This is the physical part of the problem. Now it is necessary to make some of the behavioral (information) connections. Putting down the important physical stocks and flows is often a good starting point in developing a model. It lets you make part of the system concrete, and this can simplify the conceptualization of other parts of the system. Alternative approaches include building a causal loop diagram and converting that to stock and flow form, or writing equations directly from causal loop diagrams. You might also want to draw a causal loop diagram, then start over again with a stock and flow diagram. What works best varies by individual and by problem, so we try to present some alternative approaches in different chapters in this guide.
In completing the information connection, we will try to keep things as simple as possible. Starting with production we want to remove all the complexities of adding shifts and mothballing equipment and simply state that production is proportional to Workforce. We add the proportionality constant productivity. Also, net hire rate is dependent on the value of Workforce. This gives us:
The net hire rate is the net number of people hired. The most straightforward way to formulate this is as a stock adjustment process. In a stock adjustment process you take an existing value of a variable (usually a stock) and compare it to some target or desired level, then take an action based on the difference between the two. For example if you are driving a car at 40 MPH and wish to be going 50 MPH you would depress the accelerator. Your car's speed (a stock) will increase at a rate that depends on how far you depress the accelerator and the car you are driving.
To capture this stock adjustment process we add in the variables target workforce and time to adjust workforce and connect them as shown :
time to adjust workforce represents the time required for management to agree on a change in the workforce level and screen potential applicants or notify workers to be laid off. target workforce is the number of people you need to produce the amount you want to produce. The Level Workforce is initialized at this value. Now we add the concept of target production, and connect it to target workforce. We will set target production on the basis of sales.
This is a complete model, though it does have a critical error of omission which will be brought to light during simulation. The next step is to take the conceptual model and turn it into a simulation model.
