Advanced Topics in System Dynamics

OptimizationKen CarpenterLuis Luna

Introduction

System Dynamics has relied on the use of intuition and experience by system owners and analysts to help design policies for improving system behavior over time

Most descriptions of the System Dynamics method emphasize the iterative process required to validate Dynamic Hypothesis.

Introduction (Wolstenholme, 1990)

Desired ModelBehavior

Manual changes tosimulation Model

New parameter valuesand structures

Simulation

Actual ModelBehavior

Introduction (Wolstenholme, 1990)

Desired value ofobjective function in

ModelOptimization

New parametervalues and structure

Simulation

Actual value ofobjective function in

model

The concept of optimization is based on the automation of the manual procedure.

Most common optimization problems

Optimization for Model Calibration Curve fitting

Optimization for Policy Analysis Save the World!!

Two Approaches (Oliva, 2000)

Full-information maximum likelihood via optimal filtering (FIMLOF) Engineering statistics

Model Reference Optimization (MRO) Non-linear optimization techniques

Model Reference Optimization

Main steps Define an objective function (Pay-off)

Policy AnalysisCalibration

Define the Constraints (Parameters) Apply one of the Optimization Methods

(Use Vensim or other software).