STOCKS AND FLOWS

Chapter Six
PRINCIPLES OF STRUCTURAL DIAGRAM
 Quantitative effects can be easily discovered using a
structural diagram termed as a stock flow diagram
 Basic building block in a system dynamics model.

 Stocks
 represent accumulation of quantities
 start with initial values that change over time
 source of delays

 Flow
 controlthe changes to stocks via its rates
 expressed per some unit time
PRINCIPLES OF STRUCTURAL DIAGRAM
Elements Description Symbol
Stock
Stock Known as levels, it acts as a reservoir to accumulate
quantities and describe the condition of system.

Flow Flows function to increase (inflow) and decrease (outflow)

the value of stock. Flow
Connecters Represent the cause and effect link within the model
structure.
Auxiliary To link from one variable to another variable. It is an
intermediate variable used to break the flow equation into A

smaller parts.
B

Parameter Variable with constant value over time. CAPITAL LETTER

PRINCIPLES OF STRUCTURAL
DIAGRAM
IDENTIFYING STOCKS AND FLOWS
 Stocks usually are the things that can be quantified, such
as, number of staff, money in savings account, or
volume of blood in circulation inside our body
 Units for the flows must be the same unit of the stock
divided by the unit of time selected
 Can represent two forms of flows, either physical
flows or information flows
 Eg: Physical flow – patients
 Eg: Information flow – patient record
IDENTIFYING STOCKS AND FLOWS
Field Stocks Flows
Mathematics, physics and Integrals, states, state Derivatives, rates of change,
engineering variables, stocks flows

Chemistry Reactants Reaction rates

Manufacturing Buffers, inventories Throughput
Economics Levels Rates
Accounting Stocks, balance sheet Flows, cash flow or income
items statement items

Health People of different types Incidence, infection, morbidity,

(infective, susceptible) mortality rates
IDENTIFYING STOCKS AND FLOWS
 Stocks change only through their rates of flow. There can be no
causal link directly into a stock

Incorrect

customers
arrival rate waiting departure rate
- -
-
+
workweek

productivity
+
service staff
IDENTIFYING STOCKS AND FLOWS (4)
 Stocks change only through their rates of flow. There can be no
causal link directly into a stock

Correct

customers
arrival rate waiting +
departure
+ + rate

+
workweek

productivity
+
service staff
IDENTIFYING STOCKS AND FLOWS
 The stock and flow perspective (and its equivalent integral or
differential equation structure) represents time as unfolding
continuously.
 In SD, the time is always represent as continuous.
 A flow at any time is defined to be its instantaneous value eg: the
rate at which water is flow into your bathtub RIGHT NOW. No
one can measure the instantaneous value of any flow.
 Most flows are actually quantized, meaning they consist of
collections of individual items which cannot be divided into
arbitrarily small units.
MAPING STOCKS AND FLOWS
 Causal diagrams can be drawn without showing the stock and
flow structure of a system.
 Should select an appropriate level of aggregation and boundary
for these stock and flow maps.
 Usually it is wise to identify the main stocks in a system and
then the flows that alter those stocks.
 General steps to perform the process
 Stock: Imagine a system and the elements involved in the system
(e.g., people, litters, animals).
 Flow: Identify elements that constitute the variation of the stocks
(e.g., persons/hour, litters/day, deer/month).
 Other remaining elements are auxiliary variables
MAPING STOCKS AND FLOWS
 You must select an appropriate level of aggregation and
boundary for these stock and flow maps.

Work in Process Inventory Finished

Production Start Production Inventory Shipment
Rate Completion Rate Rate

elements in WIP

Parts in
Production Start Process
Rate
Assembly Start
Rate

Assemblies in Finished
Process Inventory
Shipment Rate
Test Start
Rate

Product in
Testing
Production
Completion Rate
MAPING STOCKS AND FLOWS
 To determine whether activities taking place serially can be
aggregated, consider the average residence time of items in
each stock (the average time between entering and exiting the
stock).
 Stocks with short residence times relative to the time scale for
the dynamics of interest generally do not need to be represented
explicitly and can be either be omitted or lumped into adjacent
stocks.
MAPING STOCKS AND FLOWS
 Parallel activities can be aggregated – individual flows are
governed by similar decision rules.
 For example: it is often appropriate to aggregate many parts
required to manufacture a product into a small number of
categories since they are usually ordered using the same
procedures and their delivery lead times and residence times in
parts inventories generally don’t differ too much.
 In contrast, plant and equipment sometimes must be
disaggregated. Their lifetimes are very different and the
decision rules for new green-facilities differ substantially from
those used to order equipment for existing facilities due to
differences in lead times, costs, financing, permitting, and
regulatory issues.
DETERMINING BOUNDARY OF THE MODEL
 To keep your models manageable, you must truncate these
chains using sources and sinks, represented the stock and flow
maps by ‘clouds’.
 Sources and sinks are assumed to have infinite capacity and can
never constrain the flows they support.
 In the real world, the stocks supplying or absorbing flows have
finite capacity and do influence the flows.
 When you truncate a stock and flow chain with a cloud you are
setting the boundary of the model – stocks and flows beyond
this point are ignored; you exclude all possible feedbacks from
or interactions with the stocks outside the boundary.
RELATIONSHIP BETWEEN
STOCKS AND FLOWS
 Static and dynamic equilibrium
 Static equilibrium = when all flows into and out of a stock are
zero (level are same hours after hours). Eg: total volume of
water in the tub constant, but the tub contains the same water.
 Dynamic equilibrium = quantity in the stock remain constant
(in = out rate).
 Calculus without mathematics – the intuition behind the
relationship between stocks and flows is straightforward
and does not require any mathematics.
INTERPRETING RESULTS FROM
GRAPH
 To understand the behaviour of a system, a graphical
integration is better in representing the structure of the
system. Eg: Bathtub
 However, in real-life situations many systems are much
more complex, and it becomes difficult to predict how
they will behave
 It is also important that we can intuitively predict and
recognize what we see on the graph after running a
simulation
INTERPRETING RESULTS FROM
GRAPH
water in bathtub
20

15

10

0
0 1 2 3 4 5 6 7 8 9 10 11 12
Time (Minute)
water in bathtub : Bathtub
water in bathtub : Current

Bathtub model with a constant rate

INTERPRETING RESULTS FROM
GRAPH
water in bathtub
20

15

10

0
0 1 2 3 4 5 6 7 8 9 10 11 12
Time (Minute)
water in bathtub : Current

Bathtub model with rate that varies over time

LEVERAGE AND SOLUTION
 Leverage = long term decision making
 Solution = short term decision making

 Identifying the leverages points will actually tackling the

main problems for a long period as it resolve the root
causes of problems
 Solutions only solve problems for a short period of time
as it only deal with the intermediate causes of problems
INTERVENTION STRATEGIES
 The developed model can be used to determine the
appropriate strategies to deal with the causes of the
problem
 Can consider two types of actions, either applying short
term solution or long term fundamental intervention with
regard to the nature of the problem
WHAT’S WRONG WITH THIS MODEL?
WHAT’S WRONG WITH THIS MODEL?

total demand supply

demand

workload motivation
motivation reduce
stress

recruits employess quits

WHICH ONE SHOULD BE STOCK AND FLOW?
word of mouth

demand total demand supply correction

quality
workload
motivation

stress

recruitment employee quit

UNDERSTANDING THE BASIC PRINCIPLES OF
GRAPHICAL INTEGRATION
 Consider a simple system of a bathtub with a constant inflow
through a faucet but no drainage of water.
 What if there is no inflow but only an outflow? An
example would be a full bathtub being drained at a
constant rate.
 In that case, the value of the inflow is 0 and the value of
the outflow is a positive number. The net constant flow,
defined as
net flow = inflow outflow, is net flow = 0 -
(positive number) = (negative number),
thus the slope of the level is also negative.
 How would the system behave in response to a negative
net flow?
EXERCISE
 Now assume there is Selected Variables
1
2
no inflow and outflow
= 2. Graph the 1.75
behavior of the system,
assuming the initial 1.5

value of the level is 40.

1.25

1
0 2 4 6 8 10 12 14 16 18 20
Time (Minute)
outflow : Current 1 1 1 1 1 1 1 1 1 1 1 1 1
EXERCISE
 Now using the step water from faucet
1 1 1 1 1 1 1 1
4
function. The flow in
this exercise remains 0 3
until a step up to 4 at
Time = 5. Graph the 2

behavior of the system,

1
assuming the initial
value of the stock is 0. 0 1 1 1 1
0 1 2 3 4 5 6 7 8 9 10 11 12
Time (Minute)
water from faucet : Current 1 1 1 1 1 1 1 1 1 1 1
GRAPHICAL INTEGRATION VERSUS
GRAPHICAL DIFFERENTIATION.