In: Finance
Explain how does the system dynamics use a particular diagramming notation for stocks and flows
Stocks and flow diagrams goes beyond the simple analysis and the visualization structure of the feedback. A stock and flow diagram is an technique that visually distinguishes between the parts of the system and what causes them to change, precise quantitative specification of all system parts and their interactions and simulation of the behaviour of the system.
The stocks and flow diagrams are all about the visual languages with casual loops. The 6 main distinguishing features of the stock and flow diagrams are-
1. Stocks
2. Flows
3. Converters
4. Connecters
5. Sources
6. Sinks
Stocks- A stock is an part of the system whose values depend on the past behaviors of the system, at an particular instance of time. We have to measure how it changes at every instance, and adding up of all the changes. Example- While you are driving a car. Suppose you have started driving at 8am and you want to check how far have you driven at 10am. You can check the speeds at each time intervals and the distance you have covered till now. In this example the distance you have driven is the stock. Odometer(Car speed meter) is the measurement of your stock. Stocks are always represented by Rectangles on diagrams.
Flows- Flows are the rate at which the stocks are changing. In the above example it’s the velocity of the car that changes its Stock. Velocity is the acceleration or the deceleration. Flows are always represented as small valves attached to the flow pipes in the diagram.