Control charts as the preferred measurement tool for complex systems

Daniel A. McGrath, Mario G. Beruvides

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Complex systems are a typical, messy part of life. One way to create a complex system is by the simple aggregation of systems that can result in the emergence of synergistic and/or antagonistic reactions that could possibly cause a significant change in outcome. One of the difficulties of working with complex systems is input data are not available to use for deterministic or stochastic solutions. Complex systems created by aggregation are prevalent in nature with examples being mineral exploration and environmental monitoring data. When one decomposes a complex system formed by aggregation, variation is found to be nested. This nesting is, when by design, to ensure steady growth and to hedge against declines. However, each factor cannot be quantitatively defined so the covariance cannot be calculated. Complex systems display further complication in that they display growth/decline as a function of time that challenges assumptions about the use of the classic control chart. This paper explores how to assess a non-zero-sloping complex system representing a man-made case, specifically mutual fund selection. This paper introduces the I-RASR control chart as a tool that allows the assessment of control status for non-zerosloping data, and, by extension, for complex systems in general. Copyright

Original languageEnglish
Title of host publication30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009
Pages80-86
Number of pages7
StatePublished - 2009
Event30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009 - Springfield, MO, United States
Duration: Oct 14 2009Oct 17 2009

Publication series

Name30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009

Conference

Conference30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009
CountryUnited States
CitySpringfield, MO
Period10/14/0910/17/09

Keywords

  • Complex systems
  • I-RASR control charts
  • Mutual funds

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    McGrath, D. A., & Beruvides, M. G. (2009). Control charts as the preferred measurement tool for complex systems. In 30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009 (pp. 80-86). (30th Annual National Conference of the American Society for Engineering Management 2009, ASEM 2009).