Value chain modelling using system dynamics

We consider a new type of value chain that includes both production and service capabilities for existing product lines and that incorporates new product and service development. In this paper we model this value chain using system dynamics. The essential variables and causal relationships, which are expressed as linear differential equations among these variables, are also presented. We discuss the importance of eigenvalue analysis of the associated coefficient matrix in predicting and understanding the evolutionary behaviour of the system. A case study from the aerospace industry is introduced to validate the different developments.