 So, today we will begin a new topic on stocks and flows. These stocks and flows forms the central concept for this entire system dynamics methodology and we will be spending most of our time in this course worrying about the stocks and flows and trying to model them and using that construct to understand and model and simulate various systems. So, before that I would like to give a brief history of system dynamics methodology with some of you might find it fascinating. This is one of those rare approaches that has a definitive founder or a creator who had developed this methodology. So, this system dynamics methodology was developed by Professor J. W. Forrester from MIT in the mid 1950s. The interesting was Professor Forrester was an electric engineer by training and he was even participated and headed the project on the whirlwind project as it is called in the 1940s where he had helped develop the kind of a storage device which is a precursor to today's ramp. So, with that solid foundation in the mid 1950s when the Sloan School of Management was started, he was invited to be on board and being a true electrical engineer, I do not know nothing about management why am I being part of it. They just said okay you just come and see what you can do. So, being an electrical engineer we had a good sound background in the areas of control theory. So, he thought okay let us see whether we can apply some of those concepts into management. So, he spent a year or two looking at various industrial processes and trying to map it in terms of kind of control theory kind of approach where we look at the state of the system and see what kind of things flow in and out and the result was this fascinating field of system dynamics. So, what he did was to look at industrial systems where he identified various players within a supply chain. So, even at that time people were not even common in using the term supply chain kind of initiative to say okay let us assume there are some event and studied some of it and okay there are see factories, there are these warehouses and there are these retailers and warehouses orders material to the factory, factory produces them and after sometime the material reaches the warehouse and even before ordering there are various sorts of delays that can occur and systematically wrote them out as a set of equations, time difference equations or differential equations as you see it and the end result was this interesting book on industrial dynamics which he came out in 1961 so where he actually identified the business structures looked at the sales inventory and order policy in very systematic manner and looked at the business okay let us say the expanding effects of supply chain due to fluctuating retailer demand and this book now it is known as a bullwhip effect some of you may have heard of bullwhip effect it has its origins right here 1950s work of Forester at that time he did not use the term bullwhip effect he just pointed out the fluctuations and very interesting and new to that period in time this book is full of illustrations it has full of computer generated graphics to show how if an inventory changes what happens to dynamics upstream within the warehouses retailers warehouse distributors as well as the factory but to do that simulation remember you were 1950s and that is when computer logic set up each computer was probably as big as this room there is probably handful of computers in entire United States and predominantly was used in the Manhattan project and stuff so he had one so he had approached the computer department and I told here set of these equations but I can't solve them they are you know getting highly non-linear so can we actually try and simulate them so the computer department took it up as a challenge and built this simple standing for simulation of industrial management problems using lot of equations that's what simple stands for that was the very first attempt to move away from coding in the coding sense to bring it into symbolic language because what we have on the top side is just a set of differential equations and using that symbolic structure we want to simulate the system so we don't so there was this very first attempt to actually move away from coding into use of a symbolic structure so that that can be used by others who are non-coders so its foundation went way back in 1950s almost very first development of use of computers and this is probably one of the very early use of computer rather than military purpose that has later developed later meaning within next decade itself it led to the development of what is called as Dynamo standing for dynamic models with a little more powerful interface which does based on symbolic input it could use to simulate differential equations and dynamic system so dynamic model means and this spurred the development and use of computers by non-programmers that had a very very interesting origins so it is not that the programming came first and then we went this effort to develop and use computer models for non-programmers started way earlier than you might have known so in this industrial dynamics came there was very new we are looking at unit management or industrial system nobody has looked at the system as a set of equations that can be model that has kind of well received but soon the potential for this approach in other domains become apparent in admit the entire 60s when forester had encounters with other colleagues in various department as well as in administration the result was in 69 he helped work on urban dynamics where he looked at more problem of cities and urban development where is able to use the same system dynamics methodology to actually map and identify various variables as stocks and flows with underlying structure as being a differential equation concepts and then in 71 he developed this world dynamics the model of how the world population evolves the energy needs environment etc way way back in 1971 all these three where came out as nice big fan books so what it did and then forester devoted rest of his life to expansion the education as well as the use of system dynamics methodology for various societal problems as well as looking at complex issues and how to abstract them so all these work helped initiate this dialogue on whether how feasible the modeling of societal problem still of course it's an ongoing debate you may find people are either really into system dynamics take it or they just dismiss it out out front saying now this is still giving us a very still model there are still more complexities which you can't capture it so it's still ongoing debate but it's all stems from forester's early argument where he's told that use of computerized system models which he believed in use of computerized system models in form societal the social policy is far superior to simple debate both in genetic insight into the root causes of the problem and in understand the likely effects of proposed solutions way way back in 1971 which hopefully some of us will share the idea here being when we engage in come up with you know when we are looking at a social or more complex socioeconomic kind of problem we need various viewpoints we can just sit in a room and just ideate on what will work so when we start to engage in dialogue it eventually leads into moves away from dialogue to discussion to heated debates on various sources so what this can help bring to the table is as and when various viewpoints are presented we can try to map it out in the kind of nice causal kind of diagram and identifying stocks and flows and then trying to see understand how the dynamics evolve over time here so that's the kind of nice history of how system dynamics has evolved when we started off with it started off directly by identifying the stocks and flows that we are going to see and only later people told that you know jumping to stock and flow itself is quite difficult let us you know first develop what we call as a causal mapping which led to the development of causal loop diagrams identify what are the key variables in the system let us map out their interaction and then let us use that to move into stock flow diagram where once you start doing stock and flows you are already one step towards building a computer based model which you will see why in a minute because they are just visual representation of the underlying equations that you are trying to model and assemble okay so and it is quite quite easy to teach use that takes time yeah so still so MIT then the so-and-so of management has a pretty strong group on system dynamics group till most of the activities are concentrated there the fair bit of participation now from various industries and countries and applications from the government all the way to people wanting to just learn and understand the systems individual level various nice things that has happened over time people have then used the model to help predict there is a very classical book by Meadows on limits to growth it actually points out how now that was a time remember in 60s things was all great it was fantastic there is no in fact there is no limits to growth at that point in time when this in a book on based on system dynamics ideologies methodologies came about talking about that that is going to be limits to growth and then that started unfolding in the 70s and 80s 1980s system dynamics methodology was used in a supreme court or maybe a district court I don't know some legal hearings between a customer and the and the government saying that many the client was telling the telling that the delays in the project was due to the interference by the government because of changing requirements government was trying to sue the company saying that you delayed the project unnecessarily so I am not going to pay you the full money but the system dynamics model was used to understand actual dynamics between the government as well as the company and it was found that there was excessive interference in the government which caused the delays and the ruling was add use this system dynamics methodology so that is why you know how often you hear that actual math is used in court case rulings so it was quite interesting and more recently the I don't know how much of you are following that debates and discussions on climate change there is this conference of parties and one of one climate change model has been adopted by all the countries so this model is be has been developed based on system dynamics methodology underlying model or the system dynamics model which has been adopted as one of the most accurate models to represent what can happen in climate change and what are the potential pathways that it predicts based on our current consumption and usage patterns of the fuels etc. economies and stuff like that so it is called sea roads climate road map to look it up so there are a lot of interesting and very high level applications that is coming out