GRA 4135 Decision Theory and System Dynamics
Accelerating economic, technological, social, and environmental change challenge managers and policy makers to learn at increasing rates, while at the same time the complexity of the systems they need to manage is growing. Digitalisation, internationalisation and sustainability create both opportunities and challenges for managers. Many of the problems these managers face now arise as unanticipated side effects of their own past decisions. All too often the decisions or policies implemented to solve important problems fail, make the problem worse, or create new problems. Effective decision making and learning in a world of growing dynamic complexity requires systems thinking, expanding the boundaries of mental models, and developing tools to understand how the structure of complex systems creates their behavior.
This course introduces students to system dynamics as a tool for analyzing and modeling complex business problems and strategies that can be related to digitalisation, internationalisation and sustainability. As such, system dynamics enables understanding the structure and dynamics of complex systems. System dynamics is also a rigorous modeling method for developing formal computer simulations of complex systems and use these simulations to design more effective policies and make better decisions. These simulation models can be used to create management flight simulators: microworlds where space and time can be compressed and slowed so decision makers can experience the long-term side effects of decisions, speed learning, develop our understanding of complex systems, and design structures and strategies for greater success (Sterman, 2000, pp. vii).
After taking the course students should:
- Be able to explain how the structure of business systems creates their behavior and performance
- Understand how well-meant policies often inadvertently create business performance issues, rather than solve them
After taking the course students should be able to:
- Develop simulation models of business systems;
- Simulate what-if scenarios, and use these scenarios to develop better policies.
- Translate a problem description into a conceptual or qualitative model
- Translate the conceptual model into mathematical equations
- Develop a simulation model, learning to use new software
- Translate quantitative, simulation results into “best practices” for management, solving the case
After completing the course, students will be able to reflect on their “old way of thinking” and how it differs from the new way of thinking. Students will be able to recognize when a problem is dynamic, and when they should apply the “new way of thinking”. Students will learn to look at business or social problems from a broader perspective.
- Learning in and about complex systems
- The modeling process
- Causal loop diagramming
- Structure and behavior of dynamic systems
- Stocks and flows and their dynamics
- Dynamics of simple structures, like S-shaped growth
- Modeling decision making and human behavior
- Supply chains and the origin of oscillations
Different learning methods will be used in this course, for instance lectures, individual exercises, group work, and presentations about existing models. Firstly, studying the course material (lecture slides and compulsory literature) is required to get a grasp of basic concepts. Secondly, different kinds of exercises will be given to practice the new way of thinking and to practice with the new software and to learn how to develop simulation models. Finally, students have to deliver a group assignment based on a case study in a given topic. The assignment can be executed in groups of up to 4 persons.
Vensim PLE software is used to develop simulation models. This software can be downloaded for free.
Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
|Exam category||Weight||Invigilation||Duration||Grouping||Comment exam|
Form of assessment:
Internal and external examiner
Examination when next scheduled course
|100||No||6 Week(s)||Group/Individual ( 1 - 4 )||Group assignment / term paper: students will have to build a simulation model from scratch about a certain business problem. This model then needs to be used to develop and simulate different decisions. Based on the outcome of the simulations, students have to choose the best decision and motivate their choice.|
|Form of assessment:||Written submission|
|Grouping (size):||Group/Individual (1-4)|
|Comment:||Group assignment / term paper: students will have to build a simulation model from scratch about a certain business problem. This model then needs to be used to develop and simulate different decisions. Based on the outcome of the simulations, students have to choose the best decision and motivate their choice.|
|Exam code:||GRA 41351|
|Resit:||Examination when next scheduled course|
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.