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A System Dynamic Simulation Approach to Investigate Economic And Environment Factors Based on VUCA framework: A Case Study in Petrochemical Industry

Monfaredi Jafarbagi, Aoun | 2023

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  1. Type of Document: M.Sc. Thesis
  2. Language: English
  3. Document No: 56751 (51)
  4. University: Sharif University of Technology, International Campus, Kish Island
  5. Department: Science and Engineering
  6. Advisor(s): Hassannayebi, Erfan
  7. Abstract:
  8. To maintain adaptability, businesses should anticipate changes in their environment. The commonly employed forecasting method within corporate circles is the bottom-up approach, which relies on historical data for projecting future trends. However, research suggests that this approach often falls short of accurately reflecting real-world events. This has led to the adoption of dynamic systems modeling, a technique grounded in the assumption of stable conditions. This method effectively replicates the system's current state, thereby assisting in predicting future behaviors over a longer timeframe. The dynamic systems modeling approach was employed in this study, underscoring the imperative for firms to make prudent investments in their assets. Such investments are paramount for sustaining production capabilities and weathering external challenges. Cause-and-effect diagrams and system equations were harnessed to emulate the system's response to factors that undermine its effectiveness. The findings underscore vigilant management's necessity to maintain the system's productivity. Additionally, how destabilizing elements impact the operational state of the system was investigated. A framework targeting four instability elements, namely ambiguity, uncertainty, volatility, and complexity, was incorporated into our methodology. These elements were quantitatively assessed using simulation data to create the VUCA index, a measure of internal turmoil within a company. Understanding this turmoil enables strategies to mitigate it to be formulated, although the development of such policies falls outside the scope of our research. Our approach places emphasis on the importance of quantitatively comprehending the business environment and anticipating its long-term changes. System thinking and dynamic system frameworks, along with the novel VUCA paradigm, were employed for this analysis. Ultimately, the aim of our research is to present a long-term perspective on an organization's profitability and the evolving pressures it encounters over time
  9. Keywords:
  10. System Dynamic Analysis ; Systems Thinking Skills ; Fluctuation Theory ; Uncertainty ; Complexity ; Ambiguity Function ; Libration Points

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