Ali N.

Mashayekhi

Bahman 1393
Sharif University of Technology
Graduate School of Management and Economics

System Dynamics for Business Policy

Course Schedule
Second Semester 1393-1394
GENERAL INFORMATION
Schedule: Sunday and Tuesday 13:30-15:00
TAs: Mr. Eslamifar and his team

TA Sessions: The TAs will lead a weekly review session to answer questions and discuss solutions to the due
assignments. Time and place of TAs sessions will be arranged later.
Grading Emphasis:
Assignments:
Mid-term exam:
Final exam:
Term project:

15%
25%
45%
15%

Each assignment is graded on a 10 points scale. Assignments handed in more than 1 class late will receive no
credit. This policy will be strictly enforced.

Objectives and Scope

This course introduces you to system dynamics modeling for the analysis of socio-economic and business
policy and strategy. Students will practice and learn to think in dynamic terms and over time. They will also
learn a system perspective in which they can visualize a socio-economic entity in terms of the structures and
policies that create its dynamic performance over time. System dynamics allows us to create micro-worlds,
management flight simulators where space and time can be compressed, slowed, and stopped so we can
experience the long-term side effects of decisions, systematically explore new policies, and develop our
understanding of complex systems. The course considers the use of systems thinking to promote effective
learning.
The principal purpose of modeling is to improve our understanding of the ways in which a socioeconomic entity's performance is related to its internal structure and operating policies. During the course you
will use several simulation models to explore the relationship between structure and behavior. Students will
learn to recognize and deal with situations where policy interventions are likely to be delayed, diluted, or
defeated by unanticipated reactions and side effects. You will have a chance to use state of the art software
for computer simulation and gaming. Assignments give hands-on experience in developing and testing
computer simulation models in diverse settings.

Text and Software

Sterman, J. (2000). Business Dynamics: Systems Thinking and Modeling

Irwin/McGraw Hill. ISBN 0-07-231135-5.

for a Complex World.

Senge Peter (1990), The Fifith Discipline, Random House, UK.

Several excellent packages for system dynamics simulation are now available commercially, including
iThink, from High Performance Systems, Powersim, from Powersim Corporation, Professional DYNAMO,
from Pugh-Roberts Associates, and Vensim, from Ventana Systems. You may wish to learn more about these
packages, as all are used in the business and academic world. For further information, see the following
resources:

iThink: See the High Performance Systems web site at

<http://www.hps-inc.com/hps.mhtml>
Powersim: See the Powersim web site at <http://www.powersim.no>
Professional DYNAMO: Contact Pugh-Roberts Associates, 41 William
Linskey Way, Cambridge, MA 02142, 617/864-8880
Vensim: See the Ventana Systems web site at <http://www.vensim.com/>
In this course, we will be using the Vensim Personal Learning Edition (Vensim PLE), a FREE
package offered by Ventana Systems. Vensim PLE comes with on line users guide and help, and also a folder
of
demo
models.
Download
Vensim
PLE
from
the
Vensim
web
site
at
http://www.vensim.com/venple.mhtml.

Course Schedule:
(Subject to change)

No.

Section.

Date
Sunday
93/11/12

Topic

System
thinking

Tuesday
93/11/14

Sunday
93/11/19

Tuesday
93/11/21

Reading

Course introduction:
- Dynamic world and
system perspective
- Modeling
- Implications and
insights
World is changing and
dynamic
- Dynamic in different
aspects
- Qualitative variables
- The Dynamic at
different levels
- Quantitative and
Challenge of understanding
and controlling changes

5th Discipline; Chapters

1 and 2

Understanding and
managing the real world,
Models Definition and
categories:
- Mental models
- Descriptive Models
- Physical Models
- Mathematical Models
- System Dynamics
Models

5th Discipline; Chapter 3

Systems Perspective:
Systems Thinking
Dynamic hypothesis:
Descriptive model based on
system perspective
- Deer population
- Supply and demand
A theory of system structure
for systems:
- Closed systems or
Feedback Systems;
Feedback loops, stocks and
flows, auxiliary variables,
and information links

Business Dynamics [BD],

Chapter 1

Assign
-ment
Out

Assignment
Due

#1

#2

#1

BD Ch. 2

Sunday
93/11/26

Tuesday
93/11/28

Modeling process
Causal loops presentation of
dynamic models

Causal loops presentation of

dynamic models
From dynamic hypothesis to
causal loops
- Deer population
- Supply and demand

BD, Ch. 5

Stock and flow presentation

of dynamic models
From dynamic hypothesis to
stock and flow presentation
- Deer population
- Supply and demand

BD, Ch. 6

Mathematical presentation
of dynamic models
- Deer population
- Supply and demand

BD, Ch. 7

Sunday
93/12/3

Tuesday
93/12/5

Sunday
93/12/10

Modeling
process
Tuesday
93/12/12

10

Sunday
93/12/17

11

Tuesday
93/12/19

12

Sunday
93/12/24

13

15

Tuesday
93/12/26
Sunday
93/1/16

16

Tuesday
93/1/18

14

Simple
structures

Modeling simulation
- Deer population
- Supply and demand

Formulating non-linear
relationship
Modeling Decision Making
Structure and behavior of
simple dynamic systems:
Exponential growth
Goal seeking
Structure and behavior of
simple dynamic systems:
S-Shape

BD, Ch. 3, Ch. 4

#3

Vensim manual

#2
Term
project
definition

#4

#3

#5

Project
Problem
definition
#4

BD Ch. 14
BD Ch. 13

#6

Dynamic
hypothesis
of your
project

BD Ch. 4: 4.1.1, 4.1.2,

4.2.1
Ch. 8

BD Ch. 4.2,Ch. 9.1

#5

#7

#6

#8

#7

Review and discussion

Structure and behavior of
simple dynamic systems:
Delays
Structure and behavior of
simple dynamic systems:

BD Ch. 11
BD 4.2.2, 4.1.3, 4.1.4
BD Ch 17


Sunday
93/1/23

17
18
19
20

Tuesday
93/1/25
Archetypes
Sunday
93/1/30
Tuesday
Mid-term
93/2/1
Exam
Sunday
93/2/6

Overshoot

Structure and behavior of

simple dynamic systems:
Oscillation
Archetypes

Tuesday
93/2/8

22
Sunday
93/2/13

23

BD, Ch. 17

5th Discipline; Appendixes

Mid-term exam

Growth Strategies Part 1:

Modeling Innovation Diffusion
and the Growth of New
Products
Growth Strategies Part 2:
Positive Feedbacks in the
economy, path dependence, and
the engines of growth

Read BD Ch. 10
(Skim section 10.2)

Sunday
93/2/20

Forecasting and Feedback:

Bounded Rationality or Rational
Expectations?

BD, Ch. 16

26

Tuesday
93/2/22

The Supply Line and Supply

Chains

BD, Ch. 19

27

Sunday
93/2/27

Business cycles

28

Tuesday
93/2/29

Commodity Cycle

Sunday
93/3/3

Truth and Beauty: Model

testing and the process of
building confidence in models

Business
dynamics

29
Tuesday
93/3/5

30

31

Sunday
93/3/10

#10

#9

Applications of system dynamics

in management of natural
resources and public policy issues

project
model
formulation

BD Ch. 10

Managing Instability Part 1:

Aging chain

25

#8

Skim BD, Ch. 9.2

Read BD, Ch. 9.3
(Skim sections 9.3.5-end)

Tuesday
93/2/15

24

#9

Archetypes

Distribution system game

21

Conceptualization of
your
project

BD, Ch. 12

#11

#10

Project:
Simulation

#12

#11

#13

#12

#14

#13
Policy
analysis of
your
project

BD, Ch. 19
BD, Ch. 15

BD, Ch. 18
Read Meadows, et. al.,
Groping in the Dark: The
First Decade of Global
Modelling (excerpts),
Meadows, Global Citizen
selections

Sum up
5

Term project:
Students in group of 3 or 4 persons can pick a dynamic problem and build a model to analyze it.
The groups should hand in their term projects in several stages as is identified in the course schedule.