The SD Model in Depth

Customized Factory Packages

Customized factory packages are shared or purchased and loaded on demand to provide the user with an application extension of factories and a “cookbook” to model and solve a particular problem with their System Dynamics Calculator. A comprehensive list of solutions that might be supported by customized factory packages is beyond the scope of this document. However, there are several packages of factories that are envisioned and discussed to illustrate the potential of this element of the System Dynamics Calculator.

The intent of a customized factory package is to give the user a palette of familiar terms and concepts to simply pick from with a minimum level of understanding required. Embedded in each factory is a set of interfaces into and out of the factory, and a behavior that is configurable within some bounds. For some factories, the embedded interfaces and behaviors will be identical, but the label is distinguishing; this approach eliminates a step to label the factory, and limits errors by reducing the knowledge required to apply the factory correctly.

Finance Factory Package

Finance Factories focus on the processing of money flows commonly found in households, business operations, banks and investment institutions.

Accumulation Account Finance Factories

Balance Sheet Account Finance Factory

Income Statement Account Finance Factory

Transaction Account Finance Factories

A number of factories are defined for common accounts that are maintained by institutions. Several finance factories are defined for conventional transaction accounts:

Cash Savings Account Finance Factory

Checking Account Finance Factory

Debit Card Account Finance Factory

Credit Card Account Finance Factory

Investment Account Finance Factories

Several factories are defined for conventional investment accounts:

Illiquid (money market) Investment Account Finance Factory

Illiquid (non-cash) Investment Account Finance Factory (note that the “Invest” badge may be replaced with a trading symbol)

Several factories are defined for investment accounts that receive special tax treatment:

401K Account Finance Factory

IRA Account Finance Factory

Roth Account Finance Factory

Periodic Payment Finance Factories

Several finance factories are defined for equal periodic payment accounts:

Annuity Account Finance Factory

Loan Account Finance Factory

Past Flow and Future Flow Finance Factories

Several finance factories are defined that perform operations on past flows and future flows:

Net Present Value Finance Factory

Internal rate of Return Finance Factory

Modified Internal Rate of Return Finance Factory

Bond Price Finance Factory

Bond Yield to Maturity Finance Factory

Significant work remains to describe finance factories.

Analysis Factory Package

Analysis factories apply a number of quantitative analysis techniques to the results of a simulation including inferential statistical techniques to see a pattern or a significant characteristic. In general, hypothesis testing and statistical tests on more than one set of data are covered below:

The following analysis factories are envisioned:

Correlation Analysis Factory

Analysis of Variance Analysis Factory (Model 1 for fixed effects, Model 2 for random effects, Model 3 for mixed effects)

Analysis of Covariance Analysis Factory (Model 1 for fixed effects, Model 2 for random effects, Model 3 for mixed effects)

F-Test Probability Analysis Factory (returns one-tailed P that two related data sets are statistically similar)

T-Test (Student’s t-test) Probability Analysis Factory (returns two-tailed P of statistical significance for a small sample)

Chi-squared Test (Χ2-Test) Probability Analysis Factory (returns the P that two independent data sets are statistically similar)

Z-Test Probability Analysis Factory (returns two-tailed P of statistical significance for a population)

Significant work remains to describe analysis factories.

Natural Science Factories

A Natural Science Factory describes characteristics and behavior of biological systems including people. Two types of factories are anticipated: “non-thinking” or evolution factories, and “thinking” or decision factories.

A Decision Factory typically operates on intangible inflows. The output of the decision factory is a Boolean indicator that is either “true” or “false”. The decision factory represents decision making of an individual, a population sample or the population itself as simulation methods are applied differently for each case.

Several generic decision factories are envisioned:

Generic Individual Decision Factory

Generic Sample Decision Factory

Generic Population Decision Factory

Significant work remains to describe natural science factories.

Physical Science Factories

A Physical Science Factory describes characteristics and behavior of non-living systems. Two types of factories are anticipated: “micro-scale” or atomic factories for elemental particles, atoms or molecules, and “macro scale” or physical factories for objects.

The following generic atomic factory symbol is defined:

Generic Atomic Factory for an element or compound (K)

Several atomic factories are envisioned:

Electrolytic Reaction Factory

Radiolytic Reaction Factory

Photolytic Reaction Factory

Thermolytic Reaction Factory

Hydrolytic Reaction Factory

Combustion Reaction Factory

Nuclear Reaction Factory (for Uranium, for example)

Significant work remains to describe physical science factories.

Customized Factory Packages

Finance Factory Package

Analysis Factory Package

Natural Science Factories

Physical Science Factories

Abstraction Layers, Fragments and Scripts

Appendix: The Modeling Process