I have answerd question 1 and 2. Need help in 3 and 4.
Casual Loop Modelling:
A paragraph will be given and answer the four questions below.
* i. Formulate the problem by giving a problem statement. To do so, start by briefly summarizing the story.
* ii. What are the key variables described in the story? (Hint: There are four.)
* iii. Graph the behavior of these variables over time.
* iv. Using Vensim PLE software, create a causal loop diagram that represents the variables’ interrelationships. Include all necessary labels. Where appropriate, indicate any important delays in the diagram.
Paragraph:
Read the following story and answer the questions that follow:
Setting budgets, a target level of spending, are an excellent way of tracking money as it flows through a company. But when budgets are used for other purposes such as long range planning or measuring performance of the company, they can distort reality and mislead managers. When budgets become an end in themselves, the company suffers. The results is that managers end up managing the budget rather than managing the company.
Here is what typically happens: As a result of the annual budgeting process, each department in a company is given a budget. If actual costs exceed the budget, everyone in the division begins to experience budget pressure. A department may respond in a variety of ways. They could lay-off employees, cut back the work week, drop employment benefits, or even restrict expenditures for training and development. Eventually, to management’s relief, the monthly and quarterly results of the company improve
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