From the course: Supply Chain Beyond the Basics: Building System Dynamics Models

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Creating a causal loop diagram

Creating a causal loop diagram

From the course: Supply Chain Beyond the Basics: Building System Dynamics Models

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Creating a causal loop diagram

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- [Speaker] Causal loop diagrams are a powerful way to visualize and understand the feedback loops and interactions within a system. They can also help to uncover mental models and ensure that everyone is on the same page. Let's walk through the steps to build a causal loop diagram for our labor example. To create a causal loop diagram, we first need to identify the key variables and their relationships. First, we identify the key variables in the system. These are the elements that have significant impacts on the system's behavior. For example, in a supply chain labor model, our key variables might include wages, labor supply, working conditions, and turnover rate. Now we write these variables down and think about how they could interact with each other. Make sure to keep the list manageable, focusing on only the most critical elements. Next, determine the relationships between these variables. Ask yourself how changes in one variable might affect the others. For instance, how do…

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