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University of Maribor Faculty of Organizational Sciences Relevance of Simulation Models for Assessments of University of Maribor Faculty of Organizational Sciences Relevance of Simulation Models for Assessments of Living. Labs Activity Miroljub Kljajić, Professor & Head Laboratory of Cybernetics and Decision Support Systems University of Maribor, Faculty of Organizational Sciences Cybernetics & DSS Laboratory e-mail: miroljub. [email protected] uni-mb. si www http: //kib 1. fov. uni-mb. si

Introduction • Basic Definition • Complex systems • Living Systems • Simulation model • Introduction • Basic Definition • Complex systems • Living Systems • Simulation model • Living Labs model

System • • • System means a whole consist of parts and was the System • • • System means a whole consist of parts and was the axiom for ancient philosophers. A system is composed of regularly interacting or interdependent groups of activities/parts that form the emergent whole. Complex systems are phenomenon consisting of a large number of elements organized in a multilevel hierarchical structure where elements themselves could represent systems (Mesarovic, 1989).

System (contd. ) • Living Systems Theory is a general theory about how all System (contd. ) • Living Systems Theory is a general theory about how all living systems "work, " about how they maintain themselves and how they develop and change (J G Miller, 1978). • Living systems can be as simple as a single cell or as complex as a supranational organization (such as the European Economic Community). • System dynamics is a method for understanding the dynamic behavior of complex systems. The basic method in studding complex system is the modeling and simulation. .

Model Classification (Forrester, 1961) Cybernetics & DSS Laboratory Model Classification (Forrester, 1961) Cybernetics & DSS Laboratory

Living Labs. Sim = Operation game. • Computer system users, administrators, and designers usually Living Labs. Sim = Operation game. • Computer system users, administrators, and designers usually have a goal of highest performance at lowest cost. Modeling and simulation of system design trade off is good preparation for design and engineering decisions in real world jobs (Arsham, 2005). • Dynamic modeling in organizations is the collective ability to understand the implications of change over time. • Another important application of simulation is in developing "virtual environments" , e. g. , for training military personnel for battlefield situations, disaster relief, etc. .

Simulation Approach to Decision Assessment in Living Labs • The use of visual interactive Simulation Approach to Decision Assessment in Living Labs • The use of visual interactive modeling and animation can help users to obtain a better understanding of simulation results, especially those, who are not computer simulation experts. Decision-makers are motivated by the animation while seeking better solutions for complex problems.

Case 1: VIM Models Screen Capture of Production Line Selection Kljajić, M. , Bernik, Case 1: VIM Models Screen Capture of Production Line Selection Kljajić, M. , Bernik, I. , & Škraba, A. (2000). Simulation Approach to Decision Assesment in Enterprises. Simulation, 75 (4), Simulation Councils Inc. , 199 -210. Video Variants:

Post-Decision Analysis of Production Line Selection by Simulation Methods Forecast of the Cumulative production Post-Decision Analysis of Production Line Selection by Simulation Methods Forecast of the Cumulative production (X 1, X 2, X 3, X 4) and real production in the first four years

Post-Decision Analysis of Production Line Selection Figure 6 a): Comparison of the Predicted Net Post-Decision Analysis of Production Line Selection Figure 6 a): Comparison of the Predicted Net Income under different scenarios (Curves 1, 2, 3, 4) and realized Net Income (Curve 5) for the first 48 months with its predicted values until 96 months;

Post-Decision Analysis of Production Line Selection Figure 6 b): Expected Value of Net Income Post-Decision Analysis of Production Line Selection Figure 6 b): Expected Value of Net Income EV and realized Net Income (Curve 5) for the first 48 months and its predicted values until 96 months

EV Vs A 4 Analysis Expected Value t 0 Expected Value (EV) (Curve 1) EV Vs A 4 Analysis Expected Value t 0 Expected Value (EV) (Curve 1) for the first 48 months, Realized Net Income (Curve 2) and the fully automated production process i. e. alternative A 4 outcome (Curve 3) i. e. highest financial risk

Case 2: THE ROLE OF INFORMATION FEEDBACK IN THE MANAGEMENT GROUP DECISION-MAKING PROCESS APPLYING Case 2: THE ROLE OF INFORMATION FEEDBACK IN THE MANAGEMENT GROUP DECISION-MAKING PROCESS APPLYING SYSTEM DYNAMICS MODELS Škraba, A. , Kljajić, M. , & Leskovar, R. (2003). Group exploration of system dynamics models – Is there a place for a feedback loop in the decision process? System Dynamics Review, 19, 243 -263. Cybernetics & DSS Laboratory

System Elements and Experimental Conditions • M ~ Model i. e. Business simulator • System Elements and Experimental Conditions • M ~ Model i. e. Business simulator • DG ~ Decision Group • a 1 ~ Individual decision-making without the simulation model • a 2 ~ Individual decision-making supported by the simulation model • a 3 ~ Decision-making supported by both the simulation model and group feedback information

Structure of the Group Feedback Interaction Cybernetics & DSS Laboratory Structure of the Group Feedback Interaction Cybernetics & DSS Laboratory

Comparing Methods Cybernetics & DSS Laboratory Comparing Methods Cybernetics & DSS Laboratory

Condition a 2 , 4 Phases Condition a 2 , 4 Phases

Condition a 3 , 4 Phases Condition a 3 , 4 Phases

Conclusion • Simulation, supported with animation, which demonstrates the operations of the modeled system, Conclusion • Simulation, supported with animation, which demonstrates the operations of the modeled system, helps participants to recognize the specifics of the presented system. • Decision-makers are motivated by the animation of a real system, due to the cognitive information obtained, which is relevant for model validation. • Such simulations are used extensively today to train military personnel for battlefield situations, reengineering process, development of new products, integrated modeling and simulation environments etc.