Reflections on System Dynamics Asset Stock Coordination, Performance and the Role of Information

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Reflections on System DynamicsAsset Stock
Coordination, Performance and the Role of
Information

• Keynote Talk for PhD Colloquium
• International System Dynamics Conference
• St Gallen, Switzerland July 2012
• John Morecroft
• London Business School

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Outline

• Inventory-Workforce model and cyclicality
• Coordination and performance in manufacturing
  firms
• Operating policy, information and bounded
  rationality
• A sample of projects MIT, London and Brazil

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The Inventory-Workforce Model
SourceMass NJ and Senge PM 1975. Understanding
Oscillations in Simple Systems, MIT System
Dynamics Group Working Paper, D-2045-2 (available
from the System Dynamics Society on a DVD
containing the complete D-memo series of the MIT
System Dynamics Group).
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Overview of a Manufacturing Firm
Source A Systems Perspective on Material
Requirements Planning by John Morecroft,
Decision Sciences 1983.
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Information Flow Comparison of Order Point and
MRP Methods in Material Control
Source A Systems Perspective on Material
Requirements Planning by John Morecroft,
Decision Sciences 1983.
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Order Point versus MRP in Rival Manufacturing
FirmsPerformance Comparison in Materials Control
Order Point
Unexpected 10 percent increase in customer
demand, year 1
Source A Systems Perspective on Material
Requirements Planning by John Morecroft,
Decision Sciences 1983.
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Order Point versus MRP in Rival Manufacturing
FirmsPerformance Comparison in Labour Management
Order Point
Productivity
Direct labor
Overtime
Unexpected 10 percent increase in customer
demand, year 1
Source A Systems Perspective on Material
Requirements Planning by John Morecroft,
Decision Sciences 1983.
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Operating Policy, Information and Bounded
Rationality
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A Sample of Applied Research Projects
Growth Management (Market Growth Model and
Variations) Bio-Tech Startup Dynamics of
Strategy McKinsey and Goodyear Back to
Cyclicality Romeo and Juliet in Brazil Shell
and the Global Oil Producers
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Current ProjectAsset Stock Coordination and
Sustainability
Global Industrial Society Natural
Resources Population Capital Capital in
Agriculture Pollution
Regional Fishery Fish Ships
Stocks to Coordinate
To learn more, attend my workshop on Thursday
July 28 Metaphorical Models for Managing the
Transition from Industrial Growth to
Sustainability
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Related Publications

• Asset Stock Coordination and Firm Performance
• Gary MS, Kunc M, Morecroft JDW and Rockart SF.
  2008. System Dynamics and Strategy, System
  Dynamics Review 24(4), 407-429.
• Kunc M and Morecroft JDW. 2010. Managerial
  decisionmaking and firm performance under a
  resource-based paradigm, Strategic Management
  Journal, , 31(11), 1164-1180.
• Morecroft JDW. 2009. Resource Coordination and
  Firm Performance A System Dynamics View, 3-22 in
  Strategisches und operatives Produktionsmanagememt
  (a Festschrift honouring Peter Milling, editors
  Strohhecker and Grossler), Gabler Research.
• Warren KD. 2008. Strategic Management Dynamics,
  Chichester Wiley.
• Bounded Rationality and Misperceptions of
  Feedback
• Morecroft JDW. 1985. Rationality in the analysis
  of behavioral simulation models, Management
  Science 31 (7), 900-916.
• Sterman JD. 1989. Misperceptions of feedback in
  dynamic decisionmaking, Organizational Behavior
  and Human Decision Processes 43 (3), 301-335.
• Manufacturing Dynamics
• Morecroft JDW. 1983. A Systems Perspective on
  Material Requirements Planning, Decision
  Sciences, 14 (1), 1-17.

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Inventory-Workforce Equations

• Inventory(t) Inventory(t - dt)
  (Production_Rate - Sales_Rate) dt
• INIT Inventory 4000 refrigerators
• Production_Rate WorkforceProductivity_Per_Man
  refrigerators/week
• Sales_Rate Exogenous_Sales_Rate
  refrigerators/week
• Workforce(t) Workforce(t - dt)
  (Hire_Fire_Rate) dt
• INIT Workforce 200 workers
• Hire_Fire_Rate (Desired_Inventory -
  Inventory)/(Inventory_Adjustment_Time
  Productivity_Per_Man Workforce_Adjustment_Time)
  
• Desired_Inventory 4000 refrigerators
• Exogenous_Sales_Rate 1000NORMAL(1,0)
  STEP(100,10) RAMP(0,10) units/week
• Inventory_Adjustment_Time 12 weeks
• Productivity_Per_Man 5 refrigerators per
  worker per week
• Workforce_Adjustment_Time 8 weeks