customer service, Zagu

Fixes that Fail

Problem Fix

Unintended Consequences

Delay

Characteristics of Fixes that Fail

Pattern or behavior There has been improvement before,

but now its not working.Management principle

Focus on long term solutions. Use short term fixes to buy time, while working on long term remedy.

Examples:Loans/Credit Card Use, Cutting back maintenance.

The Production Management Problem adapted from R.G. CoyleThe domestic manufacturing company

(DMC) produces washing machines for major retail companies. These companies tend to order large batches with required deliveries of about 6 weeks. The production of a washing machine is very simple. It involves the assembly of standard parts and the processing time is short.

The Production Management Problem adapted from R.G. Coyle

DMC has never been able to forecast the inflow of new orders. They cope with a very unpredictable order pattern. New orders accumulate into backlog which the company tries to keep down at a target level. The production manager considers two factors in setting the production rate.

The Production Management Problem adapted from R.G. Coyle

First, it aims to eliminate discrepancies between actual and target backlog over a period of 4 weeks.The backlog target is to complete the new orders in 6 weeks.

The Production Management Problem adapted from R.G. Coyle

Second, to keep up with the current order level, the production rate includes the average order rate to eliminate the discrepancy in the actual backlog and target backlog.

The Production Management Problem adapted from R.G. CoyleThe raw material manager tries to

keep raw material stock up to a target level, ordering raw materials to eliminate any discrepancies within a period of 4 weeks. The target level is based on smoothing production variations over 4 weeks and aiming to have sufficient stocks to cover 8 weeks of average production.

The Production Management Problem adapted from R.G. Coyle

To keep up with the current usage, the order rate is added with the average usage rate of raw materials which would eliminate the discrepancy between the desired stock level and actual stock level.

The Production Management Problem adapted from R.G. Coyle

Averaging Period for Order Rate

Average Order Rate

Desired Backlog of Orders

New Order Inflow Rate

Backlog Discrepancy

Production Rate

Time to Correct Order Backlog Discrepancy

Averaging Period for Production Rate

Average Production Rate

Desired Raw Material Stocks

Weeks of Average Production in Desired Raw Material Stock

Raw Material Stock Discrepancy

Raw Material Order Rate

Time to Correct Raw Material Discrepancy

+ +

-

+

Backlog of Orders

Weeks of Average Orders as Desired Backlog

-

+

+

+

+

+

Raw Material Arrival Rate+

Raw Material Stocks

+

-

-+

+

Summary

System dynamics is very relevant to dynamic problems and complements other management science tools.

SD deals with the behavior of the system and how it affects its future. This is more relevant to strategic management.

SD models come in two forms, the causal loop and a simulation model.

SD is very challenging and fun.

Selected References

The 5th discipline by P. SengeSystem dynamics modeling by G. CoyleHttp://www.uni-klu.Ac.At/~gossimit/

Links/bookmksd.htm (SD MEGALINK LIST)

Www.vensim.ComWww.pegasuscom.ComHttp://sysdyn.mit.edu/road-maps/

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