 Hello everyone, welcome to the sessions of simulation modeling. In the previous session, we have discussed the basic Monte Carlo simulation and its illustration process and the Excel demonstration also. That was the main part of our course curriculum of business forecasting that is called Monte Carlo simulation and its use in business planning and business forecasting. In this session today, we will study an additional concept of simulation modeling that is called system dynamics modeling. This is also simulation using this software, you can actually study the dynamic nature of a system over a period of time. In the Monte Carlo simulation, we generally do not capture the time. We capture the entire data and the stochastic or probabilistic nature or random nature of any uncertain nature of any parameter and then we model that through Monte Carlo simulation through inverse function of cumulative distribution. And then we use that distribution of a particular random variable or uncertain parameter into your model and then you do the simulation process of and experiment of the system and you study the system behavior through different instances, through different iterations. But here in this version of simulation, it is a continuous version of simulation. That means, you will study the system behavior and the performance and the dynamic nature of the system of any complex system over a period of time like what happened in the past that will be used as a reference and you can study the system behavior using the data and the non-linear relationship among the parameters of the system and the variables of the divisions of the system and then you can run that and you can make a forecast for the future, what is going to happen and what could happen that modification can also be done. So, predictive prescriptive both can come in this system versus system dynamics version of simulation. It is very popular in management domain, it is very popular in social science also. Today, I will give you couple of examples both from management as well as social science also. Remember, this is an additional session about simulation process, but we will spend the introductory of system dynamic simulation and just few applications and the software demonstration, how does it work, that is it. We will not elaborate the entire you know aspects or the characteristics of system dynamics, it will take huge time. So, in a one session we thought of giving a glimpse say of the basic understanding or basic information of system dynamic simulation, how does it work and how it can be used for the prediction or for the statistical decision making of any organization through a continuous version of simulation process through the software. Remember, sometimes we call this a micro world, this software. That means, using this particular software you can put the entire data, entire information and the relationship and the divisional data sets, everything you can put and you can run the entire process or the dynamic nature of the company or say organization and you can study their behavior over a period of time. So, therefore, since you can do everything you throw the software in your pen drive through this particular software say therefore, we call it a micro world. Enter in organizations your college information, your library system, your you know municipality system, your you know any company's performance, manufacturing system, everything you can study and you can supply gain performance, everything you can study through the software using the data and the proper relationship among the data and you can study the system behavior. It is little complex, but it is very interesting and easy to understand once you understand the software features. So, we will focus the software features little bit and couple of application in today's session. When it comes to the application whether it is a management, government, economy, environment everywhere you can use this particular software, but remember it is not a Monte Carlo simulation, here people use integral equation, here people use differential equation like Ranga Kutta method, Weller equation etcetera. And then they use this particular simulation software, they developed MIT developed this software. This software is very popular and many people have been using this in their academic need research and the industrial applications. Now, think about the characteristics of this particular software, as I mentioned it studied the system behavior over a period of time. So, you need to study the pattern, the behavior and the different properties of the software, to some extent the company's performance right organizations. For example, say pattern of the data whether it is an organized, organized or self-organized how, how does it work all these things that pattern of the system. If you are studying a manufacturing process or say you know demand planning or say FD calculation. So, you need to understand what is the interest rate, how the manufacturing process is going on in last couple of months, how does it work. So, all this pattern you need to understand then only data pattern and the system behavior, then only we can make a better relationship, we can construct a better model and we can make a better strategic decision making for the software. Then the different properties like independent parameter, who are not involving into the system directly, but can have a relationship interdependent relationship with the your overall system. The scale whether it is a small scale, large scale, how many periods you will have to study whether it is a EROI study or say you know we call it a BOT behavior over graph, that also need to study. So, different type of you know aspect characteristics are there through the software, once you open the software you will get to know. Remember one more part, these are the couple of important point, multiple feedback effect is a very important part of the software, it is a feedback like you know currently suppose your system is this is a time right, currently system performance you will have to study. So, this is the system say it is a very complex system it is inbuilt it is overall system performance. So, what you do over a period of time you will have to study the system behavior. So, the system is moving actually, so you want to study the system performance over a period of time. Therefore, you need the feedback mechanism or feedback effect, what happened in the past that will have a impact in the future, what happened in the past that will have a impact in your future. So, it is a recursive process and feedback cause-effect relationship comes into the picture and this feedback mechanism develop to study your future performance based on your past performance like this is like time series data. What happened in the past that will have a impact in your future based on the pattern and the behavior of the past data. Similarly, here also what happened in the past that system behavior will have a impact to your future performance also. So, therefore, cause-effect relationship and the system feedback multiple feedback will come here to study the system behavior over a period of time. Delay is also very important I will show you one example like if you would like to shift a product of supply chain say in the logistics there might be say transportation system there might be a delay of 7 days, like if you have a global supply chain a maritime supply chain in that case you might see that you know there might be 2 months, 3 months delay. So, that delay you have to put right in your system. So, how to incorporate that delay also that is the software can take care of that also that part also this effectively it is actually features the real scenario of the company performance. What is happening that can be captured visualize the clearly through this software performance and non-linear responsive will be very important part like you know it could be linear, non-linear all aspects can come into the picture while studying the system performance. Look at cause-effect relationship as I was talking about system thinking sometimes this software people call it as a the simulation software of system dynamics people call it is a system thinking because how the system is thinking with your past behavior and the data and the inter relationship that you need to understand effectively you have to think that is called micro world and the complex system the better you think better how it is performing if you can capture effectively and if you can model effectively probably you will be able to design a better model with better accuracy and better forecast. So, these are the couple of point feedback linkage and to some extent you know boundaries of the data and the overall you know length that you know how many periods how many months overall spectrum of the data you need to study. Few more characteristics you can study like level and rate two most important parameters or say you can variables of your software once you will open the software you will find that couple of box or say you know arrow will be there so what are them these are the rate and say you know variables kind of thing. So, level is nothing but the actual amount or the information or say quantity that you will be stored here it is a tank it is a value where the main power performance will be stored that you need to study. Suppose you are going to calculate FD value will be stored here the information flow the material flow that will be stored here we called as a level. Suppose you want to calculate the inventory level so inventory will be stored here right where was inventory manufacturing process whatever you want to apply. So, this is what the main part of your CD software level that you look to study right then how the FD is been calculated through rate right through interest rate. So, that rate will come into the picture year on year basis it will add that value will go into your total FD calculations. Similarly, suppose you will have to calculate the inventory level so how the inventory level are ordering and how the inventory level is consumed. So, that is nothing but the inflow rate and outflow rate this is called rate. This rate is not different like interest rate interest rate is a fixed, but in every year how much value is added to your FD how much value of inventory you are ordering that is per week say. So, that is called your rate the change the change of your data in your final accumulated value that is called the level value. So, these two are the most important parameters in this particular software and then behavior of the system structure as I talked about that in the system study I will show you couple of graph you will get to know the system behavior understanding is very important and is one of the important characteristics of this particular software. Then loop dominance and the nonlinearity I will discuss that also loop dominance means there might be a big large complex system right. You might see that there might be a couple of parameters variables who are managing the performance of the organizations. Here also couple of parameter and subsystem who is managing the say system one, subsystem one and say subsystem two say. In that case this subsystem one is complex this one is also complex both are interconnected say, but what happened you need to study the entire performance of the inter system right. So, this loop this subsystem this loop might be dominating this one. So, in that case what happens your entire performance of the organizations will increase. If this is suppose this is suppose enhancing loop and this is suppose you know diminishing loop. So, in that case if this is active in that case you might see that this loop will decrease the downfall of your entire system performance. So, these are the called loop dominance. I can give you one example the concept of loop dominance. Suppose you know in a population control suppose population study you will have to do through the software right. So, population will be your level right. Total population of a country of a city you will have to study right. So, this will be the level and this populations will be controlled through your rate right that rate that I was talking about in the previous slide. So, this rate the notations will be there like this I will show you later. So, this population you would to study right. So, this populations are being controlled or are being measured through two main main parameter one is the birth rate another is the death rate right. So, there might be two loop one is the birth rate loop another is a death rate right. So, these two level rate rate value here you have means a rate value will help you in calculating your population over a period of time. Every year how much population are been accumulating in the city or in your state or in your country you will be able to calculate through this particular software. I will show you couple of your station. So, where where is the loop dominance maybe birth rate it could be high then every year then the death rate. Then in that case if there will be a loop birth rate and population the correlation and there will be another loop in the right hand side say death rate and population. So, if there are two loops say birth rate is this one and the death rate is this one and entire population will have to study in that case your birth rate loop left hand side loop will be dominating the death rate loop. Hence, you will see your population graph the behavior graph will be increasing over a period of time. Why population is increasing this population study you will have to study right through the software. How it will be increasing because birth rate loop is higher birth rate is higher that loop is dominating than the death rate. There should be death rate otherwise population will be exponentially increased. So, death rate will balance your system, but overall birth rate is dominating hence your population rate is increasing. I believe it is clear to everybody. These are the couple of information that you need to understand when you use this particular software in future for your project or for your industry or your academic purpose in future. So, I thought of sharing this particular software as a one in one session. So, that you get a different you know flavor about this simulation based forecasting and the business planning and the strategy. Endogenous and exogenous variables could be there. Some variables who are not directly involved in the system, but it has an impact in the system. So, this point of this particular parameter into identify they are not the auxiliary variable they are not insights parameter who are changing over a period of time. Maybe fixed type of constant time or some some sort of you know some dynamic variables will be there who are not directly involved in your system, but has an impact. It can be inside the organization instead of outside the organization like sunlight. Sunlight is exogenous variables. It does not come from the insides of your system, but you cannot control it, but it will have an impact in your decision making or in your performance system performance. Then system structure as I mentioned system structure are being developed by the two main parameter level and rate and then couple of auxiliary parameters will be there. Auxiliary variables intermediate variables will be there. Let us see couple of you know example for that type of graph how the system behavior works. The system behavior could be the most important you know 6 graphs. There might be many more graphs, but the most popular graphs through the software when you study the system behavior with the results input result and output results you will be able to see this type of graph. So, exponential growth you can understand exponential growth when there will be you know inflow is high you will see the total level value that I was talking about level value right. This level value will be always increasing you know in case your input flow is high. So, you will get you will see that your graph of this level level stock variable will be increased exponential growth. Similarly, if company is performing every quarter they are coming up with their good results you will see the exponential growth will be there. Similarly, goal seeking sometimes you know it will go up and then it will get steady you are seeking the goal and you are reaching the goal. So, then after that it will remain steady. So, goal seeking graph could be there oscillating graph could be the like up down up down kind of thing stock price might go up down up down kind of thing volatile market. So, there are many examples which follows oscillating pattern. SA growth like you know for startup or so to some extent for the initial like small scale companies performance follow SA growth. Initially it will be quite high then after that it will get maturity. So, these are to some extent SA growth. SA when oscillating with oversloting or with overshoot you can see that growth and then sometimes you know it will be fluctuating. So, I can give one example like that suppose you know if you really a movie initially there will be high demand. So, it will be spiked quickly. Then after that after one or two you might say that based on the word of mouth etcetera also you call for example the burst diffusion model of marketing you will get to know how SA growth helps there. So, after that it will be fluctuating and after something it may fall also here you can see. New movie if it is a good movie initially it will be high, but after that it will be saturated. Then there will be no people will see, but if the movie is flopped immediately it will fall down. So, there are many couple of examples where you know you can bring for this particular aspects of growth behavior of a system dynamics models. Now, let us understand few more aspects like you know information feedback system. Remember in this particular software the most important part is the information feedback system. How the information or the material are passing? Remember when you develop a system in a software it is all about information right. Even if it is inventory or material flow you are not putting your material in your software right only the information of the material you are putting here. So, information flow is the only important part and that feedback mechanism is the craft of this particular software. Look at couple of example a person sense that he may fall correct his balance and therefore he is able to stand erect. What does it mean? He realized look at the system thinking and self-regulating process this software how the system feedback cause effect relationship I talked about right. So, how that how does it work? Look at this particular yes person sense that he may fall you are riding a bike you might see that in front there is a obstacle or say you know some path also. So, you take the left you are riding the bike with the full speed you are taking the left you are controlling the speed and you are managing the obstacle and you are going forward. So, this is all everything is happening in your mind. So, this is called a system feedback every time your mind is working with the feedback process. So, this how you will capture that through the software that is the craft of this particular you know system dynamics modeling and continuous version of modeling and through that you can develop any kind of practical aspects of companies performance or the different organizations model you can design through this software. I will show you couple of example through this software also today. Like you know in business order the inventory level lead time which leads to the manufacturing decisions that fills the order correct the inventories yield the new manufacturing decision. So, it is a it is a feedback it is a feedback right it is a feedback it is a feedback. So, effectively your system performance over a period of time and when you run the system you will see everything is performing over a period of time. So, how does it work that is what the system dynamics or the you know continuous version of simulation through the software. It helps you not only the prediction it helps you also the business strategy decision making also. You can rectify your model you can take a recourse action. So, this therefore, this software is not only the prediction model the business forecasting modeling this software is a part of predictive prescriptive modeling also. So, because strategy you can also take based on the understanding of the software and how does it work accordingly you can take a recourse action plan. In competition also you know in R and D also people use this software for their technological development and what kind of difficulty they are facing they can also capture through the software internally. Look at here one example the mechanism of feedback loop and information feedback how does it work I have given example of riding a bike ride here you can think because I have put this example here therefore, I am sharing you can see therefore, you want to fill a glass with water and you have a faucet and you know you how you handle that remember it is all about eye your mind your hand and the glass of water. So, all work together actually your action plan your results and the information flow. So, all this feedback happening in a 1 minute duration also 30 seconds duration look at this information is going over what is the water level initially here then here then here then here you cannot fill more than that right there will be overflow. So, all these are happening in a period of a small period of time and your hand is working over here you cannot make it full flow. So, you have to control this also water is coming here and your information is going and that you are controlling through your mind and your entire process are doing this is complex system it looks very easy but when you go to the large scale problem complexity or complex industrial problem you will find it is very difficult. So, how to design it how to draw it that is the aspects of this particular software of system dynamics. Here we can see this entire process are here like this is called CLD diagram causal loop diagram. I will show you more examples you will get to know in this particular software like the feedback mechanism how does it it might be plus sometimes it might have effect positive effect somewhat be negative effect. So, all this will come together and overall the system behavior can be studied through this particular cause effect relationship or the system dynamics or the you know stock flow diagram. This type of graph are called the causal loop diagram. Here you can see couple of more causal loop diagram couple of more example here how the cause effect it could be the positive effect it could be the negative effect as I was talking about reinforcing loop it can be balancing loop. So, think about this it is a to some extent what about salary and performance it is a reinforcing higher the salary higher the performance higher the performance higher the salary. So, in both case it is a positive you can think the positive feedback look at here positive both are positive so it is a it is a reinforcing loop like exponential growth or to some extent reinforcing it is increasing it is a motivational loop but look at this it is a balancing loop here you can see one positive one negative more the tired you need more sleep more the sleep you are reducing your tired so it is a negative feedback so it is a actually balancing loop but it is a reinforcing loop so these are the different type of examples in your system what you need to study through this particular software here you can see in the previous examples here I have talked about the CLD diagram it is a reinforcing loop left one the right one is the look at the negative it is a balancing loop both are independent right here it is a one effect the other the cause effect one effect the other and it is a all or performing in a better manner because both are increasing but here you can see it is a balancing if tired increase if tired level level of tiredness increases what happens your you need more sleep so here it is a positive but here the you need more right more is a positive so when you have a more sleep here you can see your tiredness will reduce so it is a balancing it is a negative overall positive negative comes to it comes out to be a balancing loop in the pre next example I have add both in a complex system it is a small complex small small problem but just trying to say you share with you that how you can intricate the concepts look at here it is a same example you would like to study the population this is the level right level of stock value but this can be calculated through your rate right through your rate through your rate so here you can see this loop is a positive loop reinforcing loop look at here plus higher the birth rate higher the population higher the population higher the birth rate look at here the CLD diagram causal loop diagram but look at here higher the population higher the death rate higher the death rate lower the population so this death rate actually reduce your population and control your population so if this is a reinforcing loop enhancing loop this is a balancing loop because this loop controls your population this loop enhance your population increase your population so when you put together you can see a complex system and the system performance of population you can study we will see that in the software how you can put this type of data and you can draw graph performance of population and all these things right now here you can see that I was talking about the exogenous variables look at here this you cannot control but that will have an impact in your decision making of the company performance of the system performance harvesting plantation sunlight required like renewable energy sunlight required you cannot control but it has an impact in your renewable energy solar energy production so this is a exogenous factor you cannot control it but it will have an impact in your decision making so you need to understand you need to capture that also here is the another unless you if you start growing a tree plantation process you cannot start harvesting immediately right the crops you cannot start harvesting you need to at least 2 months 3 months you need to wait then only once the trees goes up crops comes then only you can harvest similarly for big tree you need to wait 5 years 6 years 7 years before you do the harvesting process cut the tree so this delay you have to put otherwise your system will not work so doing the plantation next time period you cannot cut so initially maybe first 10 years you will not have any harvesting here onwards your harvesting will start so this is the input data like you know your investment is going on here onwards you will see the outcome like you know return so like delay will come so initially in your this software helps you in developing the delay part also because you can capture it effectively one such interesting feature I thought of sharing with you manage the different aspects small aspects of this particular practical aspects through this particular software now let us come to the software and how the software can be designed so before we go to the software let us understand couple of the basic features that I talked about how they are named and how they work remember the two main parameter stalks and flow I told right we are going to enter into the software now the stock and flow these are the main parameters so stock and stock and flow stock sometimes people call it a stock or level which accumulates over time the actual money actual information actual in material that you are accumulating through over a period of time that is stock right unit could be say rupees unit could be inventory unit the unit could be say number of inventory unit could be population person so it is a actual information right actual quantity you have to calculate flow rate is nothing but the change over a period of time the rate of change of your stock right so you know if it is a stock so this is your rate flow every every time how that your stock level or you know actual value is changing that every calculation I was talking about how it is changing so that like every rate could be 10% say or 15% or 5% but if you keep 1 lakh in your every first year it could be 10k right 10k so this value change so this is your rate this is your rate flow 10% is your interest rate it is a constant parameter it is not changing but your rate value first year it is 10,000 next year it is 11,000 because next year your accumulated value has become 1.1 lakh right 1.1 lakh so based on that your 10% will come so it is changing so therefore rate value will be changed every time period therefore your actual stock or the calculation fd will change over a period of time just one example is the information which are the intermediate variables which help you in calculating your rate of your system so stock when you calculate stock or say you know level value that is calculated through rate as I talked about that is calculated through rate right whether in flow or out flow that will calculate it through rate but in the middle there might be auxiliary parameter who helps you in calculating your this rate and the stock and your divisions are called the auxiliary variables I will show a couple of examples so as I mentioned stock is a quantity which and the rates are per unit time period and this is the actual calculation and then here like in actual information and here few more information I have mentioned you can read like you know choice of time unit must be consistent flow can be positive or negative contents of stock flow network is conserved you know so all these things and designing once you develop this particular software over a period of time you will understand all the features of the software effectively look at the notations of the variables so this is the level I was talking every time this is the rate I was talking every time so this is the rate this is the level the auxiliary variable intermediate this is the source and sink the outside the sunlight source sink water is consuming amount of money is consuming this is sink this is the sink this is the source and the constant you will have an impact in your system purpose look at causal effect arc value so these are the different notations when you open the software we will get to stock flow diagram now in the software it will look like this so this is your stock say example say inventory this is your flow inflow rate it is like a production rate it is outflow nothing but your seam band rate so this is what the effect of stock flow diagram in the software we call it is a system dynamic software or using vensing or ithing or stela there are many softwares in the commercial domain available you can use any one of them today we will use vensing vensing software it is been developed by MIT that software I will show you and how this type of diagram can be developed and you can run the system behavior through simulation of continuous version here you can see look at here this is the external factors or say like you know like DR output label that you want and look at the water glass of water that you filled we have discussed few minutes ago but here you can see when you develop this in a software it will look like that and then you can see the water level of your glass is increasing over a period of time or decreasing whatever the example tank you are filling a tank of water or say dam there are many case studies you know how a dam of a you know hydro project can be handled that also you know people have used this particular software and they have used their case study also look at here the example that I talked about the birth population and this so birth population only one loop reinforcing loop I have drawn here you can see population birth and the population so it will have your birth rate will come here obviously it will improve your population look at another example say interest rate percent interest rate it is fixed but this value will change right this is every year this value will change therefore your stock value will also change look at the flow your principal value is coming every year because it is increasing it is increasing it is increasing over a period of time but this is fixed 15 percent and this is say first year 15,000 next year say 17,000 something period of time and look at here your rate is changing this is the rate first 15 then 17.25 and that value you are adding your level value the FD value principal value initially 100 but it is changing after 15 years you can see 813 is your new ability calculate value so you can effectively do that in bank they do not use the software but if they can use the software quickly they can understand the system they can do actually for this particular software look at the graph how the level of principal and the interest rate are changing that also you can study for this output result of this graph so the software will look like this blank sheet will look like this here in this side you will have a features of editing developing the software and in this side you will be able to see the output results I will show you in the I have drawn it that when you go to the software it will look like the latest version of the software or vain sim software vain sim software will look like this in the when you open the software look at here this is your copy paste all these things like the basic software work here it is a level through this you know look at the stock variable auxiliary variables the equation and you can also delete the information you can modify you can check the error equations or character not through this you know through this you can check the equations are correct or not all these things here you can see the result table figure causal relationship precedence and the succeeding relationship all these things CLD diagram everything you can see through this all results you can put a deficit you want to calculate right through your case study through your data India government or your state government data you have and you look to study how the debt is increasing of a government so net rate is your rate this is your rate every year it is changing this is your level stock stock variables because you want to study the government debt if the government is performing or debt may reduce but if the government is not able to perform generate higher revenue the interest if the interest and the expenses are high overall is government revenue will dominate this loop will dominate the may be government revenue you can calculate with some other more parameter I have not put more just for your information total expenses will dominate your government revenue in case you are not able to generate more revenue through different sources look at the you know your expenses are high your then the revenue your debt will increase but if your revenue is high and expenses are low your debt will reduce your graph of debt will reduce over a period of time if government revenue is high over a period of time say 10 years 10 years you will have to study right or low you will see the debt of the government will reduce but if the expenses are high physical deficit people talk about physical deficit right this way you can also use this particular software but a revenue low you will see the graph of debt will increase you can study all this this software I have already you can see the go to Google and download Vensim free you will receive the software link in your Gmail and you can install it in your laptop or desktop and you can run this software through different case studies or case applications here I have done it look at here is another example bus diffusion model in marketing it is very popular bus diffusion model here new product it is very popular new product launch it is an adapter who has already consumed the product or have already seen the movie these are the consumers who would like to buy the product or like to see the movie potential customers a total population in that region so this population of the bus diffusion model in marketing of a new product works through two main parameter one is the advertisement another is the word of mouth if the movie is good or the product word of mouth then in that case what happen over a period of time over a period of time let me over a period of time what happens this is called BOT behavior over time graph over a period of time what happens the entire system performance here two main parameter population potential adapter and the adapter right you can study their graph you will see the adapter graph will increase and potential consumer products purchase also so in that case movie if the movie is good you do more advertisement you will get more potential customers will see the movie and they will convert over a period of time potential adapter to adapter and the word of mouth also will help word of mouth also will help in increasing your conversion from adapter to potential adapter adapter this word of mouth or say advertisement effectiveness so these are the two you know say evergreen model you can use this model and you can develop many case studies in your real life or in your project also but this word of mouth the calculation of word of mouth and say adoption through advertisement can be done through the adoption rate because this is your rate this is your rate so that you have to calculate through these two value rate is nothing but what advertisement plus word of mouth so the word of mouth you have to calculate say or every month what is your unit you do not know unit you can define when you open the software you can define your unit then word of mouth and advertisement you can put and you can calculate your rate adoption rate every week or every month how many people are shifting from the potential to adapter for consuming or who are watching the movie and they will have impact in your decision making also advertisement will not be linked to the adapters but the adoption as well as for static decision making also here you know you can see one another example like in inventory management you know warehouse management you can use also you know this type of software look at so many complex systems so many subdivisions are there you need to link all of them right and then only you can study the raw material inventory of warehouse just I have taken on basic example it is very popular example for the software and here is a birth rate as the death rate I have given this example like birth rate is fixed say lifetime is fixed say 8 years say or say here is say say 10 percent say or whatever if you put this and initial value if you put say say 100 say or in a in a local region or in a particular area you can see how this these are changing but the the reason of putting this example is here how to develop software right look at the data sets how to put units you have to put right look at the birth rate and the unit you have to put look at the birth calculation the non-linear equation and the unit all this you need to put population is integral equation I told about level and stock or level or nothing but the integral equation of your rate like dy dt d s dt s is nothing but your stock level right s is nothing but dy dt this will help you in calculating your level or stock every time therefore it is integral equation and unit is actual rapid number of population unit money cost this is the actual level value and these are the rate value and these are the intermediate data or say in a constant data if you put the unit and etcetera in the software you can run the software and you can get to know let us start with the basic FD calculation model etcetera or say commanded through the illustration of the software so we have come to the software now the Vensim software you can install that software through the link by down in google that download Vensim free Vensim so you will get the link and you can download in your gmail you have to give your gmail name organizations the link will come and you can download this software once you open the software the free version you will see this type of FD calculation so first you have to draw the level select the level here right here so suppose write down FD values here right you have to calculate right this FD value and you this is your level of stock variable look at here this and you have to calculate your rate this calculation will be done through your rate but before that you have to put the interest value right so you put the interest say this interest rate will help you in calculating your FD over a period of time so I will give the time period also let us complete the time period also go to the model and setting so let us save the model say let us save the one say test model right test 1 2 3 say suppose so model is saved you need to put the unit also setting so month wise you have to study say say quarter wise study you have to do right and say time units initially 1 and say say 100 quarters suppose and time step is 1 here you can see the time step like 0.2 0.5 etcetera you can do all these things whatever you do you can do this right you can save now material information the time spend and the behavior value is done initial value you will have to give data you have to enter later and the interest rate also I will have to give the data first first construct the model the causal lower stock flow diagram then the rate main part rate is here so select here say and then come say here say this is what your interest rate is so now you can change this formula wherever you want to do right so net interest rate and now this fd will be accumulated every time period right so you need to connect this with your fd rate net interest rate also connect this so you have connected just like this so it will be easier to understand now what we have done we have designed the model you have to understand look at all the variables says that there is no data so click one by one say interest rate start with interest rate right look at the interface of equation data like solver here also in the software any equation has come initially suppose you would like to put interest rate say you can do this one by here because this is interest rate fixed per year so click you can put some comment about the software the variable also so that when you have a complex large complex system you can see that what variable this is actually because in complex there are hundreds of variables it will be very difficult to measure by to that variable now if you select this equation formula look at here this is filled now because data you have entered similarly fd you can put and the interest rate also you can put one example I can show you say fd look at its integral equation automatically interest integral equation come this will help in calculating your rate to the system so the system the main everything will be calculated through rate because every integral equation every year it will be changed or every time it will be changed through your rate net rate so that net rate or that outflow inflow will come into your the box therefore the inventory information whatever you will suppose you put say one lakh right an unit here it is a money right you can put unit you can write say you know say rupees you can put this it is a label look at here the fd is also now calculated your fd value say one lakh multiplied by 10% multiplied by 10% this is already been given the data right but this unit is different unit is what rupees per year right rupees per year then only you will be able to your unit will come effectively for example if you put only rupees per year then unlock it and then if you put the equation it says that every all the variables in your software has the data right before you run the simulation here but if you check the unit come to model and unit check there will be error look at there are error why this error real rupees will come so therefore what you have to do the unit error are saying you come here net interest click the net interest rate go to equation and then here if you put rupees per year probably this error at least will go click okay and then if you check the model unit look at here information normal distribution smoothing information flow step function everything you can put while developing your model for input data auxiliary variables calculation process so now here you can see units are correct even for FD value also if you see the equations for your information I am sharing here you can see initially suppose constant value here I can show you this equation also look at it is 1 by here and 10% now units are okay you can check again units in the data entry are all fine units are okay right now if you run it just run this first or already saved file is already saved just run your net rate is also changing but interest rate is fixed because you have put 10% look at the relationship look at look at interest rate is helping helping your net rate FD are being calculated click this and click this particular formula you will be able to see from where it is coming look at which from net rate FD are being calculated and if you want to see the data table just come here look at the data table every year how they initially 1 lakh then 1 lakh 10,000 then 1 lakh 21,000 33,000 so you can see all this data you can copy and paste in your excel world everywhere you can put therefore I talked about it is a micro world in your pen drive you can carry the entire bank SBI particular employee particular clerk or particular clients you can store and you can study this FD calculation I have shown you look at here how the net rate are changing click this and then see the graph look at how the net rate are changing you can increase the graph size you can check actually how the net rate are changing you can see the format also look at here so all this if you want to change the 10 interest rate you can look at how I told you it is not about prediction it helps in calculating your strategy decision making also suppose you want to change your interest rate you can see the effect of your FD internet rate over a period of time everything you can see so this is drawn everything but I can show you look at the government debt example look at this is the government debt right so entire data I have put if you want to see unlock the value model and if you check this government debt look at government debt net it is coming from net deficit net government deficit we can see the initial value that I could have put rupees suppose dollar I have put and all these units you put and if you put the relationship of the data look at here interest payment or nothing but look at here interest payment or nothing but your current debt into the interest rate that RBI say charging say right so interest rate or government is charging so interest rate total expenses are nothing but other government expenses plus interest rate click total government you can see it is nothing but the sum of interest payment every year or every time period that you have here you have put time period as a year right plus the expenses both will give you interest rate and expenses both will give you your final calculation of your total expenses of that here government revenue the government revenue then this government revenue and total debt total expenses will have to subtract from because your debt is increasing so here you can see net deficit government deficit nothing but total government expenses minus government revenue therefore and it is a dollar per year because it is nothing but actual rate your calculation that will be added to your final debt if you click expenses minus revenue because you have done subtraction check expenses minus revenue and your debt are being calculated effectively then throw this net rate every year you run it since I had saved the file you can directly run the model you can see if you are increase your revenue look at if you increase your revenue look at your debt is falling down look at here but if your relative and prescriptive both can be done through this simulation software look at here look at here you are increasing your revenue over a period of time suppose because the changing means revenue are changing look at here your debt is falling down throw net deficit look at interesting part look at here if you see this suppose you know your other expenses are increasing suppose down you are able to reduce the expenses reducing your expenses look at here your debt is falling down you click this you can see the graph and the table effectively look at the graph of your debt because you have reduced the expenses so this all type you know this expenses I have put a fixed per year right you can modify with the random data with random normal distribution step function all these things if they else condition information of the actual random behavior risk parameter and you can study the government deficit GDP calculation whatever you want you can do through this software I believe it is clear to everyone now let us close this and then for your information one more problem that I have discussed that I will show you then we will end up the session say bus distribution model right does see this so this also I have drawn the potential adapter I have kept here look at the word of mouth formula sorry I have to unlock it look at the word of mouth formula and the equation look at here all this data I have kept the information all these things and if you run it you can see your potential adapter is falling over a period of time the number of potential person who would like to see the movie and the person who has seen the movie or has consumed the product and throw word of mouth you can do the policy study all these things effectiveness if you increase your advertisement amount your quickly adoption rate will increase because advertisement amount effectiveness will increase similarly if you have word of mouth if you do more social media publication or you know word of mouth or your network integration probably you will be able to increase your word of mouth effectively the next person of simulation of system dynamics modeling I thought of sharing this as a part of simulation modeling and the business forecasting session I hope it is clear to everybody the basic understanding of the continuous person of simulation that is for system dynamics simulation or business dynamic simulation and how the prediction can be done through data modeling through nonlinear relationship stock flow diagram and how can you make a prediction called the system dynamic simulation and the business planning and the strategy decision making with that let us conclude this session of system dynamic simulation as a part of business forecasting thank you