system dynamics (SD)

Definition

General purpose framework for depicting and simulating fluid (dynamic) behavior of business, economic, environmental, and social mechanisms. Based on information feedback (cybernetic) and behavioral decision making principles, SD attempts to illustrate complex interplay between hard or tangible aspects (such as machines, materials, money, people) and soft or intangible aspects (such as morale, policies, processes, structures) of a given situation. To construct a model (simulation), SD employs two basic concepts: (1) Stock or Reservoir (symbolized by a rectangle) representing accumulation of anything—accounts receivable, capital, delays, inventories, etc., and (2) Flow (symbolized by straight or curved lines) representing movement of anything—consumption, deliveries, expenses, production, etc. Together, stocks and flows form cause-and-effect loops that show how a problem developed over time and what are the likely consequences of proposed solutions. SD does not replace experimentation (system analysis) and quantitative methods, but instead supplements them with insight and understanding gained from obvious and non-obvious (sometimes counter-intuitive) causal patterns called systems-archetypes. SD methodology was developed by the Massachusetts Institute of Technology (MIT) professor Jay W. Forrester (born 1918 ), inventor of the ferrite-memory-core, in his 1961 book 'Industrial Dynamics' and expanded in his 1971 book 'Urban Dynamics.'