Business Dynamics: System Thinking
Question 1: (50 marks-500 wards)
Although causal loop diagrams are wonderfully useful in many situations, they suffer from a number of limitations and can be easily abused. One of the most important limitations of causal diagrams is their inability to capture the stock and flow structure of systems. Stocks and flows, along with feedback, are the two central concepts of dynamic systems theory.
a. Explain what is meant by stock and flow and support your answer with examples. (20 marks)
b. Explain how does the system dynamics use a particular diagramming notation for stocks and flows (20 marks) and draw the figure of stock and flow structure of task in project phase (10 marks)
Question 2: (50 marks- 500wards)
The nature of a decision process and its rationality are empirical questions that must be addressed by primary field study, experimental tests, and other means. But whatever your view about the sophistication and rationality of decision making, your models must conform to certain basic principles.
a. Explain the principles of modeling human behavior (50 marks)