Subject category:
Strategy and General Management
Published by:
London Business School
Length: 5 pages
Data source: Field research
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Abstract
This is the second of a two-case series (399-115-1 and 399-116-). This case study focuses on production decisions in a reservoir-based hydro-energy plant. While developed for a system dynamics course, similar learning points can be achieved in any modelling course by adapting the questions. The focus is on model conceptualisation and structuring, not detailed stock and flow modelling or equation writing. Key issues include: (1) A single all-encompassing model versus several smaller models: Faced with decisions at different levels, it may be better to build separate models for the different decision makers, even if these decisions are inter-related; (2) Modelling in a changing environment: In a changing environment, the modeller should be aware that using past data to calibrate policy functions can be misleading, and that there may be a significant lag between a change in the environment and the ensuring change in behaviour; and (3) Differing mental models: Different parties may have different views on ''optimality'', and may all be right in their own way.
About
Abstract
This is the second of a two-case series (399-115-1 and 399-116-). This case study focuses on production decisions in a reservoir-based hydro-energy plant. While developed for a system dynamics course, similar learning points can be achieved in any modelling course by adapting the questions. The focus is on model conceptualisation and structuring, not detailed stock and flow modelling or equation writing. Key issues include: (1) A single all-encompassing model versus several smaller models: Faced with decisions at different levels, it may be better to build separate models for the different decision makers, even if these decisions are inter-related; (2) Modelling in a changing environment: In a changing environment, the modeller should be aware that using past data to calibrate policy functions can be misleading, and that there may be a significant lag between a change in the environment and the ensuring change in behaviour; and (3) Differing mental models: Different parties may have different views on ''optimality'', and may all be right in their own way.