ABSTRACT
A central idea in process dynamics is the notion of stocks and flows. Stocks are accumulations that are created due to the difference between the inflow to a process and its outflow. Everyone is familiar with stocks and flows. The finished goods inventory of a manufacturing firm is the stock of products in its warehouse. The number of people employed by a business also represents a stock-in this case, of resources. The balance in a checking account is a third example of a form of stock. Stocks are altered by inflows and outflows. For instance, a firm’s inventory increases with the flow of production and decreases with the flow of shipments (and possibly other flows due to spoilage and shrinkage). The workforce increases via a hiring rate and decreases via the rate of resignations, layoffs, and retirements. The balance of a bank account increases with deposits and decreases with withdrawals (Sterman, 2000).
